‘Fight or flight’: Federal hemp rules could wipe out THC drinks, threaten Texas businesses
Paige Linney, general manager at LazyDaze, which offers THC-infused beverages, prepares drinks at the Austin coffee shop on Friday, Dec. 5, 2025. As federal restrictions on hemp-derived THC products move closer to taking effect, the shop is testing mushroom-based alternatives that offer mood or focus benefits without intoxication.
Aaron E. Martinez/Austin American-Statesman
Aaron Owens would never describe himself as scared — ever.
But, he said, this summer came close.
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Various THC products are displayed at the register at LazyDaze coffee shop on Friday, Dec. 5, 2025 in Austin.
Aaron E. Martinez/Austin American-Statesman
The Texas Legislature had passed Senate Bill 3, a sweeping measure that would have banned the sale of products containing any amount of THC. For months, the state’s hemp sector had been dreading this moment. Panic swept through the state’s $5.5 billion industry — in just a few years, it had grown into a source of relief for Texans and a livelihood for retailers, manufacturers and farmers alike.
Owens, the owner of hemp-infused beverage company Tejas Tonic, was among them. For the first time since he walked away from his West Texas ranching career, he felt the ground beneath him shift.
“I was as close to scared as a man can be,” he said. “To think seven years in, that they could step in and just wipe the slate clean and take us off the map? It was a really heavy thought that came with a lot of stress.”
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The bill arrived suddenly and transformed many hemp entrepreneurs into activists. They lobbied politicians, wrote letters in support of their products and launched public campaigns to rally customers. Meanwhile, investment declined and the industry’s uncertain future became a pain point for business.
And then, only minutes before the deadline, Gov. Greg Abbott issued a veto.
For many, it hit the industry like a jolt of electricity. The veto felt like confirmation that their advocacy work mattered. The existential threat, at least in Texas, had been eliminated.
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The relief was immediate and overwhelming. It would also be short-lived. Months after Texans fought for their hemp rights — and won — a new federal law banning hemp is threatening to take it all away once again.
What Farm Bill changes mean for Delta-8, THC products
Ray Bonton sits in the lounge area at LazyDaze coffee shop on Friday, Dec. 5, 2025 in Austin. Hemp-derived THC products boomed under the 2018 Farm Bill, but new federal limits could bring that era to an end.
Aaron E. Martinez/Austin American-Statesman
Before the 2018 Farm Bill expired in September, it governed everything from crop insurance to food assistance. It was also the foundational legislation that legalized hemp nationally, redefining cannabis plants containing less than 0.3% of Delta-9 THC.
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That definition allowed Delta-8 and hemp-derived THC products, now found in gas stations, grocery stores and dedicated shops across the U.S., to bloom.
Meanwhile, products derived from cannabis plants with a higher THC content are still federally categorized as a Schedule I drug, the same classification as heroin.
In the spending bill that Congress passed to reopen the government in November, lawmakers included a provision to close this “loophole” within one year and added new restrictions, which business owners argue will be catastrophic. These restrictions, taken together, could dismantle much of the existing market before products ever reach the shelves.
One requirement is for cannabinoids to be naturally extracted rather than synthesized from CBD, a change targeting chemically manipulated products. Another expected update involves moving from Delta-9-only testing to total THC. Both of these are changes that industry leaders might have seen coming.
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But two of the other restrictions would drastically change the landscape for farming and production.
A 0.3% cap on “work in progress” hemp is almost impossible to meet, as the concentrate produced during extraction and before dilution naturally spikes above 0.3% during processing. In essence, Owens said, if the process is made illegal, any product that comes from it will also be illegal.
Even non-intoxicating CBD could be outlawed under the new rules.
“It’s not possible by the letter of the law,” Owens said. “Every CBD product that exists is going to be illegal, period, because there’s no path.”
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The bill also sets a THC cap of 0.4 milligrams per container — not per serving, but per product. That limit is effectively zero. Many hemp seltzers on the shelves today contain 2 to 5 milligrams of THC, and some go even higher, up to 25 or 50 milligrams.
“Here we are, and it’s all at risk again”
A register and drink station are in the front lobby at LazyDaze coffee shop on Friday, Dec. 5, 2025 in Austin.
Aaron E. Martinez/Austin American-Statesman
At his core, Owens is a farmer. He started out more than 20 years ago on a ranch in West Texas, where he housed cattle, goats and dogs on leased land that stretched out under dry, open skies. When hemp became legal, he saw a chance to transition. He eased into it with cultivation and processing, and later explored product development.
