Delta-8 THC is one of the most popular cannabinoid products in Texas today due to its low levels of the psychoactive component, THC. Early last year, Texas joined many states in banning the product, which federal law legalized in 2018. While a district court in the state temporarily stayed the ban, the controversy around the legality of Delta-8 THC continues to cause confusion among stakeholders like manufacturers, dealers, consumers, and ancillary providers such as banks and insurers. This is why many insurers aren't covering the product in the state.
Delta-8 THC is derived from hemp, which means cannabis containing 0.3% or less of Delta-9 THC, according to the federal government. Any cannabis product with more than 0.3% THC is considered marijuana. However, the 2018 federal Farm Bill removed hemp from the list of controlled substances at the federal level. This meant that the DEA wouldn't trouble you for selling oil, candy, or any other product containing Delta-8 THC.
Production and sale of hemp derivatives became legal in Texas in 2019. Just like the Farm Bill, Texan law only legalized cannabinoid products with 0.3% or less of Delta-9 THC. Retailers across the state assumed that both laws allowed the sale of Delta-8 THC, so they began selling products containing the hemp extract. The products caught on rapidly across the state as users loved the mild "high" they produced.
The confusion started when Texas rejected the DEA's removal of Delta-8 from the list of controlled substances. In January 2021, the state declared the substance as a Schedule I drug, making it illegal to manufacture, sell, or use Delta-8 THC products in Texas. This declaration caught many dispensaries by surprise. Many of them rushed to remove the outlawed products from their shelves to avoid legal problems.
However, investors in the cannabis industry aren't losing any of the lucrative business without a fight. A Texan dispensary sued the state's health department in court to reverse the ban, and it won a temporary relief.
A district judge in Texas issued an injunction against the listing of Delta-8 THC as a Schedule I controlled substance. This made it legal to manufacture or sell the hemp derivative in the state. Many CBD stores responded by restocking to match the high demand for the popular cannabis extract. How long this reprieve lasts remains to be seen as the regulatory controversy is set for a full-court hearing in January 2022. If the state's health department loses this case, the cannabis industry will have won an important battle.
So long as Delta-8 THC is out of Texas' controlled substances list, you can legally produce or sell its products anywhere in the state. However, you still need to protect your operations with proper insurance coverage. Unfortunately, any outstanding grey areas over the products' legality make it difficult to obtain coverages like product liability or property damage/loss. You're essentially a high-risk, hard-to-place business that most carriers today wouldn't offer commercial insurance. Many hesitant insurers are waiting on sufficient legal protection before they can start selling Delta-8 THC policies to dealers or producers.
Despite the ongoing controversy over the legality of Delta-8 THC products in Texas, there are a few providers offering insurance policies for these products, including in the state. If you manufacture the disputed cannabis extracts, you can access coverage via an agent affiliated with these insurers. Specialty insurance agents are a good place to begin your search for cannabis/hemp business insurance.
Secure Your Delta-8 THC Business with GrayStone Insurance Group At GrayStone Insurance Group, we will work with you to develop a customized coverage suited to your CBD and Hemp business insurance needs. Contact us today to get started!