The newly passed federal ban on hemp-based products containing THC could have a significant negative effect on the Texas economy, hitting a wide range of Texas industries that rely on hemp in any form, according to leading economists studying the hemp industry.
Language included in the spending legislation that just ended the federal government shutdown would dramatically lower the legal amount of THC – the psychoactive component of cannabis – permitted in hemp-derived products. Advocates, including a bipartisan coalition of state attorneys general, argue this is necessary to close a loophole in the 2018 Federal Farm Bill that has led to the widespread marketing of intoxicating products, including to children.
Notably, the coalition did not include Texas Attorney General Ken Paxton, despite the significant push by Lt. Gov. Dan Patrick and Texas lawmakers over the past year to ban such hemp-based products containing THC.
Texas produces more hemp than almost any other state in the country, according to the U.S. Department of Agriculture. Economist Beau Whitney estimated the Texas hemp industry employs roughly 53,000 people and pays wages of just $2.1 billion.
"There’s roughly 6,350 businesses that are projected to fail as a result of this and displace over 40,000 workers. And so, this is a significant blow to the Texas economy," Whitney said, "because of the fact that those people now, instead of contributing into the state coffers from a revenue perspective...payroll taxes, business taxes and the spending that occurs, sales taxes, this will now be an expenditure that is needing to be absorbed by the state."
te
Those numbers include workers involved in cultivating, manufacturing, distributing, and selling hemp-derived cannabinoids. But Whitney says the legislation would discourage the cultivation of any hemp.
"This is the troubling aspect of this bill, is that there’s so much uncertainty and so much risk that farmers won’t plant and investors won’t invest, even in the fiber and in...the industrial aspect of the industry," Whitney said. "You’re not going to get the investment at a time where you need the infrastructure...to support the growing demand for automobile parts, plastics, and construction material."
Whitney also noted that there could be knock-on effects for other segments of U.S. and Texas agriculture. Farmers often plant hemp fiber in rotation, because doing so can increase the yield of other crops.
"So, this is having an impact not only on hemp farmers, but on farmers of soy and corn and wheat and cotton and other industries," Whitney said.
The ban is scheduled to take effect in November 2026, but Whitney said that state legislatures across the country could wind up enacting their own laws to comply with the ban much sooner.
"This is an extinction-level event," Whitney said. "If it does survive, it’ll set the industry back decades."
Copyright 2025 Houston Public Media News 88.7