This article summarizes the Texas Department of Agriculture (TDA) hemp regulations as adopted on March 6, 2020.  The full text of these regulations may be found here.   While the changes from the proposed rule (which we summarized here) were few in number, there were several significant changes in the adopted regulations. We have attempted to note those significant modifications within this summary. 

A video summary of this adopted rule put together by Dr. Justin Benavidez may be accessed here.

TAMU AgriLife photo by Kay Ledbetter

Licensing

Producers looking to grow hemp will need to obtain both a license and various permits.

TDA License

First, all producers, handlers, or those who will sample or collect hemp will be required to obtain a TDA license. This will require an annual online application.   For producers wishing to renew a license, a renewal application must be submitted prior to the expiration of the current license as there will be no automatic renewals.

TDA began accepting license applications on March 16, 2020.

The application will require the following information:

• Complete and accurate application form.
• Proof of completion of TDA mandatory orientation video, which is available on the TDA website and takes approximately 30 minutes to view.
• Criminal background check for each applicant and each key participant in an entity. (A “key participant” is defined as “a sole proprietor, a partner in a general partnership, a general partner in a limited partnership, or a person with executive managerial control in an entity. A person with executive managerial control includes persons such as a trustee, independent or dependent executor or administrator of an estate, chief executive officer, managing member, manager, president, vice president, general partner, chief operating officer and chief financial officer, or their equivalents. This definition does not include non-executive employees such as farm, field, or shift managers that do not make financial planning decisions and that do not vote or exercise control of an entity.”).
• Payment of all required fees

The application form will require the following information:

• Applicant’s name, Texas address, phone number, email address;
• If submitting on behalf of an entity, the entity’s principal Texas location address; full names, titles, addresses, and emails of key participants; the full name, title and email of the applicant who will have signing authority; and the Texas taxpayer ID number.
• A street address & geospatial location including GPS for each facility where hemp will be cultivated or stored and proof of ownership or control over these locations.
• All other info required by the department.

Further, TDA will take into account the applicant’s history showing willingness to comply with TDA rules and instructions from TDA staff and the applicant must not owe TDA any money under a final order.

The following persons may not obtain a producer license:

• Persons under 18 years of age at the time the application is submitted.
• Persons who have had a hemp license revoked, terminated, or suspended by TDA, USDA, another state, Indian nation, or U.S. territory within 5 years.
• Persons who have been convicted of a felony relating to a controlled substance under federal or state law within the past 10 years. (Note, this also applies to governing persons of a business entity that holds a license and to key participants of a license holder. A “governing person” is defined as “a person serving as part of the governing authority of an entity.”  A “key participant” is defined as “a sole proprietor, a partner in a general partnership, a general partner in a limited partnership, or a person with executive managerial control in an entity. A person with executive managerial control includes persons such as a trustee, independent or dependent executor or administrator of an estate, chief executive officer, managing member, manager, president, vice president, general partner, chief operating officer and chief financial officer, or their equivalents. This definition does not include non-executive employees such as farm, field, or shift managers that do not make financial planning decisions and that do not vote or exercise control of an entity.”)
• A person who falsifies any information contained in a license application to the TDA or who has previously submitted an application containing materially false statements or misrepresentations to TDA, USDA, another state, Indian nation, or US territory.

The TDA will notify applicants of approval or denial by letter or email.  If there are changes to the information submitted in the license application, the applicant must submit a license modification.

If TDA denies a license, the applicant may appeal this decision. If TDA denies an appeal, the applicant may request, in writing, a formal adjudicatory proceeding within 30 days.

Importantly, licenses are not transferable.  The only exception to this rule is in the event a license holder dies.  In that situation, his or her executor may contract with another license holder to cultivate, harvest, handle, test, and convey the hemp crop existing at the time of the license holder’s death.

Lot Permit

All producers will be required to obtain a lot permit for each lot where the license holder intends to produce or handle hemp.  This will require the applicant to submit the license number, geospatial location of the lot where the hemp will be planted, the facility where the lot is located, and anticipated dates of cultivation.

