A handful of Texas-based hemp companies are suing in an attempt to rescind a new law banning the manufacture and sale of smokable hemp products.
The lawsuit, filed in Travis County District Court, claims that numerous Texas companies will be excluded from the multibillion-dollar hemp industry. They are asking a judge to declare the ban unconstitutional, although in other cases it has already been established that states can implement their own laws and restrictions regarding these matters.
“At a time when the Texas economy is reeling from the fiscal impact of COVID-19, it is unfortunate that the State chose to foreclose such a large economic opportunity for our state and instead chose to force long-standing Texas businesses and jobs across the border to neighboring states, such as Oklahoma,” said attorney Chelsie Spencer, representing lead plaintiff Crown Distributing LLC.
“Crown Distributing, which manufactures the popular Wild Hemp brand of smokable products, stands to lose $59.6 million in revenue over the next five years if the bans are upheld,” Spencer told Marijuana Moment in an email. “The state of Texas stands to lose $2.9 million in sales tax revenue alone.”
Also included in the lawsuit are America Juice Co. LLC, an affiliate of Crown; Custom Botanical Dispensary LLC, from Austin, and 1937 Apothecary, also based in Austin. All of these companies produce numerous different products, including smokable hemp products.
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Details About the Lawsuit
It’s really the same situation that’s coming up in every other state that’s looking to ban smokable hemp flowers; law enforcement can’t differentiate if from marijuana. So, they seek to punish cannabis users, because as we all know so well, banning something doesn’t mean people stop using it. As a matter of fact, as a frequent visitor to the great state of Texas, I’ve actually found it very easy to find marijuana there. All it does is shut people out of a booming industry that’s federally legal.
“If allowed to move forward, these bans on smokable hemp products will shutter businesses across the state, resulting in a loss of jobs and tax revenue,” the companies stated in the lawsuit. “They impede the economic liberty of Texas businesses, pose an existential threat to Texas hemp manufacturers, farmers, and retailers, and are sure to stifle growth of a budding Texas industry.”
They also addressed the ban on producing and manufacturing smokable hemp products, since that is technically separate than banning the sale, claiming that it violates the state’s constitutional protections against arbitrary economic restrictions.
“There is no plausible law enforcement benefit from banning the Texas manufacture and processing of smokable hemp products,” the lawsuit argues. “Imposing an arbitrary constraint here is particularly perverse because the law does not ban the use or consumption of smokable hemp products. As such, Texas consumers will simply buy smokable products made out-of-state.”
“Stated differently,” it continues, “if Texas had banned the processing and manufacture of cheese in Texas, Texans wouldn’t stop eating cheese.”
“No Logic To It”
They went on to further describe exactly why this ban would make absolutely no sense and have no benefit whatsoever to the state of Texas.
“The retail ban—especially in view of DSHS’s public comments—has no more logic to it than the ban on processing and manufacturing smokables,” the lawsuit says. “Texans can still purchase and use smokable hemp products manufactured out-of-state. Texans can also purchase hemp that is not labeled or marketed ‘for smoking’—for example, hemp marketed as ‘tea’—and they can use that hemp to make their own smokables or with the vaporizing devices shown above. If anything, the Rule and DSHS commentary encourages Texas farmers and retailers to mislabel hemp flower so that consumers will still be able to purchase hemp flower grown Texas.”
They also mention the fact that the law make it makes less safe for consumers shopping for smokable hemp products, as it will encourage shady companies to falsify labels and lab tests.
“The Legislative Ban cannot rationally be understood to reduce the prevalence of smokable hemp in Texas. On the contrary, it works against promoting safe and effective products for consumers,” the lawsuit says. “Rather than keeping the manufacture and processing of smokable hemp products in-state, the products will be manufactured and processed out-of-state and shipped into Texas outside its full regulatory reach for consumer safety. The state of Texas will have little to no regulatory oversight over these products.”
Looking Further East
Although it seems like a pretty straightforward situation, a state is prohibiting the sale of something legal, that should be unconstitutional. Unfortunately, when it comes to cannabis (both marijuana and hemp), nothing is ever so cut and dry. Take gambling into consideration. It’s federally legal, but states have the individual authority to make their own laws governing exactly how gambling is legal. Certain states, like Utah, have banned gambling altogether. Others, like Nevada, have an entire gambling culture funding the entire state, but they don’t allow state lotter.
The same goes for alcohol, you have dry counties, states that don’t sell alcohol on certain days of the week, others will only sell room temperature alcohol and it’s prohibited to sell it refrigerated – any variation is an option.
In the state of Indiana, the state effectively prohibited smokable CBD hemp flowers in July of last year because they are “too difficult to distinguish from marijuana flowers”, but a federal judge deemed it unconstitutional a few months later and overtuned the ban after a few companies got together and sued. Sound familiar?
You would think the story ends there, but in January 2020, the state decided to revive the ban. Last month, the Seventh Circuit Court approved the ban, stating that regardless of the 2018 Farm Bill, states have the right to prohibit the cultivation, manufacture, and sale of smokable hemp products, as they see fit.
It’s hard to tell exactly how this will play out. Even though other states have effectively banned smokable hemp, companies and industry activists will continue to fight against them, for the right to sell federally legal products in Texas. Plus, one day cannabis will be legal across the board. They can try to ban all of it, but their arguments to do so will become increasingly less effective. We will be keeping a close eye on litigations in Texas, as well as other states, to see how it all unfolds.