Positive Shift in Texas Hemp Law: Governor’s Veto Spurs Regulatory Clarity

Kevin Kimmell
Jun 24
4 min read

Texas is no stranger to fierce debates over cannabis laws - but this summer’s legislative drama has sparked particular attention across the hemp industry.

On June 21, Governor Greg Abbott issued a surprise veto of Senate Bill 3, a proposed law that would have banned the production and sale of most hemp-derived THC products, including Delta-8, Delta-9, and other intoxicating cannabinoids.

The veto came just weeks after the Texas House overwhelmingly passed the bill, creating a rare clash between the legislative and executive branches over the future of Texas hemp.

For hemp brands and retailers across the state, this is more than a policy decision - it’s a pivotal moment that reaffirms their ability to operate, innovate, and serve customers in a compliant, regulated market.

What Senate Bill 3 Would Have Done

Senate Bill 3 sought to strictly limit the types and amounts of THC allowed in consumable hemp products, essentially eliminating the sale of all products with intoxicating effects. This included:

Banning synthetic conversion methods like isomerization
Prohibiting products with more than trace amounts of THC (regardless of isomer)
Cracking down on edibles, vapes, and beverages infused with cannabinoids like Delta-8 and Delta-10

The bill passed the Senate 30-1 and cleared the House with broad bipartisan support. But at the last minute, Abbott vetoed the bill, stating that the proposed language was too broad and would have unintentionally outlawed non-intoxicating hemp products, like full-spectrum CBD oils and topicals, which many Texans rely on for wellness.

Why the Veto Matters

Governor Abbott’s decision wasn’t a green light for unchecked THC sales - it was a call for more precise, enforceable regulation.

In his veto statement, Abbott wrote:

“The Legislature may wish to further address the regulation of consumable hemp products. If so, it must do so carefully to ensure it does not outlaw non-psychoactive hemp products.”

This sends a strong message to the hemp industry: Texas isn’t closing the door on regulation - it's demanding better rules, not broader bans.

Key Texas Hemp Market Stats (2025)

Total Economic Impact

Texas' hemp industry generates over $5.5 billion annually in retail and wholesale sales, with a $10.3 billion total economic impact statewide.

Jobs & Wages

The hemp sector employs over 53,000 Texans and supports more than $2.1 billion in wages annually.

Number of Businesses

There are over 8,500 licensed hemp businesses in Texas, up from just 1,948 in 2020.

A chart of the Texas Hemp Market Share for 2025

Market Share by Product (2025)

Edibles: 26.4%
THCA flower: 25.3%
Vapes: 24.3%
Beverages: 18.6%

Source: Houston Chronicle

Cannabinoid Revenue Breakdown (2025)

CBD: $600+ million
THCA: $571 million
Delta‑9 THC (hemp-derived): $567 million
Source: Texas A&M AgriLife

Agricultural Output

Texas grew over 4,863 acres of grain hemp in 2024, producing 3.41 million pounds of hemp biomass.

Tax Revenue

Annual sales tax revenue from hemp sales is estimated at $268 million. Source: Beaumont Enterprise

Regulatory Landscape (June 2025)

Governor Greg Abbott vetoed Senate Bill 3, which would have banned most intoxicating hemp products. A special session begins July 21 to define new regulations, expected to include age limits, packaging rules, and oversight by the TABC.

A Win for Fair Regulation — and a Sign of What's Next

At Arvida Labs, we believe regulation is not a threat - it's a necessity. We support strong, science-backed rules that:

Ensure product safety
Prevent youth access
Promote clear labeling and accurate potency
Allow compliant businesses to compete fairly

The veto of Senate Bill 3 creates space for a more thoughtful, stakeholder-driven approach to regulation - one that balances public health with economic opportunity.

We're excited by the opportunity to work with Texas-based brands, retailers, and manufacturers who share our commitment to quality and compliance.

Whether it's providing certified Delta-8 distillate, HHC distillate, or other bulk cannabinoids, helping brands navigate COA requirements through our comprehensive testing, or advising on formulation strategies that meet evolving rules — Arvida Labs is here to help Texas businesses stay ahead.

What Texas Businesses Should Do Now

Stay Informed: Though SB 3 was vetoed, future regulatory efforts are likely. Monitor the special session beginning July 21 and interim hearings.

Maintain Compliance: Stick to tested products, verified COAs, and responsible labeling - especially if you're selling intoxicating cannabinoids.

Plan for Change: Be ready to pivot. Product formulas, packaging, and marketing may need to adapt to new rules down the line.

Work with Trusted Partners: Collaborate with labs and manufacturers who are already preparing for what's next - not reacting when it's too late. Consider partnering with a white-label manufacturer who understands regulatory compliance.

We’re proud to support Texas hemp. This veto was a moment of pause — but it also opens the door to a smarter, safer future for the entire industry.

Read about more details on the law via The Texas Tribune