A “lot” is defined as “a contiguous area in a facility, field, greenhouse, or indoor growing structure containing the same variety or strain of cannabis throughout the area.”  A “facility” is defined as “a location with a legal description and is within the legal control of a person or entity.  A facility may consist of multiple fields, greenhouses, storage, and/or lots.”  “Contiguous” is defined as “all of the lots in or on a location owned or controlled by one owner or tenant, or the same owner and tenant, and no lot is separated from the other lots on the location by different ownership or control, or a public right of way, a navigable waterway, or an area greater than sixty feet.”  A “field” is defined as “an outdoor area of land consisting of one or more lots on which the producer will produce or store hemp.”

Transportation

Third, anyone who plans to transport hemp outside of a facility where hemp is produced will be required to obtain a transportation certificate or transportation manifest.  Hemp harvested outside of Texas that has no living tissue, including seed, that will be transported in Texas must be accompanied by a transport manifest or valid documentation authorized by the USDA, another state, Indian nation, or US territory.  For living tissue hemp plants that originated from cannabis plants germinated, cloned, or transported outside of Texas, a valid transport manifest, or other valid documentation authorized by another state, the USDA, Indian Nation, or U.S. territory and a phytosanitary certificate is required.

Transport manifests or other valid authorized documentation authorized by another state, the USDA, Indian Nation, or U.S. territory, must accompany all samples collected and send to a laboratory for testing.

There are two further restrictions related to transportation.  First, a person transporting hemp plant material may not transport any other cargo that is not hemp material. Second, a person may not transport hemp in Texas that contains an agricultural pest or disease listed under the Texas Administrative Code.

Fees

Texas hemp producers will be subject to the following fees:

• License application fee: $100
• License modification fee (if applicable)
• Annual license renewal fee: $100
• Annual background check fee
• Participation fee (at a minimum for each facility, each lot, and a processor registration)
• Facility modification fee (if applicable): $500
• Fee for sampling and collection conducted by TDA (if applicable): $300
• Fee for licensed samplers contracted with TDA to conduct sampling (if applicable)
• Shipment/transportation fees to get a sample to the laboratory.
• Testing fees payable to laboratory.
• Transport manifest fees in an amount determined by TDA.
• Organic certification fee (if applicable) in an amount determined by TDA.
• Participation fee for optional TDA marketing program (if applicable) in an amount determined by TDA.
• Fee for destruction of material in accordance with DEA reverse distributor regulations.  Note, the TDA website states that destruction methods approved by USDA will be allowed, which will not require a DEA reverse distributor.

Seed and Transplanting

First, after May 2020, a person may not sell, possess, hold, or purchase hemp seed unless they have a valid, active TDA license for production and handling.  A person or entity based out of state is not required to obtain a license to sell hemp seed to a person or business entity in Texas, but they may not do so unless the seed  has been certified or approved in accordance with Section 24.48 of these regulations.

Second, a person may not sell or distribute hemp seed in Texas unless the seed is certified or approved by TDA. TDA shall maintain and make available to license holders a list of businesses that sell certified and approved hemp seed for production, sale, offered for sale, or distribution within Texas. According to the TDA’s website, there is currently no certified seed available in Texas, but there is a list of “approved hemp varieties” published by TDA, along with the warning to “be cautious, research sources, and only buy approved varieties from reputable seed companies.” Additionally, in TDA’s response to comments, it indicated that a list of “approved seed providers” would be available on its website mid-March. To date, this list is not posted.

Third, there are a number of legal standards related to seed.  All hemp seed must meet the legal standards for seed quality and seed labeling required by Texas and federal law, as well as the legal standards in the jurisdiction(s) where the seed was originally sold and produced.  There are also additional TDA labeling requirements specifically for hemp seed quality and labeling that must be followed.  Finally, all hemp seed must contain a clear, legible statement on the label indicating the specific variety of hemp seed, the seller or distributor, and the location and jurisdiction of the original seed.

