After an objectively troubled launch that spurred litigation,
Tennessee's permanent hemp-derived cannabinoid licensing
regulations are finally set to take effect at the end of this
month. This would mark the culmination of a roughly 20-month effort
by the Tennessee Department of Agriculture ("Department")
following the enactment of the state's hemp-derived cannabinoid
product law (T.C.A. § 43-27-201 et seq.) in
May of 2023 to establish permanent regulations governing
hemp-derived cannabinoid ("HDC") products and the
companies that produce and sell such products. This prolonged and
circuitous journey saw the Department file a notice of rulemaking
hearing on December 14, 2023, receive thousands of public comments
on the draft permanent regulations, hold a public hearing on the
draft permanent regulations on February 6, 2024, pivot to filing
"emergency" regulations in July of 2024 (ostensibly
because draft permanent regulations were languishing in the formal
rulemaking process prescribed under the state's Administrative
Procedures Act), face legal challenges to the purported basis for
the emergency regulations, and then, ultimately, promulgate the
"final" permanent regulations at the end of September
through the haze of ongoing litigation.
While not the model of administrative efficiency, the bottom line
is that Tennessee will soon have some of the most robust licensing
and operational requirements in the country for entities in the HDC
product supply chain. On September 27, 2024, the Department filed
permanent regulations requiring all HDC product producers,
suppliers (i.e., manufacturers and distributors) and retailers in
the state to apply for and obtain licenses from the Department.
These permanent regulations will become effective on December 26,
2024 (the day after the state's emergency regulations expire)
and are available here. Pursuant to the permanent regulations,
applicants for licensure must submit required information on forms
provided by the Department, which may include:
- Name of applicant;
- Date of birth of any applicant who is an individual or partner in a general partnership;
- Proof of registration in its state of incorporation for any applicant that is a formalized business entity;
- Contact information for the applicant, to include the name of the person legally responsible for the applicant's operations;
- Address of location to be licensed; and
- Criminal background checks facilitated through the Tennessee Bureau of Investigation for the person legally responsible for the applicant's operations.
All licenses will be valid for a period of one year and require
payment of annual license fees to the Department.
Perhaps most critically, the new permanent regulations essentially
ban all HDC products with intoxicating levels of THC. Specifically,
the testing standards for HDC products make clear that any HDC
product moving in commerce to anyone who is not a licensed HDC
supplier is subject to embargo, recall, remediation and/or
destruction if it has a post-decarboxylation THC
value of greater than 0.3%. The permanent
regulations also impose specific requirements on all key functions
in the HDC product supply chain, from cultivation to manufacturing
and processing, retail sales, transportation, sampling and
testing.
Concerning manufacturing and distribution of HDC products –
defined in the permanent regulations to mean products that contain
or that are labeled to contain a hemp-derived cannabinoid and that
are produced, marketed, or otherwise intended to be consumed
orally, inhaled, or absorbed through the skin – the permanent
regulations:
- Require the assignment of a unique batch number to each product batch;
- Prohibit the addition of nicotine to any HDC product;
- Prohibit the manufacture of an inhalable HDC product made with a non-hemp derived ingredient unless the ingredient is listed in the FDA inactive ingredient database;
- Prohibit the use of solvents in the manufacturing of HDC products, except for water, vegetable glycerin, vegetable oils, animal fats, butane, propane, carbon dioxide, ethanol, isopropanol, acetone, heptane, ethyl acetate, and pentane; and
- Require that all HDC products include labels with the batch number, name of the manufacturer/distributor, an allergen statement, a QR code linking to Certificate of Analysis ("COA") results, serving size and total servings per package, and several required warnings, including a warning to keep out of reach of children.
With respect to retail sales of HDC products, the permanent regulations:
- Prohibit sales of HDC products to individuals under the age of 21;
- Prohibit the use of vending machines or unstaffed kiosks for sales of HDC products; and
- Require that HDC products be located "behind the counter" such that physical assistance from the licensee is necessary for a customer to access the products (unless the business itself is one for which entry is limited to persons 21+).
With respect to the transportation of HDC products, the
regulations make clear that HDC suppliers are prohibited from
transporting HDC products that fail microbial testing or THC
concentration testing unless: 1) the subject batch is further
processed to meet required tolerances; 2) the licensee submits a
corrective action plan for the remediation of the batch by another
HDC supplier; or 3) the batch is rendered unusable.
Finally, with respect to sampling and testing, the regulations
institute robust product testing requirements, including the
requirement to obtain COAs from third-party laboratories for all
product batches, which COAs are defined in the permanent
regulations to be a "written document from a laboratory that
meets USDA standards for testing of hemp samples, and which
communicates the results of those tests performed." HDC
supplier licensees are required to sample and conduct full panel
testing (including testing for analytes, residual solvents and
heavy metals) for each batch of HDC products.
Originally published 04 December 2024
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