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Texas Laws: Hemp, Banking and Marijuana Possession

by Jax

Since the Texas Hemp Farming Act (HB 1325) took effect on June 10th, there has been a lot of conversation around what is actually legal in the interim before the program takes full effect as well as how these changes affect law enforcement’s ability to arrest and prosecute low level marijuana possession. This has led to confusion amongst the public.

We have compiled recent letters, memos and more from the Texas Department of Public Safety (DPS), the Texas Department of Banking (TDB), the Texas Department of Agriculture (TDA), the Texas Department of State Health Services (DSHS), the US Department of Agriculture (USDA) and the US Food and Drug Administration (FDA) in an effort to help bring some clarity to this complicated issue. We will lay out information regarding the potential timeline, consumable hemp products, the banking industry and the current state of arresting for hemp and marijuana possession.


The USDA plans to issue regulations and start accepting hemp program plans from states by the fall of 2019. The TDA must submit a plan for the Texas hemp program to the USDA by September 9th, 2019. The USDA has 60 days to review and approve or disapprove the plan. Upon approval from the USDA, TDA will begin the rule making process with the goal of issuing licenses in time for the 2020 growing season.

Consumable Hemp Products

DSHS has regulatory oversight of all consumable hemp products. As soon as is practicable, DSHS will start the rule making process and then issue licenses. Until that process is complete, all hemp/CBD products will continue to be subject to the FD&C Act requirements and FDA regulations. (DSHS FAQ page)

Hemp and Marijuana Possession

There has been a lot of conversation regarding the level of testing that is now required to prove a possession of marijuana charge. The Texas District and County Attorneys Association (TDCA) advised that prosecutors and DAs ensure they are using adequate testing to determine that an alleged controlled substance is marijuana and not hemp (based on the percentage of THC present). Because of the overwhelming cost of testing, many DA offices put out directives to no longer arrest and prosecute for small amounts of marijuana. The Big Three and the AG responded saying that not only should they still prosecute but now there is a new offense for illegal possession of hemp without proper documentation. At almost the exact same time, DPS issued an interoffice memo directing to use cite and release on any charge for 4 ounces or less. It is important to note that the cite and release program allows you to be ticketed and self-submit to face the full charges at a later date, therefore bypassing a night in jail. News reports show that certain counties in Texas are currently choosing to not arrest for small amounts of marijuana. However, DPS advises that they “will develop the validation method to qualify THC” in about 6 months.

Texas Banking Industry

The TDB has issued an industry notice to Texas financial institutions. After providing an overview of the current legal landscape in Texas, TDB advises State banks and financial institutions to proceed with a high level of due diligence. They outline the following advice:

– Consult legal counsel

– Exercise due diligence in ensuring that they are providing services to individuals and companies that operate within the law to produce, manufacture, transport, and sell legal hemp and hemp-related products

– Keep apprised of ongoing legal developments at the state and federal level, including new rules, licensing, and registration requirements that may be promulgated by the USDA, TDA, DSHS and FDA

– Use “know-your-customer” practices

Items of Note

Cultivation, processing and manufacturing of hemp and hemp products is not legal in Texas until licenses are available for application and a license is obtained. Retailers may possess, transport or sell consumable hemp products that become part of the retailers’ inventory prior to the effective date of DSHS rules so long as the THC level is below .3% and the product is free from contamination. Upon approval of the Texas state hemp plan by USDA, DSHS will establish a process to register retailers selling consumable hemp products such as those containing CBD. At that time, existing retailers selling consumable hemp products containing CBD and new retailers wishing to sell these products will be required to register with DSHS.

It is of note that these letters and memos are guidance from the Departments and do not override any state or federal law, should those laws be pursued by the State.

Posted with permission from our sister organization, Foundation for an Informed Texas. Original post found HERE

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