Tennessee’s hemp industry will take a major blow starting in 2026 after Gov. Bill Lee signed legislation on May 21 that not only will ban products with THCA and synthetic cannabinoids but also prohibit direct-to-consumer sales.

The legislation, House Bill 1376, also removes the state’s Agriculture Department from regulatory duties over hemp-derived cannabinoid products, transferring that authority to the Tennessee Alcoholic Beverage Commission (ABC).

Under the new regulatory regime, hemp-derived cannabinoid product (HDCP) sales will be banned in convenience and grocery stores and instead be restricted to establishments that limit entry to individuals 21 and older or are licensed by the ABC. The new law also establishes strict regulatory structures for HDCP wholesalers and manufacturers.

Sen. Richard Briggs, R-Knoxville, who sponsored the Senate version of the legislation, said last month on the chamber floor that the intent is to regulate HDCPs like alcohol in the interest of public health and safety.

“We have a situation here in Tennessee where we essentially are dealing with unregulated recreational marijuana with no regulation,” he said. “It’s the wild west out there.”

In opposition to the bill, the U.S. Hemp Roundtable (USHR) called H.B. 1376 “hemp-killing” legislation that would provide the alcohol industry a monopoly on beverages containing cannabinoids while cutting opportunities for farmers and small businesses.

Moreover, according to the USHR, the legislation will strip access to wellness products that many Tennesseans have relied upon in the absence of medical cannabis legalization in the Volunteer State.

The Tennessee Growers Coalition, which advocates for local hemp farmers and businesses, held a similar position, urging its supporters to send the following message to their elected officials regarding H.B. 1376’s intent to ban THCA flower and online sales, and to shift regulatory authority to the ABC:

“This maneuver is also brought by the liquor industry as a greedy attempt to make up for lost revenue lost by the onset of popular legal hemp products. This is not about protecting consumers like proponents say; it’s about capitalizing on the hemp industry to offset losses in alcohol sales and padding bureaucratic pockets off the backs of everyday hard-working Tennesseans.”

Briggs said last month that opponents of his sponsored legislation were overly focused on tetrahydrocannabinolic acid (THCA), a precursor to THC: When nonintoxicating THCA is heated, or decarboxylated, it converts into intoxicating THC.

For hemp industry stakeholders, THCA, which was omitted from the federal definition of hemp in the passage of the 2018 Farm Bill, represents a robust business opportunity, especially in states that have less permissive cannabis laws.

For many in the highly regulated and taxed cannabis industry, THCA represents a loophole for their competitors to undercut their licensed and tested products.

“A very, very small part deals with probably what most of the discussion is going to be about, which is dealing with the THCA,” Briggs said.

The senator said he and other legislative leaders sent a letter to the U.S. Department of Justice (DOJ) asking for clarification on where the federal government classifies THCA under the Controlled Substances Act (CSA).

Legal experts outside of Tennessee have sent similar letters and received similar responses.

Terrence L. Boos, Ph.D., chief of the Drug and Chemical Evaluation Section of the Drug Enforcement Administration’s (DEA) Diversion Control Division, wrote in a May 13, 2024, letter to Attorney Shane Pennington that THCA must be factored into determining whether a substance meets the legal definition of hemp or cannabis.

“The ‘decarboxylation’ process converts delta-9 THCA to delta-9-THC. Thus, for the purposes of enforcing the hemp definition, the delta-9 THC level must account for any delta-9 THCA in a substance,” Boos wrote in the letter. “Accordingly, cannabis-derived THCA does not meet the definition of hemp under the CSA, because upon conversion for identification purposes as required by Congress, it is equivalent to delta-9 THC.”

However, some legal experts argue that Boos’ interpretation of THCA does not align with the 2018 Farm Bill language because the federal legislation only deals with hemp tested in the field, not in finish goods. In other words, as long as a plant tests below 0.3% delta-9 THC on a dry-weight basis during a pre-harvest test within 30 days of being chopped down, then its derivatives that land on retail shelves can contain any amount of THCA under federal law.

Similarly, the DEA determined that “all synthetically derived tetrahydrocannabinols,” such as delta-8 THC and THC-O, “remain Schedule I controlled substances” in the agency’s Interim Final Rule from August 2020.

However, the U.S. Ninth Circuit Court of Appeals, in May 2022, and the U.S. Fourth Circuit Court of Appeals, in September 2024, rejected the DEA’s interpretation.

Tennessee state Sen. Kerry Roberts, R-Springfield, said last month that H.B. 1376 would hurt farmers in his rural district, asking why the legislation doesn’t align with the federal definition of hemp.

Much like other states that have legalized adult-use cannabis, Briggs said, “This is an issue of state sovereignty, and we can set it anywhere we want.”

Sen. Page Walley, R-Savannah, said it was a “bit disconcerting” that his fellow lawmakers decided to change the rules after having already set definitions for hemp-derived cannabis like THCA and delta-8 THC for industry participants in July 2023.

“My concern isn’t about the content; it’s about the process … We went through a lot of this work over the last few years, and we told our farmers, we told our retailers, we told small business people, who are honest, that are paying rents on facilities, that these were the rules,” Walley said. “Law-abiding Tennesseans who have trusted us and did what we told them they could do, and now we’re going to move that goalpost.”