Finally, for license holders who transplant, there are a number of additional requirements.  Note that this is an area where there were significant differences from the proposed rule to the final rule:

• The final rule allows living tissue hemp plants that originated from cannabis plants germinated, cloned, or transplanted outside of the State of Texas to be brought into the state with a valid transport manifest, or other valid documentation authorized by another state, the USDA, Indian Nation, or US Territory and a phytosanitary certificate.  Note that “transplant” is defined as moving “a fully germinated seedling, mature plant, cutting, or clone from one lot and to replant it in another permanent lot under the control of the same license holder, for later harvest by the same license holder. “Transplant” also means a plant, cutting, or clone that has been moved from its initial lot of germination or cultivation for the purpose being transplanted.”
• In order to be eligible to transplant cannabis plants, a license holder must acquire a lot permit for the initial area of cultivation.  Initial cultivation area and the final transplant area will be considered one lot with two registered geospatial locations.
• In the lot permit application, the applicant must include the initial area of cultivation, the final transplant areas and anticipated dates of transplant.
• A license holder may not divide a lot from the initial area of cultivation for transplant into more than one transplantation area.
• If the initial cultivation area and final transplantation area are not located in the same facility, the license holder must request a transport manifest before transporting.
• Finally, the sale or transfer of a lot of cannabis plants from a license holder to another license holder for transplant is considered a harvest. This will trigger the various requirements related to harvest, including the testing requirements discussed below.

Production

There are certain regulations related to hemp production that growers need to be aware of.

First, a license holder may not produce or handle hemp in any other locations not listed on his or her license application.  Should a producer wish to handle or produce hemp on additional facilities, a facility addition or modification request must be submitted or approved.  Similarly, a license holder shall not produce or handle any cannabis that is not hemp.

Second, a license holder must own or completely control any real property included on his or her license application.  Growers may not handle or produce hemp on land owned by or leased from a person who is ineligible for licensure under the Department’s hemp program, a person whose application or renewal application was denied by TDA, or a person whose license was terminated or revoked.

Third, a license holder may not interplant hemp with any other crop without express written permission from TDA.  Hemp must be physically segregated from other crops without prior written TDA approval.  Prior to processing, harvested hemp may not be commingled with cannabis from other lots or other material without prior permission from TDA.

Fourth, growers must comply with TDA regulations related to the transportation and movement of hemp plants and plant parts. This includes ensuring that hemp in transit has an issued transport manifest.

Fifth, a license holder must notify TDA of any theft of cannabis materials, whether growing or not, within 48 hours of the discovery of the theft.

Inspection, Sampling, and Testing

Hemp producers will be required to submit to certain inspection, sampling, and testing.

Inspection

First, a license holder must immediately produce a copy of his or her license upon request from TDA. TDA or its representatives shall conduct random inspections of license holders to verify compliance with state and federal law.

Second, as a condition of licensure, license holders consent to entry on and inspection of all locations identified in an initial or renewal application and all land on which hemp or other cannabis plants or materials are located. TDA, DEA, DPS, US authorities, and local law enforcement agencies shall have complete and unrestricted access to all hemp plants, whether growing or harvested, all facilities used for the production and storage of hemp in all locations where hemp is produced or handled.  This includes the right for TDA and US authorities and their representatives to enter such locations, land and premises, with or without cause, and with or without advance notice.

Third, a license holder must notify TDA of any interaction with US authorities.  This must be done by phone within 24 hours of the interaction and by follow-up in writing within 3 calendar days of the interaction.

Sampling

A license holder may not harvest a cannabis crop prior to samples being collected. A sample request form must be submitted to TDA at least 15 days prior to the expected harvest date.  Receipt of this form triggers a site inspection and sample collection by TDA or its representative.  Harvest must be completed within 15 days of sample collection, unless otherwise specifically authorized by TDA.  If the license holder fails to complete harvest within 15 days from the sample collection, a secondary sample of each lot must be collected and submitted for testing.  The license holder must notify TDA of a harvesting delay by submitting another sample request form.

