Texas is quickly becoming a prime destination for CBD entrepreneurs. With one of the largest consumer markets in the U.S. and a growing demand for natural wellness products, the Lone Star State presents a lucrative opportunity for business owners looking to enter the CBD industry.
For many entrepreneurs, navigating the legal landscape can be overwhelming. From obtaining a Consumable Hemp Products (CHP) License to securing reliable payment processing, there are critical steps you must take to remain compliant and competitive. While the path to success may seem complicated, it’s entirely possible with the right guidance, strategy, and support.
1. Understanding CBD Laws in Texas to Legally Sell CBD
The 2018 Farm Bill legalized hemp-derived CBD with less than 0.3% THC at the federal level. Following this, Texas enacted House Bill 1325, which made it legal to grow, process, and sell hemp-derived CBD products within the state. However, Texas has specific rules and regulations for selling consumable hemp products (CHPs) that you must follow.
The Texas Department of State Health Services (DSHS) is the regulatory body overseeing CBD products. To comply with state and federal regulations, all consumable hemp products must be registered, labeled, and tested to ensure they are free of harmful substances like pesticides, heavy metals, and residual solvents.
To legally operate a CBD business in Texas, you’ll need the following:
Retail Hemp Registration from DSHS if you plan to sell CBD products directly to consumers.
Consumable Hemp Products (CHP) License if you plan to manufacture, distribute, or process hemp products.
Non-compliance with these regulations can result in heavy fines or a business shutdown. Staying up-to-date with regulatory changes is critical to long-term success.
2. How to Create a Business Plan for Your CBD Business in Texas
A comprehensive business plan sets the foundation for your success. It outlines your goals, operational strategy, and financial plan. It’s also essential when seeking investors, business loans, or high-risk merchant accounts.
When developing your plan, focus on these key areas:
Business Structure and RegistrationDecide on the structure of your business — sole proprietorship, LLC, or corporation. Then, register your business with the Texas Secretary of State and apply for an Employer Identification Number (EIN) from the IRS. This number is necessary for tax reporting and hiring employees.
Revenue Model and Product LineDetermine the types of products you will offer. Will you sell oils, tinctures, gummies, topicals, or a mix of these? Establish revenue streams through retail, wholesale, or direct-to-consumer e-commerce sales.
Target MarketIdentify your customer base. Will you target wellness enthusiasts, pet owners, or athletes? Understanding your audience will help you develop targeted marketing strategies.
Marketing StrategyHow will you promote your brand? Strategies include content marketing, search engine optimization (SEO), social media campaigns, and paid advertising. Focus on keywords like "CBD oil in Texas" and "hemp-based CBD products" to improve visibility online.
Payment ProcessingMany payment processors refuse to work with CBD businesses because they are classified as “high-risk.” Zen Payments specializes in high-risk payment processing and offers secure, seamless solutions to ensure you can accept credit and debit card payments with ease.
3. Licensing Requirements for a CBD Business in Texas
Obtaining the necessary licenses is one of the most crucial steps in starting your CBD business. Texas has specific requirements for anyone selling, distributing, or manufacturing consumable hemp products.
Retail Hemp RegistrationIf you plan to sell directly to consumers — whether in-store at a retail location or online — you must obtain a Retail Hemp Registration from DSHS. This license allows you to legally sell consumable hemp products in Texas.
Consumable Hemp Products (CHP) LicenseIf you intend to manufacture, process, or distribute CBD products, you must obtain a CHP License from the Texas Department of State Health Services (DSHS). To do this, you’ll need to:
Submit an online application.
Pay the application fee.
Comply with product testing and facility inspections to ensure GMP (Good Manufacturing Practices) compliance.
Failure to obtain the appropriate licenses can result in penalties or the shutdown of your operations.
4. Sourcing Quality CBD Products for Retail Sale
Product quality is the backbone of your CBD business. Sourcing from reputable suppliers ensures compliance with regulations and earns customer trust. Texas requires extensive testing for CBD products, including testing for THC content, pesticides, heavy metals, and residual solvents.
