Tennessee finalizes hemp rules banning the sale of THCA starting July 1

A combination of state and federal rules are going to reshape Tennessee’s once-burgeoning hemp industry starting in July.

Most of Tennessee’s most popular hemp-derived cannabis products, like THCA, will be illegal to sell as the Tennessee Alcoholic Beverage Commission assumes full regulatory control of hemp and begins enforcing a ban passed in 2025 by state lawmakers.

The commission became the state agency responsible for hemp at the start of the year but a last-minute deal allowed companies operating under the old regulatory framework to continue selling products like THCA until June 30.

Officials with the Alcoholic Beverage Commission appeared before the legislature’s government operations committee in May to finalize the rules, acknowledging that most of the public comments focused on frustrations with the THCA ban.

“Our focus was to faithfully implement the framework enacted by the general assembly,” said Russell Thomas, the executive director of the commission.

After Congress passed the 2018 hemp bill, new marijuana-like products were sold in states that hadn’t already legalized it. These new, mostly smokable, drinkable, and edible consumer items are derived from hemp, which allowed them to avoid Tennessee’s ban on THC products, but still produce a similar type of high.

The most glaring loophole was THCA.  When burned, THCA essentially turns into THC, the psychoactive ingredient in marijuana that is illegal in Tennessee. THCA, because it comes from hemp, technically has a THC content below the state’s previous legal threshold.

Hemp taxes in limbo as industry braces for massive sales drop-off in July

The industry quickly grew in Tennessee, with stores popping up across the state to sell the products.

But starting in 2022, state Republican lawmakers began trying to rein in the industry, in part because at one point there were no age restrictions on who could buy it.

Initial outright bans proposed by lawmakers failed to pass the legislature, in part due to financial concerns. In 2022, the state’s legislative fiscal review committee estimated that hemp products had an economic impact of $180 million.

But marijuana prohibition lawmakers eventually got their way in May 2025, passing legislation to close the THCA loophole. U.S. Congress followed suit, passing a law in November 2025 to close the THCA loophole nationally by 2026.

Industry experts estimated that 75% of hemp sales come from THCA, and expect that once the ban fully goes into effect on July 1, it will be a death blow to the industry.

Rep. John Crawford, a Kingsport Republican, said during the hearing that the new rules are likely to put a wholesaler in his district out of business.

”I have a really hard time with that we gave them permission over the last year, and now we’re taking that back,” Crawford said.

The ban is also expected to impact the state’s budget, where officials have already reduced this year’s hemp wholesale tax projections from more than $55 million to less than $10 million.

Hanging over the whole hemp conversation is a move by President Donald Trump’s administration to reclassify marijuana in April from Schedule 1, considered a dangerous addictive drug to Schedule 3, recognizing its potential medical benefits.

Tennessee doesn’t have a medical marijuana program, but did have a provision in law requiring the health department to review its options if marijuana were ever reclassified. But Republican lawmakers passed a bill this year removing that provision and requiring the legislature to pass its own law creating any medical marijuana program.

Proposals for a medical marijuana program in Tennessee are expected to be proposed during the next legislative session in January.