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In 2022, he launched Tejas Tonic, a hemp-infused beverage company now known across Austin for its sparkling THC and CBD drinks.
He left his former career in agriculture to go all-in on the hemp industry, and specifically, to go all-in on hemp-derived beverages. Since starting Tejas Tonic, Owens has expanded operations and employs nearly 20 people. Tejas Tonic is sold in retail stores across the state.
“I let go of all my ranching leases in West Texas and I sold all my livestock and I went all in,” Owens said. “I have a 16-year career that was pushed in to launch the beverage business. And now here we are, and it’s all at risk again.”
Suffice to say, he has a lot on the line.
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“It’s like living in fight or flight mode, and that is an unhealthy place for any human being or business to be,” Owens said.
A lot is at stake for Alex and Morgan Baumeister, too.
Alex, a firefighter in Austin, first started taking THC gummies to help him sleep at night. The products treated his insomnia, but his wife didn’t have the same tolerance. She saw the value in something that could provide a lighter feeling. Together, they developed a THC-infused drink designed to replicate the gentle buzz of a single glass of wine — and taste like one, too.
The couple launched their own hemp-derived beverage company, Delta Vine, earlier this year.
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They spent months researching the industry and finding reputable companies to help get their idea off the ground, and they poured tens of thousands of dollars into their production run.
“When we had this idea, we knew it was some sort of legal,” Alex Baumeister said. “We were a little bit nervous, but not as concerned as we probably should’ve been.”
With the budget bill’s current language, the business they built suddenly looks fragile. Their suppliers have reassured them that things will work themselves out, but Alex admits he doesn’t know what will come of the investment if and when the new regulations take effect. For now, Delta Vine plans to keep going.
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“We’re not changing too much of our strategy because it feels like the people around us aren’t changing their strategy,” Alex Baumeister said. “We haven’t gotten any pushback from any of our suppliers. Everyone so far is just saying, you know what, there’s a year to figure this out.”
And they’re not alone. Paige Linney, who manages Lazydaze, a coffee shop offering THC-infused beverages, said she’s fielding the same questions from customers and store owners, but for now, it’s business as usual.
“We’re not changing anything,” Linney said. “Lazydaze is trucking on through, and we’re going to keep doing what we’re doing as long as we can, and we’re going to fight to keep doing it. We’re ordering normal, we’re still getting all of our product in.”
Owens said that attitude is common among retailers. In his view, they’re the most stable part of the supply chain right now — shops are still ordering, still selling out and still treating the market as steady.
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“It’s the distributors who are hesitant,” he said. “Retailers are moving forward. Retailers are holding strong. The distribution network, unfortunately, doesn’t look as positive. They’re saying, ‘We don’t want to take on any new labels in this political uncertainty.’”
What’s next for Texas THC-infused beverage companies?
Across Austin’s booming market, where alcohol consumption has dipped and THC drinks have become a fixture of weekend patios and corner store shelves, there are many THC beverage companies that will need to pivot somehow if the new provisions stand.
But what does pivoting even look like?
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For some, the answer is reinvention.
Linney said Lazydaze began exploring mushroom-infused beverages earlier this year, long before the federal ban surfaced. But with stricter rules now looming, those experiments are becoming part of a contingency plan. Instead of THC, the drinks would rely on ingredients like lion’s mane, cordyceps and chaga, which aim to relax or focus rather than intoxicate.
“After SB3 got vetoed, we kept it up and we sort of got into kava and the different mushrooms,” Linney said. “They’re in addition to what we’re doing.”
Delta Vine is having similar conversations. The Baumeisters’ first choice is still their microdose THC wine alternative, the product they spent months developing. But if the rules stay as written, they said they’ll consider crafting a non-THC formula to keep the brand alive.
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Tejas Tonic, though, has fewer options. Owens’ current model depends on naturally derived cannabinoids, the same ingredients the federal provision would make nearly impossible to extract legally.
“Farmers are the backbone of the United States and we need to stimulate agriculture,” Owens said. “The rules need to allow what happens in agriculture to make it to market, and the current proposed regulations in those bills — the work in progress at 0.3% and the 0.4 milligram THC — those two things are going to make it to where a farmer has no opportunity.”
Even so, all three businesses are making the same decision for now: keep producing, keep selling, keep showing up. Because while federal law might change, the market hasn’t.
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“We’ve seen this adversity before,” Owens said. “We’re going to keep selling as long as we can, and that’s a great attitude, because the chances of this reversing in the next year are there. Chances exist that this won’t ever come into effect.”