Look for suppliers with transparent production practices and those that follow Good Manufacturing Practices (GMP). You can also consider white-label or private-label opportunities to create a unique product line under your own brand.
5. Payment Processing for CBD Businesses in Texas
Accepting payments is one of the most significant hurdles for CBD businesses. Many payment processors, like PayPal or Stripe, will not work with CBD companies because they are considered high-risk. This is where Zen Payments becomes invaluable.
Why Use Zen Payments?Zen Payments specializes in payment processing for high-risk businesses, including CBD companies. Here’s what sets them apart:
High Approval Rates: Zen Payments boasts a 98% approval rate for high-risk businesses.
Fraud and Chargeback Protection: Protect your business from fraudulent transactions and unnecessary chargebacks.
Seamless Integration: Zen Payments integrates with Shopify, WooCommerce, and other e-commerce platforms, making it easy to launch an online store.
Without proper payment processing, your business can’t accept credit card payments, which could cost you thousands in lost revenue.
6. Marketing and Promoting Your CBD Business
Marketing a CBD business comes with unique challenges, as online platforms like Facebook and Google have restrictions on advertising hemp-derived products. Nevertheless, you can still use several effective marketing strategies.
Content Marketing & SEOCreate blogs and articles on CBD-related topics. Focus on SEO-friendly content with high-ranking keywords. This improves your site's visibility on search engines.
Social Media MarketingUse platforms like Instagram, TikTok, and YouTube to share educational content, testimonials, and behind-the-scenes insights.
Affiliate MarketingPartner with wellness influencers, content creators, and bloggers who can promote your products for a commission.
Email CampaignsBuild an email list of prospective and existing customers. Send them newsletters about new products, educational content, and promotions.
7. Regulatory Compliance and Product Testing
CBD products sold in Texas must meet strict testing and labeling requirements. Products must be tested for THC content, residual solvents, heavy metals, and harmful microorganisms. Labels must include:
Product name and description.
Batch or lot number.
THC content (must be less than 0.3%).
Name and location of the manufacturer.
Complying with these regulations ensures that you avoid legal issues, build consumer trust, and establish your brand as reputable and safe.
8. Launching Your CBD Business Online
Selling CBD products online gives you access to a larger customer base, but it also introduces unique challenges. Your e-commerce store must comply with Texas laws and ensure payment security.
How to Launch Your Online CBD Store
Build a Website: Use platforms like Shopify or WooCommerce to create a professional, mobile-friendly site.
Secure Payment Processing: Partner with Zen Payments for a payment gateway.
Ensure PCI Compliance: Protect customer data with PCI-compliant security measures.
Create SEO-Optimized Content: Boost your website's visibility on Google with relevant keywords.
9. Overcoming Common Challenges for CBD Businesses in Texas
Starting a CBD business is rewarding, but it also presents unique obstacles. Here’s how to overcome them.
Compliance with RegulationsWork with legal experts and ensure you’re up-to-date with DSHS requirements.
Payment Processing IssuesSince traditional processors like PayPal refuse to work with CBD companies, it’s essential to partner with high-risk processors like Zen Payments.
Competition in the IndustryDifferentiate your brand by offering unique products, superior quality, and educational resources.
Take Action and Launch Your CBD Business Today
Starting a CBD business in Texas can be rewarding, but it requires a strategic approach. From licensing and compliance to marketing and payment processing, every step matters. Zen Payments offers critical support for high-risk businesses, providing a smooth payment process that keeps your business running.
Don’t let payment processing be a barrier to success. Apply for a payment processing account with Zen Payments today and join the growing list of thriving CBD businesses.
Lizzy joined the Zen Payments team following her graduation from Utah Valley University. As a dedicated customer service representative, she brings extensive experience in client relations and customer support. Lizzy is committed to delivering exceptional service to all Zen Payments clients.
