On May 27, the Texas Legislature sent Senate Bill 3 (SB3) to Gov. Greg Abbott for signature, marking a potentially seismic shift in the legal landscape for hemp-derived cannabinoid products in the state. If signed into law – or allowed to take effect without a veto – SB3 will impose one of the most comprehensive bans on consumable hemp products in the country, to include all products containing any measurable amount of tetrahydrocannabinol (THC) or other natural and synthetic intoxicating cannabinoids. The legislation targets a market that has flourished since the passage of the 2018 federal Farm Bill and Texas’s 2019 hemp law, creating new compliance, enforcement, and business continuity questions for stakeholders across the supply chain. This article summarizes SB3’s major provisions and provides an example of the impacts the bill will have on manufacturers, retailers, and consumers through the lens of infused beverage products.

Overview of SB3

At its core, SB3 aims to eliminate the manufacture, delivery, and possession of any consumable hemp product containing THC or other psychoactive cannabinoids. This includes not only Delta-9 THC – the compound most commonly associated with marijuana – but also hemp-derived analogs such as Delta-8, Delta-10, THCA, and HHC, all of which have become popular in Texas’s unlicensed retail market. SB3’s reach is broad: any product with a detectable amount of an intoxicating cannabinoid would fall within its scope, regardless of source or form. In practical terms, this would result in a blanket prohibition of THC-containing gummies, vapes, tinctures, seltzers, and other infused items that currently dominate retail hemp sales in the state.

In support of SB3, proponents cite increasing concerns over youth access, lack of regulatory oversight, and the psychoactive potency of hemp-derived products. According to these proponents, although the 2019 legalization of hemp in Texas was never intended to create a parallel market for recreational THC consumption, that is precisely what has emerged in the vacuum left by federal inaction and state-level permissiveness.

The bill preserves a narrow window of non-intoxicating hemp-derived cannabinoids. Products containing only cannabidiol (CBD) or cannabigerol (CBG) – provided they are devoid of measurable intoxicating cannabinoids – will remain lawful under SB3. However, these products will be subject to newly enacted regulatory controls, including licensing, product registration, and strict packaging requirements. Beginning in January 2026, all CBD and CBG consumables must be individually registered with the state, and sellers will be required to obtain a license to engage in retail or wholesale activity.

In addition to substance-based prohibitions, SB3 imposes new structural requirements on the remaining legal hemp market. Sales of any consumable hemp products would be limited to individuals aged 21 and older, and advertising or branding deemed likely to appeal to minors would be strictly prohibited. Child-resistant packaging, tamper-evident seals, and detailed labeling requirements will apply to all lawful products, reflecting a regulatory philosophy akin to alcohol or tobacco control.

SB3 also includes robust criminal enforcement provisions. Under the bill, the manufacture, delivery, or possession with intent to deliver banned THC products would constitute a third-degree felony, while possession would be treated as a Class C misdemeanor.

Taken together, these provisions amount to a near-total rollback of the Texas retail hemp marketplace as it currently exists. Industry estimates suggest that approximately 8,000 businesses and 50,000 jobs may be affected. Unsurprisingly, industry associations and stakeholders have voiced strong opposition. Many argue that the bill punishes legitimate operators who have complied with existing laws, while doing little to curb illicit activity. Assuming the bill receives the governor’s approval, it is set to take effect in September 2025, though litigation or executive intervention may alter that timeline.

Market Implications for Intoxicating Hemp-Derived Products – THC Beverages

While SB3 applies broadly to all products containing intoxicating hemp-derived cannabinoids, its impact on the rapidly expanding THC beverage market in Texas deserves particular attention. In recent years, THC-infused seltzers, teas, and sodas have surged in popularity across the state, especially among consumers seeking a social alternative to alcohol. National beverage producers have capitalized on this demand, placing low-dose hemp seltzers on the shelves of liquor stores, smoke shops, and even gas stations.

SB3 would categorically prohibit these beverages if they contain any measurable amount of intoxicating cannabinoids. As a result, hemp beverage manufacturers operating in Texas will face stark choices: reformulate their products to be free of all intoxicating cannabinoids (e.g., CBD-only), move operations out of state, or exit the market entirely. Retailers that rely on these products as a key revenue driver will be required to remove them from inventory and retool their product lines. For producers and distributors who handle compliant beverages, the legislation introduces new liability exposure and potential supply chain disruption.

From a consumer perspective, the removal of these beverages from the legal marketplace may limit consumer access to an alternative to alcohol. Public health advocates and industry representatives have raised concerns that the elimination of regulated THC products may inadvertently drive consumers toward illicit sources, or back to more harmful substances such as high-proof alcohol or opioids.

Why It Matters

If enacted, SB3 will dramatically reshape the state’s hemp industry, with immediate consequences for manufacturers, retailers, consumers, and regulators. While the bill’s proponents emphasize the need to close perceived loopholes and protect public safety, its sweeping nature raises complex legal and economic questions that are likely to play out in both the courts and the marketplace. For those operating in the hemp space, now is the time to assess risk, prepare compliance strategies, and consider long-term diversification in response to a rapidly shifting regulatory environment. Immediate priorities include inventory audits, product reformulation, licensing preparation, and risk mitigation planning. Firms with multi-state operations may wish to explore relocating THC manufacturing activities to states with more permissive frameworks.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Cannabis remains an illegal controlled substance under federal law.