The State has filed its reply in THBC’s challenge to portions of the new Texas consumable hemp rules. Here is what the State is arguing, where THBC sees gaps, and what happens next.

On September 17, 2026, the State filed its reply brief in Texas Department of State Health Services v. Texas Hemp Business Council, Cause No. 15-26-00099-CV.

Read brief here —-> The State’s reply brief

The filing completes the current round of appellate briefing. The State is asking the Fifteenth Court of Appeals to dismiss THBC’s claims that state officials acted beyond their legal authority and to vacate the temporary injunction previously entered by the trial court.

The filing does not create an immediate change for Texas businesses. The challenged DSHS rules remain enforceable while the appeal proceeds, and the court has not issued a final ruling on the merits of THBC’s claims.

What the State is arguing

The State’s reply defends the challenged rules on several grounds:

  • DSHS and HHSC had authority to use a “total delta-9 THC” compliance standard that accounts for the potential conversion of THCA.
  • The restrictions on out-of-state hemp materials, licensing fees and penalty provisions fall within the agencies’ statutory authority.
  • The agencies substantially complied with the Texas Administrative Procedure Act because they received and responded to more than 1,400 public comments and made changes before adopting the final rules.
  • The trial court’s injunction was too broad because it extended beyond the named plaintiffs and their members.

The State also argues that public-safety concerns and the government’s interest in enforcing its laws outweigh the economic harm identified by Texas hemp businesses.

THBC’s analysis

THBC’s position remains that the State is attempting to recast both the lawsuit and the trial-court record. The central question is not whether hemp products should be regulated. It is whether executive agencies may replace the legal standard enacted by the Legislature and impose major new requirements without completing the rulemaking work required by Texas law.

The State repeatedly presents this case as a disagreement over scientific testing. But THBC has not challenged the agencies’ ability to test for THCA, require accurate labels or regulate consumable hemp products.

The dispute concerns how test results are used to determine whether a product is legally compliant.

Texas law establishes a standard based on a product containing no more than 0.3% delta-9 THC on a dry-weight basis. The challenged rules apply a different “total delta-9 THC” calculation that includes the potential conversion of THCA. THBC maintains that changing the legal compliance standard is a policy decision for the Legislature, not an agency testing decision.

The State also points to federal hemp changes scheduled to take effect later this year. But a future change in federal law does not answer whether Texas agencies had authority under existing state law when they adopted these rules.

A similar problem appears in the State’s transport argument. The reply says the rules do not prohibit material from merely passing through Texas. But THBC’s challenge concerns hemp materials brought into Texas for lawful manufacturing and processing. Whether those materials are considered “noncompliant” depends on the same disputed total-delta-9 standard.

Public comments do not replace the required analysis

The State emphasizes that the agencies received 1,421 public comments and modified some provisions before adopting the final rules.

THBC’s position is not that the public lacked notice that the rules would have consequences. The issue is whether the agencies themselves performed and disclosed the economic, local-employment and small-business analyses required by the Texas Administrative Procedure Act.

Receiving comments from businesses about anticipated harm is not a substitute for the agency conducting the analysis the Legislature required. Nor does the volume of comments establish that the agencies adequately explained the factual assumptions behind the compliance standard, fees and other challenged provisions.

The fee and penalty questions remain unanswered

The State says the $10,000 manufacturer fee and $5,000 retailer fee will support inspections, testing, enforcement and coordination with other agencies.

THBC’s concern is that listing general regulatory expenses does not explain how the agencies calculated those specific amounts. The administrative record did not clearly connect the final fees to staffing projections, inspection frequency, expected revenue or other measurable costs.

The reply also compares the hemp fees to the substantially higher cost of participating in Texas’s medical cannabis program. THBC does not believe a comparison to a different regulatory program establishes that the hemp fees comply with the limits placed on DSHS by the Legislature.

On penalties, the State points to notice and cure procedures. THBC’s challenge focuses on the language of the rule itself: the statute says each day of a violation “may” be treated as a separate violation, while the rule says each day “counts” as a separate violation. THBC maintains that this conflicts with the discretion, fair-notice and opportunity-to-cure framework enacted by the Legislature.

The State’s preservation argument raises another problem

The State now argues that the temporary injunction was an impermissible “universal injunction” extending relief to nonparties.

Its reply acknowledges that the State did not use that phrase or specifically frame the issue in the trial court as an objection to interim relief for nonparties. Instead, the State contends that general arguments about separation of powers were enough to preserve the issue for appeal.

THBC maintains that a general objection to granting any injunction is not the same as a specific objection to the scope of the injunction ultimately entered. This is one of several issues that would benefit from direct questioning at oral argument.

What happens next?

The next formal step is a submission notice from the Fifteenth Court of Appeals. That notice will tell the parties whether the court intends to decide the appeal on the written briefs or schedule oral arguments.

Both sides have requested oral arguments. THBC believes argument would help the court address the differences between testing and legal compliance, the agencies’ rulemaking obligations and the State’s newly emphasized objection to the scope of the injunction.

No submission or date for oral arguments has been announced. The court’s schedule could place the next step before or after the November election and before or after the federal hemp changes currently expected in December. At this point, the court has given no indication whether those outside dates will affect its schedule.

What this means for Texas hemp businesses

For now, there is no change in businesses’ compliance obligations:

  • The challenged DSHS rules remain enforceable.
  • THBC’s legal challenge remains active.
  • No final decision has been issued on the merits.
  • The industry is waiting for the court’s submission notice and a possible oral-argument date.

THBC will continue reviewing the State’s filing with counsel and will update the industry when the court announces the next step.

View the filings and case activity through the official Fifteenth Court of Appeals docket.

This update is provided for general informational purposes and is not legal advice.