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“This is what we call the ‘Texas whiplash.’ These poor guys don’t know what is going to happen one day to the next. All they want is certainty and to sell their products.”
By Paul Cobler, The Texas Tribune
Hemp flower buds and rolled joints were piled into boxes and tucked out of public view by the staff of Dream Planet Smoke and Vape last Thursday after the state filed an appeal that triggered an hourslong ban.
By Friday, the items were back on the store shelves, and are flying off them once again as customers rush to stock up while they still can, said Leroy Sims, a cashier at the East Austin smoke shop.
“My boss is really big on keeping us all informed because he’s aware of the fact that Texas can’t really make its mind up,” Sims said. “We just put stuff in a box until they can make a decision because we can’t send it anywhere else to sell.”
Some of the most profitable products at smoke shops around Texas have been forced off store shelves, then allowed back on, then forced off again, then allowed to return—all within a 45-day span—amid a dizzying slew of court actions centered on the state’s ban on smokable hemp products. This ping-ponging regulatory landscape in recent months has injected economic uncertainty into and bled revenue for an industry that employs more than 30,000 people around the state.
“This is what we call the ‘Texas whiplash,’” said David Sergi, an attorney for the hemp industry. “These poor guys don’t know what is going to happen one day to the next. All they want is certainty and to sell their products.”
While the percentage varied at each shop that spoke to The Texas Tribune, managers and cashiers said smokable hemp products make up a sizable portion of their total profits. The uncertainty surrounding a potential ban on their sales is already leading to employees losing their jobs, hours being cut back and plans being made to close store locations. The ultimate fear is that customers will soon start losing access to some of their favorite products even before the courts permanently rule on the ban.
Austin Vape & Smoke is eyeing closing its less popular location near the University of Texas at Austin campus, leaving a handful of employees out of work, and cutting back on hours at their South Austin location, said Zaquiri Hensen, a manager at the South Austin store. About 43 percent of the company’s sales are smokable hemp products.
“It…sucks,” Hensen said, using an expletive to emphasize his frustration with the recent uncertainty. “We’re lucky that we don’t really have any turnover, so a lot of our guys have been working here for a long, long time. I’m very close with them.”
Texas smoke shops have had the opportunity to plan for a ban because it has already happened twice in recent months as the Texas Department of State Health Services’ efforts to further regulate the consumable hemp industry is challenged in state courts.
A statewide ban on the sale of smokable hemp went into effect on March 31 under rules imposed by the public health agency. Smoke shops briefly pulled the products from their shelves until a Travis County district judge on April 10 temporarily lifted the ban until May 1 as a lawsuit by the hemp industry challenged the ban played out in court.
Earlier this month, a judge ruled to extend the ban until the next hearing in the district courts, scheduled for July 27, but because the 15th Court of Appeals agreed to considering the state’s appeal, the ban was back in effect last Thursday. That ban only lasted for some hours—briefly forcing the products off store shelves again—until the appeals court last Thursday allowed the sale of the smokable flower.
The next ruling on whether or not the injunction will stand is expected in the coming weeks. If the appeals court blocks the injunction, the ban will remain in effect at least until the district court’s July 27 hearing.
The regulatory effort to ban smokable hemp began last fall after an effort to completely ban consumable hemp products failed in the Legislature. Lt. Gov. Dan Patrick (R) and other conservative legislators leading the effort argued the products are dangerous to Texans and must be banned.
Rather than keep the Legislature in Austin for a special session on the topic, Gov. Greg Abbott (R) ordered DSHS and the Texas Alcoholic Beverage Commission to create stricter regulations on the products, which culminated with the state health agency’s ban of smokable hemp.
Abbott referred a request to comment to DSHS, which referred a request for comment to Abbott’s fall executive order. Patrick did not respond to a request for comment.
Businesses are working to comply with changing state laws and regulations, all while enforcement raids of smoke shops have picked up in recent years. But following the recent flurry of court actions has proved challenging.
“I wasn’t even aware it was illegal because the last I had heard we were good to sell it until July 27,” Anthony Vazquez, owner of Dooby’s Smoking Depot in south-central Austin, said of last week’s hours-long ban. “I didn’t get any messages saying that it was gone. It wasn’t brought to my attention until Friday when I went to my distribution company and they were pulling the stuff back out on roller carts again.”
Other smoke shops have been following the court proceedings in group chats with thousands of members created by the state’s largest trade association for the industry and one of the plaintiffs in the case, the Texas Hemp Business Council. Others said they are closely following updates in the news and pass the updates on to their customers.
More than half of the sales at Dream Planet are smokable hemp, Sims said, and the company’s three locations may work to transition away from the products regardless of the court rulings because of the ongoing uncertainty.
Sam Mafza, a cashier at La Casa Smoke Shop in East Austin, said 50 percent of the sales at his store are smokable hemp, and they have already cut back on hours. Mafza said he has a friend at a different smoke shop who recently lost his job due to the uncertainty.
“Everybody is watching this,” Mafza said. “You can’t just abandon a product everybody uses.”
The Texas Hemp Business Council, Hemp Industry & Farmers of America, and several Texas-based dispensaries and manufacturers have been fighting the state’s new testing requirements that create a 0.3 percent total THC threshold that would effectively bar the sale of natural smokable hemp products. The state also created a 3,000 percent increase in licensing fees for hemp retailers.
During a three-day hearing before the district court on the injunction, attorneys for the state argued that Texas law requires the health agency to prioritize Texans’s well-being in rulemaking, allowing them to implement new hemp regulations.
Lawyers for the hemp industry argued that the state’s public health agency overstepped its constitutional authority by rewriting the legal definitions of hemp to make it different from what lawmakers passed in 2019, and the ban would put stores out of business.
Cynthia Cabrera, president of the Texas Hemp Business Council, said the effects of a ban go far beyond smoke shops, harming farmers that grow hemp, suppliers that manufacture the products, packaging companies, transportation and consumers.
Beau Whitney, the founder and chief economist at Whitney Economics, a cannabis economic research firm, told the district court that the new rules and regulations will have a $7.2 billion negative impact on the Texas economy due to job losses and reduced tax revenue from hemp retail closures.
“The ripple effects are far, wide and deep,” Cabrera said.
In the meantime, the business council is simply trying to keep its members informed of the fast-moving legal landscape, Cabrera said. While smoke shops await clarity from the courts, many stores are trying to diversify their merchandise, such as hemp edibles and drinks, that will not be banned under the new rules, she said.
Many are also trying to move their products through their stores as quickly as possible, offering promotions like buy two get one free for joints and other discounts on smokable flower buds.
If a full ban goes into effect, “I just have to take a loss on everything,” Vazquez said. “I’d rather have cash than be stuck with a bunch of weed.”
This article first appeared on The Texas Tribune.
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