Why It Matters
Tennessee’s hemp industry is set for a dramatic contraction as state regulators begin enforcing a ban on popular cannabinoid products. The restrictions, which take effect July 1, are expected to eliminate approximately 75% of hemp sales in the state and force wholesale tax revenue projections down from $55 million to less than $10 million.
The regulatory shift places Tennessee among states moving to close loopholes that allowed hemp-derived products to circumvent marijuana prohibition laws.
What Happened
The Tennessee Alcoholic Beverage Commission assumed full regulatory control of hemp products at the start of the year and will begin enforcing restrictions on July 1. Most hemp-derived cannabis products currently sold in the state, including THCA, will become illegal under the new framework.
State lawmakers passed legislation in 2025 to close the THCA loophole. A temporary agreement allowed companies operating under previous regulations to continue sales through June 30.
Russell Thomas, executive director of the commission, told the legislature’s government operations committee in May that officials focused on implementing the framework enacted by lawmakers. He acknowledged that most public comments centered on opposition to the THCA ban.
By The Numbers
Industry experts estimate THCA products account for 75% of hemp sales. The state’s legislative fiscal review committee estimated in 2022 that hemp products had an economic impact of $180 million.
Tennessee officials have already reduced hemp wholesale tax projections for this year from more than $55 million to less than $10 million. Representative John Crawford said the new rules are likely to force a wholesaler in his district out of business.
The Legal Background
After Congress passed the 2018 farm bill, hemp-derived products emerged in states without marijuana legalization. These items, including smokable, drinkable, and edible products, are derived from hemp and previously avoided Tennessee’s ban on THC products.
THCA became a focal point because when burned, it converts into THC, the psychoactive ingredient in marijuana that remains illegal in Tennessee. Because THCA comes from hemp, it technically fell below the state’s previous legal threshold for THC content.
Congress moved to close the THCA loophole nationally in November 2025, with federal restrictions taking effect in 2026.
Zoom Out
Republican lawmakers began efforts to restrict Tennessee’s hemp industry in 2022, partly because the market initially lacked age restrictions. Early attempts at outright bans failed due to economic concerns, but prohibition advocates secured passage in 2025.
The Trump administration reclassified marijuana in April from Schedule 1 to Schedule 3, recognizing potential medical benefits. Tennessee had a provision requiring the health department to review options if marijuana were reclassified, but lawmakers removed that requirement this year.
What’s Next
The hemp product ban takes full effect July 1. Republican lawmakers passed legislation this year requiring the legislature to pass its own law before creating any medical marijuana program.
Proposals for a medical marijuana program in Tennessee are expected during the next legislative session beginning in January.