On March 19, 2025, The Texas State Senate passed Senate Bill 3 (”SB 3”), which bans the sale of food and beverage products containing any detectable amounts tetrahydrocannabinol. The bill is expected to go to the Texas House for consideration the end of legislative session (June 2, 2025). If passed by the House, and signed into law by the Governor, this could have far reaching consequences for consumers and retailers alike.
On December 4, 2024, Lt. Governor Dan Patrick announced SB 3, with the intention of closing an loop hole in the Texas Hemp Farming Act, which allows the manufacture, transport, purchase and sale of nonconsumable hemp products, so long as the hemp products contain .3 percent of delta-9 tetrahydrocannabinol concentration (“Delta-9 THC”) or less. Delta-9 THC is a psychoactive compound that produces an intoxicating high.
Big Beer industry is a proponent of the legislation. This includes Anheuser-Busch and Molson-Coors, who are members of the manufacturing tier, and The Beer Alliance of Texas and Wholesale Beer Distributors of Texas, who are trade groups that represent the distribution tier. Texas Package Store Association, a trade group representing retail liquor stores is opposed. (There was more opposition from other groups and individuals outside of the alcoholic beverage industry, than for the proposed legislation.)
THC infused drinks are generally made with seltzer water (among other ingredients) which do not contain alcohol. Manufacturers of these brands include but are not limited to Texas’ own 8th Wonder, Birdie, Cann, Crooked Beverage, Daizy’s, Elevado, Five Flowers, Hi Seltzer, High Rise Beverage, Hop the Wave, Howdy, Minny Grown, North Canna Co, Nowadays, Stigma, Trail Magic, and Wynk.
Big Beer opposition to THC infused beverages is not surprising. According to one study from Bernstein, legal cannabis is expected to negatively impact beer sales. Additionally, manufacturers of THC infused beverages are not beholden to the same regulatory strictures of tied house and beer franchise laws. THC Infused beverage manufacturers can sell directly to consumers (“DTC”) and retailers. Beer manufacturers on the other hand can only sell to distributors, and retailers can only purchase beer from distributors.
Should SB 3 be passed into law, THC infused beverages, including hemp seed derived beverages containing any detectable natural occurring THC will be banned. Sale of THC infused beverages is a 3rd degree Felony. See, SB 3, Sec. 17, § 443.251 (b). This carries a penalty of 2 to 10 years in prison, and a maximum fine of $10,000. See, Tex. Penal Code § 12.34. Possession is a Class A misdemeanor, see, SB 3, Sec. 17, § 443.252 (b),which carries a penalty of 0-365 days in county jail, and a maximum penalty of $4,000. See, Tex. Penal Code § 12.21.
SB 3 prohibits sale of any alcoholic beverages derived from hemp, even if those beverages received TTB Label Approval, and do not contain any detectable THC levels. See, SB 3, Sec. 11, 443.2026 (f)(2). This will affect brands like Lucky Stash Tequila, and Colorado High Hemp Vodka to name a few.
SB 3 prohibition of THC detectable compounds is not looking good for manufacturers and sellers of alternative non-alcoholic beverages either. While the proposed bill allows sale of non-alcoholic beverage products containing hemp derived products, regardless of whether they contain cannabidiol (CBD) or cannabigerol (CBG) or not, there are additional regulatory obligations to contend with. Texas Department of Public Safety will require a $500 product registration and testing from the manufacture for each hemp derived product sold in this state along with, and a $20,000 annual permit fee from retailers who sell a hemp derived product. See, SB 3, Sec. 9, § 443.2025 (f), Sec. 11, § 443.2026 (c), and Sec. 6, § 443.151 (a). Additionally, retailers of hemp based products will be required to obtain written consent from landlord. See, SB 3, Sec. 11, § 443.2025 (i). Furthermore, there is a hostile political climate at the federal level. The Food and Drug Administration (“FDA”), takes the position products containing CBD cannot be introduced into interstate commerce under the Federal Food, Drug, and Cosmetics Act, because CBD products have not been Generally Recognized As Safe (“GRAS”). The FDA singled out prescription containing CBD which was associated with liver injury. Lastly, customers may not necessarily be interested in CBD or CBG ingredients, which do not contain intoxicating Delta-9 THC compounds.
– Edgar Korzeniowski
