News

Yetter Coleman Secures Temporary Injunction Against Texas DSHS Smokable Hemp Ban Through February 2021 Trial

On behalf Crown Distributing, Yetter Coleman has secured a temporary injunction against the Texas Department of State Health Services, preventing the state from enforcing its controversial ban on the manufacture and sale of smokable hemp products.

After the federal government removed legal restrictions on the production and sale of hemp products with the 2018 Farm Bill, smokable hemp products have proven to be a popular consumer product and have become a cornerstone of the new multi-billion-dollar hemp market nationwide that is making hemp a profitable enterprise for large companies, mom-and-pop shops, and farmers alike.

The lawsuit centers on HB 1325, legislation enacted in 2019 to provide a regulatory framework for the new hemp market in Texas. The statute instructs DSHS to enact rules prohibiting the manufacturing and processing of smokable hemp products—and nothing more. But in 2020, DSHS enacted rules prohibiting the manufacturing, processing, sale, and distribution of smokable hemp products in Texas.

Our client, Crown Distributing, is a large manufacturer of smokable hemp products with headquarters in Dallas, Texas. It manufactures over 10% of the national market for smokable hemp products and employs many Texans at its facility.

In August 2020, an Original Petition was filed in Travis County District Court alleging two counts against DSHS and DSHS Commissioner Hellerstedt asserting that the prohibition in the legislation against manufacturing and processing is unconstitutional under the standard put forward in the Texas Supreme Court decision Patel v. Dep’t of Licensing & Regulation, and that the rule DSHS subsequently enacted is invalid and exceeded statutory authority.

Two weeks after successfully obtaining a temporary restraining order in late-August, we successfully obtained a temporary injunction, enjoining enforcement of the smokable hemp prohibitions until a final trial on the merits in February 2021. The lawsuit is the first attempt to challenge a smokable hemp ban through state courts, rather than the federal judiciary.

Yetter Coleman associates Matthew Zorn, who is serving as lead litigator and argued on behalf of the plaintiffs at the temporary injunction hearing, and Shane Pennington represent Crown Distributing, along with co-counsel at Ritter Spencer PLLC. The case is Crown Distributing LLC et al. v. Texas Department of State Health Services et al., case number D-1-GN-20-004053.