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CBD and THC products
Photo: Daniel Meigs
When Gov. Bill Lee signed House Bill 1376 in May — legislation overhauling hemp regulations as of Jan. 1, 2026 — he essentially kneecapped the industry, while also invalidating a monthslong legal fight between the state’s Department of Agriculture and federally legal hemp shops.
Under the new law, fewer shops can sell hemp. Those that can remain open will have fewer products to sell and will have to contend with a new regulatory regime less than two years after the last one was implemented. The new law will shift enforcement of hemp regulations from the Tennessee Department of Agriculture to the state’s Alcoholic Beverage Commission. There will also be new dosage limits on edibles and beverages of 15 milligrams of THC per serving, and those must be sold in an age-gated establishment — basically any shop, such as a liquor store or smoke shop, that checks patrons’ IDs.
This means gas stations and grocery stores will have to stop selling intoxicating hemp products. No more reaching past Coors Light for a 50 milligram Phuk’d Up Cola, or pointing out the pre-rolls tucked between boner pills and kratom.
The largest impact comes from a late amendment to the bill placing a ban on all smokable hemp that contains THCA — a psychoactive cannabinoid, or cannabis-derived chemical compound, that two dozen other states have already made legal in the form of adult-use cannabis. Many shop owners assumed that they would have to stop selling flower containing THCA this summer due to new regulations the state attempted to implement last year.
The new rules will severely hamper an industry that has exploded since the U.S. Farm Bill allowed expanded hemp agriculture in Tennessee in 2018. The state lists 241 licensed hemp farms, and according to the Chattanooga Times Free Press, has more than 1,000 licensed retailers. Vicente LLP, a national cannabis law firm, calculated that Tennessee hemp pulled in more than $245 million in sales between December 2023 and November 2024 based on state tax data. Industry insiders have said Nashville is one of the largest markets in the country for hemp beverages.
Devin Aracena, member of the Tennessee Healthy Alternative Association (TNHAA), makes an even larger sales estimate.
“The hemp industry is a major contributor to the Tennessee economy,” Aracena tells the Scene. “We commissioned a third-party economic impact report, and the total estimated revenue derived from businesses involved in the hemp industry was $1.8 billion, and that’s just from the data that we could get our hands on. Based on our research, the industry employs over 18,770 workers.”
Kelley Hess, executive director of the Tennessee Growers Coalition, also has economic concerns.
“The new law is a significant blow to the hemp industry in Tennessee,” says Hess. “The ban on THCA threatens to put many local businesses out of operation and undermines the progress we’ve made in establishing a responsible and transparent hemp market. We’re already hearing from growers, processors, manufacturers and retailers who are concerned about the future and potential job losses.”
Hess notes that legal action has been a topic of conversation among industry stakeholders, but that she was unable to speak to any specific plan to sue. Other sources also confirmed on background that there had been talk of litigation.
“Given the last-minute amendment to prohibit the sale of THCA flower, I expect a lawsuit on that topic,” says hemp attorney Michelle Bodian. “I don’t expect the entire law to be invalidated.”
“Unfortunately, lawsuits are what industries have to do to protect themselves,” says Aracena, noting that the TNHAA plans to continue focusing on their existing lawsuit against the Department of Agriculture over its attempt to enact new hemp regulations last summer.
The Department of Agriculture was tasked with writing new regulations to govern the hemp industry under a 2023 bill that created the current hemp licensing framework. The agency had until July 1, 2024, to file, presuming it also went through the proper public process. Instead the department filed the new rules as emergency regulations, bypassing the public comment period. The emergency rules would have made THCA illegal the same way another cannabinoid, delta-9 THC, is currently illegal. The Tennessee Growers Coalition and the Tennessee Healthy Alternative Association sued over the actual rulemaking process and were able to obtain a court order blocking the rule change.
Chancellor I’Ashea L. Myles of the Davidson County Chancery Court ordered a temporary injunction on enforcement of the regulations on Dec. 23, 2024, later extending the injunction indefinitely on Feb. 26. About three months later, Gov. Lee signed the hemp bill into law — that will go into effect on Jan. 1, essentially rendering the court case moot.
Ashley Foree, spokesperson for the Tennessee Fuel and Convenience Store Association, says her organization was disappointed by the outcome, but plans to abide by the new rules.
“Convenience store operators were disappointed not to be included in the new licensing legislation for hemp products,” writes Foree in an emailed statement. “Many already have the Department of Agriculture license and are safely selling the products. C-stores and grocery stores have been utilizing universal carding and responsible vendor training for almost 20 years.”
July 1 is the first day that state-approved hemp retailers can renew their annual license with the Department of Agriculture. The department had to clarify on its website that it is still planning to issue licenses, despite having to hand over enforcement of those new licenses on Jan. 1 — six months before they expire.
“TDA is committed to carrying on its work to process and renew [hemp-derived cannabinoids] retailer and supplier applications and licenses while that responsibility remains with TDA,” reads the notice. “TDA is not otherwise able to comment on the content, interpretation, or potential application of Public Chapter 526. That responsibility is assigned to the Tennessee Alcoholic Beverage Commission.”
”}]] Business owners and advocates say overhauled hemp rules kneecap a burgeoning field Read More