Material that will be selected for sampling will be determined by TDA’s Sampling and Collection Procedure, available on page 84 of the Texas Hemp Plan. A separate sample must be taken for each lot.  Samples will be labeled and prepared to transport to the laboratory for testing in accordance with TDA’s Sampling and Collection Procedure.  This procedure mandates the number of required cuttings for each lot, depending on the number of acres.  During a scheduled sampling, the producer or a representative of the producer shall be present at each lot undergoing sampling. Generally, TDA will conduct no more than 2 sample requests per lot. TDA may grant additional requests per lot if there are unusual circumstances, including an event unforecastable to a reasonable person.

Testing

A license holder may not sell or use harvested plants unless a test of the sample for the lot associated with the harvested plant is at or below the acceptable hemp THC level. The acceptable hemp THC level is defined as “a delta-9 tetrahydrocannabinol content concentration level on a dry weight basis, that, when reported with the laboratory’s measurement of uncertainty, produces a distribution or range that includes a result of 0.3% or less.” The regulations include the following example:  “If the reported delta-9 tetrahydrocannabinol content concentration level of a dry weight basis is 0.35% and the measurement of uncertainty is +/- 0.06%, the measured delta-9 tetrahydrocannabinol content level on a dry weight basis for this sample ranges from 0.29% to 0.41%.  Because 0.3% is within the distribution or range, the sample is within the acceptable hemp THC level.”

Pursuant to the adopted regulations, testing related to the TDA hemp program may only be conducted by an independent laboratory registered with TDA or by a State of Texas Laboratory operated by TDA or its representatives.  In order to be registered with TDA, an independent lab must submit an application, be accredited by an independent accreditation body in accordance with the International Organization for Standardization ISO/ICD 17025, and be registered with DEA.  According to TDA’s website, in order to “help spur the Texas hemp industry,” both TDA and USDA have temporarily suspended the requirement that labs must be registered with the DEA. All other requirements remain in place.

A list of registered laboratories shall be available to license holders on the TDA website, although no list is located on the website as of the date this blog is posted.  A license holder may select a registered laboratory to conduct testing unless the license holder has an ownership interest in the lab or has less than a 10% ownership interest in the lab if the lab is a publicly traded company. A license holder is responsible to pay for all laboratory fees.

A lab must use appropriate, validated methods and procedures for all testing activities and must evaluate the measurement of uncertainty.  At a minimum, testing of samples for delta-9 tetrahydrocannabinol content must use post-decarboxylation or other similarly reliable methods approved by TDA.  The testing method must consider the potential conversion of the delta-9 tetrahydrocannabinolic acid (THCA) into delta-9 tetrahydrocannabinol (THC) and the test result reflect the total available THC derived from the sum of the THC and THCA content.

Labs must test samples in accordance with TDA’s “Testing Procedure,” which is included in the TDA hemp plan, available here.  The lab shall maintain chain of custody for each sample using a TDA prescribed form. All samples shall be retained by the lab for at least 30 business days from the sample collection date.

Labs must electronically send test results to the license holder and TDA no later than the 14^th business day from the sample collection date.  Results shall include the total delta-9 tetrahydrocannabinol content on a dry weight basis and the measurement of uncertainty.  Any sample test result showing with at least 95% confidence that the THC content of the sample exceeds the acceptable hemp THC level shall be conclusive evidence that one or more cannabis plants or plant products from the lot represented by the sample contain a THC concentration in excess of that allowed. If the results of a test conclude that the THC levels of a sample conclusively exceeds the acceptable hemp THC level, the laboratory will promptly notify the producer and the Department or its authorized agent.

A license holder may request a retest of the original sample within 5 days of receiving the results of the first test.  The retest must be conducted by the same laboratory using the same sample that was used in the first test. The retest results are final.

Destruction of Unauthorized Plants

As noted above and as will be described in detail below, the adopted regulations require destruction of unauthorized plants in accordance with DEA reverse distributor regulations.  However, USDA has announced it will allow “additional options” for the destruction of unauthorized plants.  TDA’s website indicates that it will allow destruction of plants “according to disposal methods approved by the USDA.”

