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CBD Business in Texas - Know the Law

September 10, 2019

Chances are you have recently begun to see businesses in your area touting large signs with the letters “CBD” splashed on them. You may have even wondered “what is CBD?” or “is this even legal?” CDB, or Cannabidiol, is one of many chemical compounds found within plants of the cannabis family, of which marijuana and hemp are a part of. CBD extract can be converted into an oil, pill, or other product variation that is then sold in order to treat various ailments such as epilepsy, general pain, nausea, anxiety, muscle spasms, and much more. Sounds like a great business opportunity- right? Unfortunately, despite the supposed positive benefits of CDB, the regulation of this compound is something that is hotly debated in current politics right now and legality of its sale potential remains varied from state to state.


Currently, the federal government still classifies marijuana, specifically the cannabis sativa species of plant, as a Schedule I drug through the Controlled Substances Act. A Schedule I drug is considered as a drug with a severe chance of abuse, as compared to a Schedule II drug which is considered to have a potential for abuse, but not quite as dangerous as Schedule I. Recently, however, states have taken it into their own hands to progress towards decriminalization, passing their own legality laws and forcing Washington D.C. to rethink its policy towards regulation. Due to restricted budgets, the Drug Enforcement Agency usually only penalizes and seeks to close major dispensaries or trafficking operations, leaving state-law abiding citizens free of government prosecution. Now that marijuana has also been found to hold medical value, the federal government is much less likely to pursue individual patients in states with medicinal legalization. California, Colorado, Connecticut, and 7 other states are among the firsts to have fully legalized recreational and medicinal use of marijuana. Many other states such as Arizona, New York, Minnesota, and Oklahoma have legalized medicinal use only, with some debating mixed feelings over recreational use. In 2018, the Federal government then passed the Farm Bill, which legalizes the agricultural production of hemp, a cannabis plant, only if it contains less than 0.3% THC, or Tetrahydrocannabinol, the chemical containing psychoactive effects. Since the passing of this bill, many businesses have embraced the sale of CBD oil and other hemp-based products, but in states without complete legality, the choice of whether or not to sell these products while remaining in good standing with the law remains a grey area.


With leaders like California and Colorado, Texas now appears to be taking a much slower, albeit similar approach to the increasingly progressive position towards cannabis use. After the passing of the Farm Bill, many state governments, including Texas, had yet to pass their own laws concerning hemp. Historically, Texas marijuana laws contained only limited medicinal use regulations, restricting any variant of marijuana use to products containing less than 0.5% of THC and typically reserved only for “intractable epileptic” patients under the Compassionate Use Act of the Texas Health and Safety Code. Since the most recent legislative session took place this year, Governor Greg Abbott signed a bill in June that has legalized the use of CBD oil and CBD products in Texas that are derived from hemp plants only and contain less than 0.3% THC, much alike the Farm Bill. A win for Texas businesses, although the regulation of these products is not strictly enforced yet, causing many companies, including suppliers, to bypass the THC rule. Therefore, businesses and franchises must remain cautious of the specific ingredients and THC levels in their products, as marijuana itself remains illegal and laws continue to rule over the sale, advertisement, taxation and use of the products within companies.If you have any questions concerning the incorporation of CBD products into your business or franchise, or if you have already taken the leap and are curious about your company’s adherence to state laws, feel free to contact any of our experienced corporate and/or franchise attorneys to get an experienced opinion regarding current laws and regulations.

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