The Delta-8 Debacle: Looking at Texas’s (Temporarily) Failed Attempt to Make Delta-8 Products Illegal

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Texas’s cannabis industry can breathe a momentary sigh of relief. Delta-8 THC, the increasingly popular hemp-derived cannabinoid that produces effects similar to Delta-9 THC, has been removed from Texas’s list of Schedule I controlled substances, at least for now.

Hometown Hero, a CBD dispensary based in Austin, filed suit against the Texas Department of State Health Services (DSHS), arguing that DSHS failed to follow the Texas Administrative Procedures Act’s (APA) rulemaking requirements when it classified Delta-8 as a Schedule I controlled substance via an update to a note on the DSHS website. On November 7, 2021, Judge Jan Soifer granted Hometown Hero’s request for a temporary injunction, which, in effect, temporarily removes Delta-8 from Texas’s Schedule I list until Judge Soifer decides whether to make the temporary injunction permanent. Importantly, this blocks Texas from taking enforcement action against businesses that produce or sell Delta-8 products or arresting their owners.

The court noted the “imminent and irreparable harm” that Hometown Hero would suffer should the injunction not be granted, such as brand erosion, reputational damage, and loss of market share. Notably, the court also recognized the threat of imminent and irreparable harm to Delta-8 users, explaining that “individual consumers throughout Texas” might lack an “effective treatment” for “anxiety, depression, insomnia, migraines, loss of appetite, chronic pain, and nausea” without Delta-8. Absent a temporary injunction that allows the continued sale of Delta-8 products, these consumers “may be forced to seek other dangerous alternatives, like opioids or street drugs.” The court explained that the temporary injunction “preserves the status quo that existed prior to [DSHS’s] ultra vires conduct and DSHS’s APA violations.”

While Judge Soifer has given Delta-8 supporters some hope, Delta-8’s road to legality has been a confusing one, both at the federal and state level. The 2018 Farm Bill legalized “hemp” (i.e., cannabis containing less than .3% Delta-9 THC) and its derivatives at the federal level. Following the Farm Bill’s passage, the supply of CBD isolate derived from hemp skyrocketed, which caused the price to plummet. Many companies used this glut of cheap isolate to manufacture Delta-8 products. Delta-8’s proponents argue that so long as these hemp-derived Delta-8 THC products contain less than .3% Delta-9 THC, they are legal under the Farm Bill – an argument well-grounded in the statutory text.

The popularity of Delta-8 products quickly soared. But this caused state and federal agencies to take notice. The federal Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) have put out a series of updates and guidance documents questioning both the health implications of Delta-8 and legality of products containing it. Some states quickly followed suit – over a dozen have independently banned or restricted Delta-8 sales.

If the recent outcome in Texas tells us one thing, it is that the controversy surrounding Delta-8’s legality will continue to breed litigation that pits the industry against state agencies. In the meantime, Delta-8 will remain a highly profitable business opportunity in states where marijuana has not been legalized and Delta-8 has not been banned, although not without some risk. However, as with all things in the cannabis industry, the landscape shifts quickly. While states have gotten craftier in their attempts to ban Delta-8, this Texas litigation provides a rough blueprint for possible future challenges to such attempts. We will continue to monitor and provide updates, both on the Texas litigation and Delta-8 challenges nationwide.