A license holder has the legal duty to destroy, at the license holder’s own expense in accordance with DEA reverse distributor regulations, and without any compensation from the State or Federal government the following:

• Any material found in excess of an acceptable hemp THC level.
• Any plants located in an area that is not licensed by TDA.
• Any plants not accounted for in required reporting to TDA.

With regard to plants over the acceptable hemp THC level, a final test result exceeding the acceptable hemp THC level is conclusive evidence that the lot represented by the sample is non-compliant with state and federal law. Cannabis on that lot may not be further handled, processed, or enter the stream of commerce for any purpose other than disposal in strict compliance with the Controlled Substance Act and DEA regulations.

Within 5 days of receiving a notice of disposal from TDA, a license holder must contact a DEA-registered reverse distributor or other authorized person or entity to request the required disposal. All plants must be surrendered to the authorized person and all fees and costs required for destruction will be the responsibility of the license holder without compensation from TDA, the State of Texas or the United States. Within 7 days of receiving a final test result exceeding the acceptable hemp THC level, a license holder must submit a completed disposal report to TDA.  Receipt of this report triggers a potential TDA field inspection.

All license holders who intend to dispose of non-compliant plants must notify TDA and USDA and verify disposal by maintaining and submitting required records.

Enforcement

There are a number of enforcement provisions related to enforcement for violations of these regulations.

Complaints

Any person who believes a violation of these regulations has occurred may file a complaint with TDA.  TDA will, as soon as possible, notify the person believed to be responsible for violations described in the complaint, as well as the owner or lessee of land where the incident allegedly occurred, of the existence of the complaint.  TDA will investigate the complaint and make a written report. The written report will be made available to the public to the extent allowed by the Texas Public Information Act.

Negligent Violations

Hemp producers shall be subject to enforcement for negligently producing hemp or for negligently producing cannabis that exceeds the acceptable hemp THC level. Negligence is defined as “failure to exercise the level of care that a reasonably prudent person would exercise in complying with the regulations.”

Negligent violations include:

• Failure to provide a legal description of geospatial location of the facility on which the license holder produces or stores hemp;
• Failure to obtain a license or other required authorization from TDA;
• Production of cannabis with a delta-9 tetrahydrocannabinol concentration exceeding the acceptable hemp THC level.

Importantly, if a producer uses reasonable efforts to grow hemp, but the test results show a delta-9 tetrahydrocannabinol concentration exceeding the acceptable hemp THC level, the producer has not committed a negligent violation so long as the THC level is below 0.5%.

For each negligent violation, TDA will issue a Notice of Violation and require the license holder to submit a corrective action plan.  A corrective action plan must include, at a minimum, the date by which correction action will be taken for each violation, steps to correct each negligent violation, and a description of the written procedures to demonstrate compliance with applicable law and TDA policy and procedures, which may include additional reporting requirements to show compliance.  If a corrective action plan is approved, the license holder shall comply with the plan to cure the negligent violation and the plan will be in place for a minimum of 2 years.  If a corrective action plan is denied, the license holder’s license will be revoked.  If a subsequent violation occurs while a corrective action plan is in place, a new corrective action plan must be submitted with a heightened level of quality control, staff training, and quantifiable action measures.  TDA or any US authority shall conduct inspections to determine if the corrective plan has been implemented.

Negligent violations shall not result in criminal enforcement actions in Texas.  A license holder that negligently violates the terms of a license 3 times in a 5-year period shall have their license revoked and be ineligible to produce hemp for a period of 5 years beginning on the date of the third violation.

Violations with a Culpable Mental State Greater than Negligence

A license holder who is found by TDA to have violated any statute or regulation governing their participation in the hemp program with a culpable mental state greater than negligence shall be subject to license suspension, license revocation, and monetary civil penalties, as discussed below. A culpable mental state greater than negligence is defined as acting “intentionally, knowingly, willfully, or recklessly.”

