THC businesses across Texas struggling amid stricter regulations

AUSTIN – THC businesses in Texas are taking a hit.

Sales are down, store hours are shrinking, retailers are going out of business and workers are losing their jobs following a slew of new regulations that effectively outlawed an $8 billion industry. 

The rule that went into effect July 31 banned previously legal synthetic forms of  hemp made to give users the same high as marijuana. The state argued that hemp-derived THC products are psychoactive drugs and should be classified as controlled substances.  

More than 13,000 retailers across Texas signed up to sell gummies, cookies, vapes and smokable hemp flowers in the seven years after they became legal in 2019. Now the vast majority of those products are illegal to sell or possess, carrying felony penalties including a $10,000 fine and up to two years behind bars.

Store owners are scrambling to clear shelves of products that once made up a bulk of their sales. Customers don’t stop by as often, owners say, confused by what’s still allowed as lawsuits challenging the new regulations play out. 

Carlton Bynum opened Chilla Smoke in January. The store in Tomball, about 30 miles northwest of Houston, had four full-time employees, stayed open from 9 a.m. to midnight and often drew customers from a bar next door.

When the restrictions on smokable hemp took effect, they whipped away his most popular product. His sales have plummeted from a high of $14,000 a month to about $3,000, not enough to stay in business. 

“I’m going to try and keep it open as much as I can, but if it keeps costing, I’m gonna close,” Bynum said. 

Mark Bordas, the executive director of the Texas Hemp Business Council, said everyone he’s spoken to within the industry in Texas has been negatively impacted. Bordas said he’s frustrated with Republican leaders who often praise the state’s economic outlook but at the same time are watching a multibillion-dollar industry crumble. 

“It’s just a shame,” Bordas said. 

Republican lawmakers who want to ban THC say the product should only be available in Texas to those whose doctors prescribe it for a medical condition. 

They say the retailers sell products that are often illegally high in THC and accuse them of selling to minors.

Down in South Austin, Todd Harris sat behind the counter at Happy Cactus waiting for potential customers to stop in. Harris, 36, began selling THC products out of a pink trailer in 2020 before expanding to two stores in the state’s Capitol.

Happy Cactus is among the 1,055 stores in Travis County that are registered to sell consumable THC products, the highest concentration among the state’s largest counties. Of the state’s 254 counties, 246 of them have at least one retailer.

Before July 31, hemp could be sold infused with a variety of synthetic THC forms with names like delta-8, delta-6, delta-10 and THCP. The new law only allows hemp products containing delta-9 – the main psychoactive compound in marijuana – at very low levels. 

Harris described how the changes have impacted his store: two shelves that were previously stocked with Happy Cactus-branded delta-8 gummies now have delta-9 chocolates. Another shelf near the register that used to be filled with smokable products now has lighters, playing cards, grinders and other accessories. 

“Just everything we can still get into people’s hands so we can try to pay rent,” he said. “We’re doing pennies on the dollar.” 

He’s cut hours for both of his stores by one hour each. He used to have 12 full-time employees and is now down to three. Before the restrictions, he could expect between eight to 10 customers an hour. 

But over a 90-minute interview, two showed up. Both stores used to generate about $4,500 a day in sales at their peak. Now, he’s hoping he can get to $1,600 daily – the bare minimum to continue operating. He checks his phone constantly to see how much he’s selling. It’s been “very depressing,” he said. 

“The last few weeks have been very tough,” Harris said. 

There are early signs the penalties for illegal hemp possession will be unevenly enforced across the state. In Dallas County, home to 833 retailers, law enforcement officials have said they will impose the penalties, while the Harris County district attorney’s office said they won’t prioritize the issue. Harris County, where Houston is located, has 2,329 retailers, the highest number in Texas.

As the realities are playing out in retail stores across the state, Republican lawmakers are planning to try to eliminate the industry in next year’s legislative session. 

Lt. Gov. Dan Patrick, who continues to press for a ban on hemp-based THC products, asked senators to study the products’ effects on healthcare costs and mental health before next year’s legislative session. 

At a committee hearing last month on THC, Sen. Charles Perry, R-Lubbock, said he will again file a bill seeking to eliminate the industry. Perry was the author of the 2025 bill that would have effectively banned all THC products, including delta-9, in Texas. Gov. Greg Abbott vetoed Perry’s bill last year, arguing it was unconstitutional. 

Instead, some of the new regulations that have taken effect are essentially resulting in businesses shutting down. One of the new rules was an increase in licensing fees for manufacturers – from $258 to $10,000 per facility – and registration fees – from $155 to $5,000. 

Perry threw his support behind the increased fees at the hearing, knowing what that will mean for businesses. 

“The cost of doing business is going to get so high that most of them will go out of business – I hope,” Perry said.