The Texas Supreme Court ruled Friday a group of hemp retailers were harmed when the Department of State Health Services effectively criminalized delta-8.
But the court lifted a temporary injunction granted against the department — meaning for now, DSHS has the authority to classify delta-8 as a Schedule I controlled substance.
In its finding, justices ruled the agency's commissioner had the authority to change the classification.
Schedule I substances are defined at the federal and state level as drugs with no accepted medical use and a high potential for abuse, and possessing or distributing them has criminal consequences.
That's despite the court also ruling the businesses likely faced loss of sales directly related to the state's reclassification.
"Our confidence in this conclusion is reinforced by the fact that manufactured delta-8-THC products have sprung back, and the hemp industry has operated and openly sold them without fear of department penalty, during the pendency of the trial court's temporary injunction," Justice Evan Young wrote for the court.
So while the court ruled the businesses had standing, it reversed a lower court's pause on its enforcement. It's not clear if the underlying suit will continue after the high court's ruling.
DSHS, however, can only impose civil penalties under the Texas Controlled Substances Act, not criminal. According to the Texas Supreme Court's opinion, the website notice has no independent legal effect, no one can be civilly penalized for violating the statement and DSHS says it won't enforce the website statement.
KERA News has reached out to DSHS and plaintiff Hometown Hero for comment and will update this story with any responses.
Road to legalization
The 2018 U.S. Farm Bill redefined "hemp" and removed cannabis products with less than 0.3% delta-9 THC from the federal Schedule I. Texas adopted the federal definitions the next year within its own 2019 Texas Farm Bill.
The Drug Enforcement Administration changed its regulations in 2020 to comply with the farm bill. But DSHS, under former commissioner John Hellerstedt, objected to and refused to enforce the DEA's new rule.
DSHS issued a notice on its website in 2021 classifying any amount of delta-8 THC and any amount of delta-9 over 0.3% as Schedule I controlled substances — effectively making them illegal.
Sky Marketing Corp., doing business as Austin-based hemp retailer Hometown Hero, and other retailers sued DSHS to prevent the agency from enforcing the notice. The company alleged DSHS acted outside its authority when it reclassified hemp products and didn't follow the proper rulemaking procedures under the Texas Administrative Procedure Act or APA.
An Austin trial court issued an injunction preventing the DSHS rule from taking effect. An appeals court affirmed the injunction, and DSHS appealed to the Texas Supreme Court.
Friday's ruling
Justices now side with DSHS, ruling the department is protected by sovereign immunity — a legal principle that protects the state and state agencies from suit — because Texas law gives the agency the authority to classify delta-8 as a Schedule I controlled substance.
The court also ruled the website notice isn't subject to the Texas Administrative Procedure Act, dismissing the plaintiffs' claim that DSHS didn't follow the proper rulemaking procedures when it issued the notice.
Justices also ruled the 2019 Texas Farm Bill did not legalize "anything more than the exceedingly trace amounts of delta-8 THC that naturally occur in hemp." The court acknowledged that the DSHS website notice could theoretically criminalize naturally occurring delta-8 — but the commissioner says this type of THC is tolerable under current rules.
"The legislature clearly defined 'hemp' to encompass the plant itself and the compounds as found in the plant," Young wrote. "The legislature gave that inch, but the vendors claim a mile—that the legislature exempted all THC, even in non-naturally-occurring ways. We reject that contention, which would unsettle the structure of this highly regulated area of law and inject the judiciary into matters wholly occupied by the other branches."
The high court's ruling comes as, in a separate case, a group of hemp businesses is asking a Travis County judge to block state rules that prevent stores from selling smokable hemp products and increase fees for those businesses. Judge Daniella DeSeta Lyttle lifted that ban with a temporary injunction and ruled Friday that key parts of the hemp regulations will be blocked while the case proceeds.
Toluwani Osibamowo is KERA's law and justice reporter. Got a tip? Email Toluwani at tosibamowo@kera.org.
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