The Executive Commissioner of the Texas Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (DSHS), proposes new §§300.100 - 300.104, 300.201 - 300.203, 300.301 - 300.303, 300.401 - 300.404, 300.501, 300.502, and 300.601 - 300.606 in new Chapter 300, concerning the Manufacture, Distribution, and Retail Sale of Consumable Hemp Products.

BACKGROUND AND PURPOSE

The purpose of the proposal is to comply with House Bill (H.B.) 1325, 86th Legislature, Regular Session, 2019, which added Texas Health and Safety Code, Chapter 443, relating to the manufacture, distribution, and sale of consumable hemp products.

Under the authority of Texas Health and Safety Code, Chapter 443, the DSHS Hemp Program regulates the manufacture, processing, distribution, and sale of consumable hemp products. Hemp Program regulations are intended to ensure that consumable hemp products are safe to consume and properly labeled. The Hemp Program requires and issues a license for the manufacture, processing, and distribution of consumable hemp products, and a registration of retailers of consumable hemp products.

SECTION-BY-SECTION SUMMARY

Proposed Subchapter A creates rules related to General Provisions by implementing §300.100, Purpose; §300.101, Definitions; §300.102, Applicability of Other Rules and Regulations; §300.103, Inspections; and §300.104, Manufacture, Processing, Distribution, and Retail Sale of Hemp Products for Smoking.

Proposed Subchapter B creates rules related to Manufacture, Processing, and Distribution of Consumable Hemp Products by implementing §300.201, Application for License or Renewal; §300.202, License Term and Fees; and §300.203, Access to Records.

Proposed Subchapter C creates rules related to the Testing of Consumable Hemp Products by implementing §300.301, Testing Required; §300.302, Sample Analysis of Consumable Hemp and Certain Cannabinoid Oils; and §300.303, Provisions Related to Testing.

Proposed Subchapter D creates rules related to the Retail Sale of Consumable Hemp Products by implementing §300.401, Possession, Distribution and Sale of Consumable Hemp Products; §300.402, Packaging and Labeling Requirements; §300.403, Retail Sale of Out-of-State Consumable Hemp Products; and §300.404, Transportation and Exportation of Consumable Hemp Products Out-of-State.

Proposed Subchapter E creates rules related to the Registration for Retailers of Consumable Hemp Products by implementing §300.501, Registration Required for Retailers of Certain Products and §300.502, Application.

Proposed Subchapter F creates rules related to the Enforcement of Chapter 300 by implementing §300.601, Violation of Department License or Registration Requirement; §300.602, Prohibited Acts; §300.603, Detained or Embargoed Article; §300.604, Destruction of Article; §300.605, Correction by Proper Labeling or Processing; and §300.606, Administrative Penalty.

FISCAL NOTE

Donna Sheppard, Chief Financial Officer, has determined that for each year of the first five years that the rules will be in effect, enforcement or administration of the rules, there will be an estimated additional cost and revenue to state government. DSHS does not anticipate a cost to local governments from the implementation of the rules.

The effect on state government for each year of the first five years the proposed rules are in effect is an estimated cost of $401,008 in fiscal year (FY) 2020; $598,992 in fiscal year FY 2021; $1,067,814 in FY 2022; $1,269,503 in FY 2023; and $1,499,838 in FY 2024; and an estimated increase in revenue of $1,200,000 in FY 2020; $1,475,000 in FY 2021; $1,807,500 in FY 2022; $2,194,000 in FY 2023; and $2,637,500 in FY 2024.

GOVERNMENT GROWTH IMPACT STATEMENT

DSHS has determined that during the first five years that the rules will be in effect:

(1) the proposed rules will create a government program;

(2) implementation of the proposed rules will create new DSHS employee positions;

(3) implementation of the proposed rules will require an increase in future legislative appropriations in FY 2022 - FY 2024;

(4) the proposed rules will affect fees paid to DSHS;

(5) the proposed rules create new Hemp Program rules;

(6) the proposed rules will not expand, limit or repeal any existing rules;

(7) the proposed rules will increase the number of individuals subject to the rules; and

(8) the proposed rules will positively affect the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Donna Sheppard, Chief Financial Officer, has determined that there is no anticipated adverse economic effect on small businesses, micro-businesses, or rural communities. The new rules will expand economic opportunity for individuals interested in the manufacture, processing, or retail sale of consumable hemp products.

LOCAL EMPLOYMENT IMPACT

The proposed rules will positively affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code, §2001.0045 does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas; and the rules are necessary to implement legislation that does not specifically state that §2001.045 applies to the rules.

PUBLIC BENEFIT AND COSTS

Stephen Pahl, Associate Commissioner, Consumer Protection Division, has determined that for each year of the first five years the rules are in effect, the public benefit will be the increased opportunity for business owners who are engaged in the manufacture, processing, distribution, and retail sale of consumable hemp products.

Donna Sheppard has also determined that for the first five years the rules are in effect, persons who are required to comply with the proposed rules may incur economic costs due to requirements in the rules for licensure fees and testing of hemp products for an entity engaged in the manufacture, processing, and distribution of consumable hemp, and registration fees for an entity engaged in the sale of consumable hemp products.

TAKINGS IMPACT ASSESSMENT

DSHS has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, §2007.043.

PUBLIC COMMENT

Questions about the content of this proposal may be directed to Rod Moline, Ph.D., R.S., Section Director, at (512) 231-5712 in the DSHS/CPD Policy, Standards, and Quality Assurance Unit.

Written comments on the proposal may also be submitted to Rod Moline, Ph.D., R.S., Section Director, Mail Code 1987, Texas Department of State Health Services, P.O. Box 149347, Austin, Texas 78714-9347, or by email to DSHSHempProgram@dshs.texas.gov.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered at 8407 Wall Street, Austin, Texas 78754 before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 19R074 Hemp Program" in the subject line.

STATUTORY AUTHORITY

The new rules are authorized by H.B. 1325 that added Texas Health and Safety Code, Chapter 443, which provides that the Executive Commissioner of HHSC may adopt rules for the efficient enforcement of Texas Health and Safety Code, Chapter 443; and Texas Government Code, §531.0055 and Texas Health and Safety Code, §1001.075, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of health and human services by DSHS and for the administration of Texas Health and Safety Code, Chapter 1001.

The new rules implement Texas Health and Safety Code, Chapter 443.