Residents of Tennessee may be paying more for cannabidiol (CBD), delta 8 THC and other hemp-derived cannabinoids after the introduction of a new tax.
Effective July 1, 2023, Public Chapter 423 (2023) created a new 6% sales tax for the “privilege of engaging in the business of selling products containing a hemp-derived cannabinoid.”
The new tax applies in addition to the standard 7% state sales tax rate and the applicable local option sales tax rate. Revenue from the new tax is to go into the Tennessee Department of Agriculture’s coffers to fund enforcement of the bill’s requirements.
A hemp-derived cannabinoid means either:
- a cannabinoid other than delta-9 tetrahydrocannabinol (“THC”), or an isomer derived from such cannabinoid, that is derived from hemp in a concentration of more than one-tenth of one percent (0.1%); or
- a hemp-derived product containing delta-9 THC in a concentration of three-tenths of one percent (0.3%) or less on a dry weight basis. This includes, but is not limited to, delta-8 THC and delta-10 THC.
The new tax does not apply to hemp-derived fiber, grain, or topical products.
Other new rules relating to CBD that came into effect on July 1 include:
- Knowingly selling or distribute cannabinoid products to any person under 21 years of age became a Class A misdemeanour.
- Where a business allows customers under the age of 21, CBD must be stored behind the counter.
- Distribution of samples on a public street, sidewalk or park became illegal
Yet to come – in July 2024 – is a requirement that all retailers selling CBD must have licenses issued by the Department of Agriculture.
While Tennessee remains among the minority of states without a full medical cannabis program, cannabidiol is easily accessible through various outlets across the state.
There were hopes more progress would be made on the medicinal cannabis front earlier this year, but those were dashed after Senate Bill 1104 failed in the Senate Judiciary Committee in late February. Likewise, other cannabis-related legislation also failed or made little headway during the session. But the general view remains a fully-fledged program will happen – it’s just not clear when.
