The Impact of a Total THC Ban on Texas’ Real Estate Market: A Ripple Effect from Business Closures
In May 2025, the Texas Legislature passed Senate Bill 3 (SB3), a measure to ban all consumable hemp-derived THC products, including delta-8, delta-9, and THCA, leaving only CBD and CBG products legal. With the bill awaiting Governor Greg Abbott’s signature, the potential ban, set to take effect on September 1, 2025, threatens to dismantle Texas’ $8 billion hemp industry, which supports an estimated 50,000 jobs across over 8,500 businesses. The closure of these businesses, primarily retail dispensaries and smoke shops, could have significant repercussions for Texas’ commercial real estate market, particularly in urban centers where the industry is concentrated. This article explores how a total THC ban could reshape the state’s real estate landscape through business closures, vacant storefronts, and broader economic impacts.
The Texas Hemp Industry and Its Real Estate Footprint
Since the legalization of hemp in 2019 through House Bill 1325, Texas has seen a proliferation of hemp-derived THC products sold in dispensaries, smoke shops, and convenience stores. The industry has grown into a powerhouse, generating $8 billion annually and supporting over 7,000 registered hemp sellers as of April 2024. These businesses occupy significant commercial real estate, particularly in urban hubs like Houston, Dallas, Austin, and San Antonio, where retail storefronts, strip malls, and standalone shops cater to a diverse customer base, including college students, veterans, and older adults seeking pain relief or relaxation.
The hemp industry’s real estate footprint is substantial. A post on X from the Houston Chronicle estimated that up to 815,000 square feet of retail space in Houston alone—roughly the size of the Toyota Center—could be at risk if the THC ban takes effect. Statewide, the closure of thousands of hemp-related businesses could vacate millions of square feet of commercial space, creating a ripple effect across the real estate market.
These retail closures could lead to a surge in vacant retail spaces, particularly in urban areas where hemp shops are concentrated. Commercial real estate in Texas, already navigating post-pandemic challenges like reduced foot traffic and shifting consumer habits, could face increased vacancy rates. In Houston, the potential loss of 815,000 square feet of retail space could depress rental rates and property values in affected areas, particularly in strip malls and smaller retail centers where hemp shops are common tenants. A report from the Texas Comptroller of Public Accounts estimated that cities could lose $1.62 million, counties $400,000, and transit authorities $540,000 in tax revenue in 2026 alone due to the ban, further straining local budgets that fund infrastructure and real estate development.
Secondary Impacts: Economic Ripple Effects
The closure of hemp businesses would not only affect retail real estate but also have broader economic implications that could indirectly influence the market. The loss of an estimated 50,000 jobs—ranging from retail staff to supply chain workers—could reduce consumer spending in affected communities, impacting nearby businesses like restaurants, cafes, and other retailers that rely on foot traffic from hemp shops. This could exacerbate vacancies in retail centers, as the loss of anchor tenants like dispensaries may deter customers from visiting adjacent stores.
Moreover, the ban could drive consumers to unregulated black markets, as critics like Representative James Talarico have warned: “Texans will still use THC—but instead of getting it safely from a local small business, they’ll go back to getting it from the black market and the drug cartels.” This shift could increase illegal activity in certain areas, potentially lowering property values in neighborhoods perceived as less safe. Conversely, some real estate investors might see opportunities to repurpose vacant hemp shop spaces for new businesses, though the transition could take time and require significant investment.
Urban vs. Rural Dynamics
The hemp industry is concentrated in urban centers like Houston, Dallas, and Austin, which host the majority of dispensaries. As a result, the real estate impact of closures would be most pronounced in these areas. Rural areas, with fewer hemp shops, may see less direct impact, but the loss of agricultural revenue from hemp farming could still affect rural real estate markets, particularly for landowners leasing to hemp growers.
Potential for Legal Challenges and Market Adaptation
The hemp industry is mobilizing against the ban. The Texas Hemp Business Council has gathered over 120,000 signatures urging Governor Abbott to veto SB3,
Some businesses are adapting by shifting to CBD and CBG products, though these have a smaller market.
The long-term impact of a THC ban on Texas’ real estate market hinges on several factors, including whether Governor Abbott signs the bill, the outcome of potential lawsuits, and the ability of businesses to adapt. If the ban takes effect, the immediate surge in vacant storefronts could depress commercial property values and rental rates, particularly in urban retail centers. Over time, new tenants—such as health-focused retailers or other small businesses—could fill the void, especially if the state expands its medical marijuana program to capture some of the demand for THC products.
Conversely, a veto or successful legal challenge could preserve the industry’s revenue, maintaining stability in retail real estate. The industry’s $8 billion economic impact and 50,000 jobs highlight its significance to Texas’ economy, and real estate stakeholders will closely monitor developments as the June 22, 2025, legislative deadline approaches.
A total THC ban in Texas, as outlined in Senate Bill 3, could significantly disrupt the state’s commercial real estate market by triggering widespread business closures. The loss of thousands of hemp dispensaries and smoke shops would leave vacant storefronts, particularly in urban areas, where up to 815,000 square feet of retail space in Houston alone is at risk. The economic fallout—job losses, reduced tax revenue, and potential black-market growth—could further strain local real estate markets. While legal challenges and market adaptations offer some hope, the potential ban’s passage would pose a challenging period for Texas’ commercial real estate sector, with ripple effects across urban economies
weed has been illegal since the 60s
it has been easily available since then as well
consequences of behavior while impaired by weed has been occurring since then
legalizing it will allow lawsuits to be filed for consequences of behavior associated with weed
THC dispensaries will be sued to their core once legalized
real estate isn't the issue, lawsuits will be
The nanny state is trying to take over. Just like gambling folks will just go across the state line and get what they want...