Additionally, TDA shall immediately report such person to the US Attorney General, Texas Department of Public Safety, Office of the Texas Attorney General, and other law enforcement agencies with appropriate jurisdiction.

Penalties

There are a number of penalties provided for under the TDA regulations.

First, TDA may suspend a license if TDA receives credible evidence establishing that a license holder violated a provision of this chapter or failed to comply with a written order from TDA related to negligence. A person whose license has been suspended shall not produce, cultivate, handle, or remove hemp or cannabis from its location at the time the Department issued a notice of suspension without written permission from TDA. A license holder has the right to appeal the suspension.

Second, licenses shall be immediately revoked if a person:

• Pleads guilty to or is convicted of a felony related to a controlled substance;
• Made a false statement or provided false information to TDA with a culpable mental state greater than negligence;
• Is found to be growing cannabis exceeding the acceptable hemp THC level with a culpable mental state greater than negligence or negligently violated this chapter three times in five years.

Third, there are a number of potential administrative penalties that may be assessed on a person who violates these regulations. Failure to pay such administrative penalties is a violation of TDA regulations.

Finally, persons who believe they have been adversely affected by the assessment of an administrative action may appeal the decision to TDA.  If TDA sustains the appeal, the person will retain their license and not be subject to administrative action proposed by TDA.  If TDA denies the appeal, the license will be revoked or suspended and any administrative penalties imposed. A person may request a formal adjudicatory proceeding.

Reporting & Record Keeping

There are a number of reporting and record keeping requirements that growers must follow.

First, license holders must maintain records and reports of all hemp plants acquired, produced, handled, sampled and collected, or disposed of for at least 3 years. All records, including the acquisition of hemp seeds or cultivars, regarding hemp production, handling, sampling and collection, records regarding disposal of plants exceeding the acceptable hemp THC level, and records regarding the transportation of hemp  must be available for inspection by TDA or US authorities during reasonable business hours.

Second, growers must report to USDA Agricultural Marketing Service or USDA Farm Service Agency the following information, consistent with USDA requirements:

• License number, street address, facility and lot geospatial location including all transplantation areas where hemp is and will be produced;
• Acreage dedicated to the production of hemp or greenhouse indoor square footage dedicated to the production of hemp, and the total acreage or square footage of hemp planted, harvested and disposed.
• Any change in the facility or lot geospatial location or amount of acreage dedicated to the production of hemp, and any change in the facility or lot geospatial location or amount of greenhouse indoor square footage dedicated to the production of hemp, including the total acreage or square footage of hemp planted, harvested, and disposed due to the changes.

Keep in mind that information submitted to TDA is subject to disclosure pursuant to the Texas Public Information Act. All personally identifiable information including physical address, mailing address, driver’s license numbers, background checks, geospatial location, phone numbers and email addresses, will be withheld as permitted by the Texas Public Information Act.

Third, license holders must submit lot reports to TDA no later than the 20^th day after the final sample is collected from a lot, or no later than 180 days from the lot permit issue date, whichever is earlier. Reports shall be provided using a TDA form and must contain, at a minimum, the following information for each lot:

• License holder account number;
• Facility ID and lot ID;
• Sample IDs and test IDs;
• Disposition of the cannabis plant materials produced or handled within the lot, including any TDA-issued transportation manifest and certification of disposal including a description of the date and method of disposal;
• Total acres or square footage of cannabis plant material produced or handled; and
• A certified statement indicating whether or not any living cannabis plants remain at any lot and, if any living plants remain, the intended disposition of said plants. If the license holder cultivates the remaining plants, he or she must register the locations of the remaining plants as new lots and pay the applicable participation fee.

Finally, a person who sells, offers to sell, distributes, or uses hemp seed in Texas must maintain records for 5 years of:

• The origin of the hemp seed (must be retained for 5 years);
• The person or entity from whom the seed was purchased;
• Any documentation indicating certification or approval of the province, quality, and variety of the hemp seed; and
• The location and jurisdiction of the origin of the seed.