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In 2023, the Tennessee General Assembly enacted legislation to
regulate and tax the hemp-derived cannabinoid products (HDCP). The
Tennessee Department of Agriculture
(TDA) was previously responsible for issuing licenses, regulating
the manufacture and distribution of HDCPs, and conducting
inspections.
In 2025 the Tennessee legislature passed House Bill 1376, which transferred regulatory authority from the TDA to the Alcoholic Beverage Commission (TABC) and established a new regulatory framework which was set to become effective on January 1, 2026.
The new law, defines HDCPs as products containing: any cannabinoid other than delta-9 THC that is derived from hemp in a concentration of more than 0.1 percent; not containing greater than .3% of delta-9 THC on a dry-weight basis; and not contain a total THC of greater than .3% on a dry weight basis.
As a result of the new legislation, the distribution, manufacture, licensing, and taxation are among the matters addressed in the legislation. In addition to changing the regulatory body responsible for overseeing HDCPs in Tennessee, modifications to prior legislation include: a new licensing structure; a wholesale tax of two cents per mg of HDCP; a mandate all transactions be face-to-face in brick-and-mortar retail locations; stricter packaging requirement and warning requirement; and prohibition on advertising targeted at youth or health related claims.
However, there were serious concerns in the HDCP industry for business which held existing licenses issued by the TDA. Tennessee Healthy Alternatives Association (TNHAA) filed a petition for a declaratory order on July 15, 2025, requesting clarity on the application of HB 1376 to those businesses selling HDCPS with existing licenses.
Yesterday, TNHAA and the TABC entered into an agreed declaratory order stipulating existing HDCP businesses will continue to operate under the 2023 regulatory framework while the state moves to the new framework.
Per the order, suppliers and retailers who were issued licenses by the TDA on or before December 31, 2025 (Legacy Licensees) will continue to operate under the 2023 regulatory framework until their existing licenses expire, rather than immediately transitioning to the new 2025 law when it takes effect on January 1, 2026.
As noted by Sam Oechslin, President of TNHAA "[o]ur members can continue operating under the existing regulatory framework they know and have invested in. We consider this outcome a significant win. TNHAA is effectively advocating for our industry, and we hope all those in the industry will consider joining."
The major provisions of the order include:
- Legacy Licensees will continue operating under the 2023 regulatory framework until their TDA-issued licenses expire
- TABC will begin processing applications under the new law on January 1, 2026
- Legacy Licensees may apply for new licenses before their current licenses expire, with the new licenses becoming effective upon expiration or closure of the Legacy Licenses,.
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