Press Release: Texas Hemp Businesses File Major Lawsuit Against Texas Department of State Health Services to Stop Government Overreach and Protect $5.1 Billion Industry. | Cannabis Law Report | How to order Skittles Moonrock online

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Texas Hemp Business Sues Texas Department of State Health Services Unauthorized Ban on Lawful Hemp Constituents, Exorbitant Fees, and Illegal Market Restriction Threatening 48,000 Texas Jobs

AUSTIN, Texas — August 20, 2026 — Texas hemp businesses are suing the Texas Department of State Health Services, challenging a recent state agency attempt to unilaterally reclassify lawful hemp products as controlled substances and rewrite the legal framework established by the Texas Legislature.

David K. Sergi of David K. Sergi & Associates filed the lawsuit in the 459th Judicial District Court of Travis County against the Texas Department of State Health Services (DSHS), Interim Commissioner Imelda Garcia, and Division Director Glenn Hargett.

The lawsuit was filed on behalf of Texas hemp businesses —including SS Distro USA LLC, Topps Distro LLC d/b/a KingPin Kush, Jason Moreno d/b/a My City Hemp, and Trevor Kocaoglan.

The lawsuit (Cause No. D-1-GN-26-007113) asserts that DSHS has engaged in executive overreach by administrative rulemaking, bypassing the Legislature’s statutory definition of hemp enacted under House Bill 1325 in 2019. The suit challenges DSHS’s newly announced “Post-July Implementation and Enforcement Standard”—under which the agency threatens product detentions and criminal law enforcement referrals for products containing more than trace amounts of naturally occurring cannabinoids like THCA—as well as punitive, non-legislated fee increases ($10,000 for manufacturers and $5,000 for retailers).

“This lawsuit presents a fundamental question of constitutional structure: whether an executive administrative agency can, through informal webpage policy and arbitrary rulemaking, criminalize conduct that the Texas Legislature explicitly legalized,” said attorney David K. Sergi. “In 2019, the Texas Legislature made a deliberate policy choice to legalize hemp containing up to 0.3 percent Delta-9 THC on a dry-weight basis. Thousands of small business owners built enterprises, hired workers, and invested capital relying on that law. DSHS does not have the constitutional authority to rewrite statutes or destroy an industry simply because it disagrees with legislative policy.”

“As we prepared this lawsuit and spoke with customers and businesses, we heard stories about how hemp products help people every day. Everyone from the strongest MAGA supporter to Democratic activist to Seniors and veterans all saw and are frustrated by the overreach by the Texas Government. Many have expressed their support for Gov. Abbott and his veto of a hemp ban and are abandoning Lt Governor Patrick and his anti-hemp position,” added Sergi.

The lawsuit accepts the Texas Supreme Court’s recent holding in DSHS v. Sky Marketing Corp. regarding concentrated manufactured Delta-8 THC, but specifically targets distinct, unadjudicated agency overreach. This includes DSHS applying controlled-substance definitions to naturally occurring hemp constituents such as THCA, imposing arbitrary post-July enforcement criteria without required Texas Administrative Procedure Act (APA) rulemaking, and violating the separation-of-powers clause of the Texas Constitution.

According to an economic analysis by Whitney Economics included in the court filing, the Texas consumable hemp industry generates $5.1 billion in annual business revenue, supports nearly 48,900 jobs paying $1.9 billion in wages, and contributes over $254 million annually in state sales tax.

The petition details the catastrophic harm already suffered by Texas businesses due to DSHS’s regulatory actions:

The suit further asserts an Anti-Monopoly claim under Article I, Section 26 of the Texas Constitution, alleging that DSHS’s administrative prohibition unlawfully shuts down the open, regulated hemp market while protecting a closed, highly concentrated state-licensed medical program (TCUP) that sells overlapping cannabinoid products.

Plaintiffs are seeking an immediate Temporary Restraining Order (TRO) and Temporary Injunction to restrain state officials from enforcing the unpromulgated post-July detention and referral criteria, alongside final declaratory judgments under Texas Government Code § 2001.038.

“Texas business owners should not be forced to choose between shutting their doors or facing criminal prosecution under administrative standards that our Legislature never passed,” Sergi added. “We are asking the Court to uphold the Texas Constitution, protect thousands of Texas jobs, and keep policy decisions where they belong—with the elected representatives of the people.”