New Texas TCH regulations: Lawsuit set to be filed

Texas THC rules: New lawsuit set to be filed

A new lawsuit is set to be filed in response to the wave of regulations introduced to the Texas hemp industry at the end of March.  FOX 7 Austin's Marco Bitonel has the story.

AUSTIN, Texas - A new lawsuit is set to be filed in response to the wave of regulations introduced to the Texas hemp industry at the end of March. 

What they're saying:

In a X video that was recently posted, Hometown Hero CEO, Lukas Gilkey, announced the company’s next steps and their plans for the legal battle which could soon be unfolding.

"This lawsuit is going after an injunction to prevent the state from putting in place the rules that came from DSHS," said Gilkey. For over the last decade, he’s been at the head of operations for Hometown Hero, an Austin-based company which sells hemp derived THC products and has been heavily involved in pushing for legislation which protects the industry. Gilkey has held close relations with the Texas Hemp Business Council, as the two groups believe they’re now ready to push back against the latest changes implemented by the Texas Department of State Health Services.

"Our lawyers along with Texas Hemp Business Council lawyers have been working together to make sure that this gets filed. This lawsuit is very technical," said Gilkey. 

The backstory:

FOX 7 Focus: Changes to hemp, THC in Texas

Less than a week into a contentious new ban on smokable THC products in Texas, FOX 7 Austin's Alec Nolan takes a closer look at the changes taking place. 

One of the first steps would be seeking an injunction, which if granted by a court or judge would pause regulations brought on by DSHS. Some of the biggest outrage still surrounds what vendors are not allowed to sell and is perhaps one of the biggest issues the lawsuit looks to challenge.

"The biggest change is that they are interpreting the definition of hemp differently, which will then affect the sale of THCA flower," Cynthia Cabrera, the President of the Texas Hemp Business Council, told FOX 7 in an interview last week.

Under the new regulations, THCA will be factored in to calculate whether a hemp product meets acceptable THC levels. As a result, most smokable hemp products no longer meet the requirements to be sold in the state of Texas.

"Not all retailers, but many, many retailers rely on the sale of hemp flower or THCA flower for their revenue," said Cabrera.

The new lawsuit would also look to fight back against soaring operating fees, as annual licensing cost have now risen by over 3,000%.

Vendors will pay $5,000 annually per location, up from the original fee of $150 per location. Manufacturers must also now pay $10,000 per year, when they were initially paying $250 per year.

Dig deeper:

Texas ban on smokable THC goes into effect this month

New hemp regulations going into effect at the end of the month could mean that some of the most popular products will be taken off the shelves.

As frustrations mount, Hometown Hero says the industry is coming together as they prepare to take the case to court.

"We also have other attorneys in this industry that have held back on filing their own lawsuits to participate with us on this big one," said Gilkey.

But one of the biggest questions raised is why the lawsuit is being filed now, after regulations have already been enforced. Gilkey says it’s a strategic move to show just how damaging the changes have been for the hemp industry.

"There's a multitude of reasons we've had to wait. All the strategy and all the people involved, there's lot of moving parts on this. We've been actively developing the legal arguments and gathering evidence from several businesses to support our claims."

This is a process that Hometown Hero has been through before. Back in 2021, they were granted an injunction which blocked the state from classifying Delta-8 as a Schedule 1 Drug. 

What's next:

In terms of the new regulations, the lawsuit will be filed by the Texas Hemp Business Council and is set to be made official sometime this week.