TABC outlines hemp law changes for city leaders

By KATE COIL

Following the Tennessee General Assembly’s overhaul of the state’s hemp regulations, officials are working to familiarize local leaders and law enforcement agencies in advance of the new law taking effect.  

Russell F. Thomas, executive director of the Tennessee Alcoholic Beverage Commission (TABC), explained how the new law, Public Chapter 526, will impact the sale and distribution of hemp-derived cannabinoid (HDC) products, as well as well as new rules for licensing, regulation, and enforcement at TML’s 85th Annual Conference in Chattanooga.  

“If your city has questions or headaches about these products showing up in your local stores, you are not alone,” Thomas said. “We in Tennessee over the past few years have been through a patchwork of laws, definitions, new products coming up every day, and enforcement gaps. I am here to tell you today that the landscape is changing in Tennessee.” 

HOW WE GOT HERE 

Hemp and marijuana both come from the cannabis plant. Thomas said tetrahydrocannabinol (THC) content determines whether something is classified as hemp or marijuana. The federal government has ruled that products with 0.3% or less THC are classified as hemp while anything above is marijuana.  

“The big picture is that hemp is said to have less intoxicating effects than marijuana,” Thomas said. “Once hemp became legal, chemists and manufacturers realized they could extract or make a wide range of compounds from that plant. All those things made from that hemp plant are in that category of hemp-derived cannabinoids. That broad category includes things like Delta-8, Delta-10, THCa, and THCp. Cannabidiol (CBD) is a non-intoxicating substance you will find in a lot of wellness products that became popular when some of these restrictions loosened. Delta-9 THC is the primary compound in marijuana.” 

Thomas said changes in federal law, the evolution of the hemp industry, and scientific research led to the state revisiting its own laws surrounding hemp, particularly in the last decade. Many of these changes focused the use of hemp for industrial products, particularly with the passage of the federal 2018 Farm Bill and the resulting state legislation in 2019.  

Since then, however, a wide variety of HDC products were developed and are now on store shelves. The state created a licensing system for suppliers and retailers in 2023 that sets safety and labeling standards, under the purview of the Tennessee Department of Agriculture (TDA). There were also several lawsuits that contributed to some of the changes to the law in the most recent legislative session. 

NEW PROVISIONS 

One of the major changes in the law was transferring licensing, regulation, and enforcement over hemp products from TDA to TABC, effective Jan. 1, 2026.  

“We are now going to have a regulatory authority that understands intoxicating products and how to keep them in check,” Thomas said. “There will be fewer retailers after Jan. 1 than there are now. At present, these products are sold in a variety of convenience stores across the state. Unless they change their business model to 21 and up and get a retail license, they won't be able to sell these products. We think that will have the practical effect of cutting down on the number of places that sell these products. The more places there are to police, the harder they are to police.” 

The new law requires separate licensing for suppliers, wholesalers, and retailers of HDC products and prohibits the sale of products that exceed a THC concentration of 0.3% on a dry weight basis. 

The new law also limits the sale of HDC products to: 

• Businesses holding a TABC retail package store license and a hemp retail license;
• Businesses holding a TABC on-premises consumption license and a hemp retail license; and
• Other establishments that restrict entry to persons 21 years of age or older and hold a hemp retail license.
• Establishments that hold a valid supplier or wholesaler hemp license and obtain a retail license for the same location, provided all statutory and regulatory conditions are met. 

As the new law takes effect in January, but previous licenses issued by the TDA do not expire until June 30, 2026, Thomas said there will be a transitional period for businesses that are already licensed.  

To resolve debate over what products are legal in Tennessee, Thomas said the new law does specifically prohibit some products, including: 

• Products containing Tetrahydrocannabinol acid (THCa) in a concentration exceeding 0.3% on a dry weight basis.
• All products containing Tetrahydrocannabiphorol (THCp) in any amount. 
• Products that do not meet labeling requirements which include an ingredient list, batch number, mandatory warning statements, and a QR code linking to a valid Certificate of Analysis. 

“Where it really comes into play with the THCa compound is that if you hold it in your hand or stick it in your mouth, it doesn’t get you high, but with a small amount of heat it can,” Thomas said. “People were buying it and rolling it into a joint, just like traditional marijuana, and when they lit it up, it was stronger than a joint you could buy on the street in the ‘60s and ‘70s.” 

Thomas said that beverages are a fast-growing segment of the HDC market. However, not all hemp-based beverages provide the same amount of THC.  

“We know that one shot of vodka has more alcohol in it than one shot of beer because beer is lower in strength,” he said. “The legislature looked at that and set some dosage limits. There are some studies that indicate only about 2.5 milligrams of THC in a drink is equivalent to the alcohol in a beer. They saw some of these drinks on the market that had 30 milligrams of THC or more.” 

Another concern is that many HDC products do not take effect as quickly as alcohol or other intoxicants.  

“There was a fear that someone would take one of these products with a super serving of THC and wouldn’t feel it for a while,” Thomas said. “So, they would take another one, and then another one, and then in 20 minutes they would be walking naked across the interstate.” 

WHERE WE GO FROM HERE 

As many in the hemp industry are not satisfied with the new law, Thomas said he anticipates there will be litigation in the future.  

“I think the legislature has gone a long way to resolve many issues via statute, but you can’t stop somebody from running to the courthouse and filing a lawsuit,” he said. “Don’t be shocked if you see big headlines or think a court will side with them if you see someone has filed a lawsuit over this. A lot of those suits will probably be over THCa.” 

While it did not pass in the previous legislative session, Thomas expects the General Assembly to revive a bill that would allow local government to set certain limits on HCD product retailers. There is another piece of legislation that may be revisited that would allow municipalities to create hemp boards, similar to the beer boards that already exist.  

Ultimately, Thomas is optimistic that Tennessee has a comprehensive system in place to regulate hemp.  

“We have clearer rules for what products can be sold,” Thomas said. “We have a consistent enforcement tool. When the system is up and running, it should mean we have fewer surprises for police and fewer lawsuits over this stuff. We are truly going to be in a much better place.”