Applications for retail sale of hemp-derived cannabinoids (HDC) products went live on July 1, 2024. The online application can be found here.
HDC are legal hemp-derived products that include Delta-8, Delta-10 and other CBD products derived from hemp.
Technically, it is illegal to sell HDC in Tennessee without a license beginning today. The Tennessee Department of Agriculture states: “From July 1 until September 30, 2024, we will issue licenses and conduct outreach to businesses to provide education about requirements. We will begin enforcement of license requirements on October 1, 2024.”
We read this to mean that if a business obtains a license by September 30, 2024, the Department of Agriculture will not issue a citation or take other action because a business is currently selling HDC products without a license. We recommend that businesses file and complete applications as soon as possible.
Unlike ticket sales for a Taylor Swift concert, the HDC website seems to be surviving the first day of applications. Speaking of Taylor, Cruel Summer comes to mind:
It's cool, that's what I tell 'em
No rules, in breakable heaven
But ooh, whoa, oh
It's a cruel summer
With you
New HDC Rules in Tennessee.
July 1, 2024 means new rules for HDC sales:
- Child Resistant. HDC products must all meet federal child-resistant effectiveness standards. This means that aluminum cans cannot be sold without added child proofing. Here is a product that bills itself as compliant:
- Testing. Retailers are required to ensure that products are tested by the manufacturer or tested by the retailer. The law requires a two-panel test on active cannabinoids and a potency test. The Department of Agriculture has not issued guidance for testing or a list of approved laboratories to perform the tests.
- Kid Appeal. Say bye-bye to gummy bears and any other product that is shaped like an animal or cartoon character. The law also prohibits using popular kid food shapes (think Goldfish), movie characters and mythological creatures. No unicorn gummies.
- Warning. All HDC products must state in at least 6-point font:
WARNING: This product contains hemp-derived cannabinoids. Must be at least 21 years of age to possess or consume. Use of this product while pregnant or breastfeeding may be harmful. Consumption may impair ability to drive or operate machinery. This product is not approved by FDA for cure, mitigation, treatment, or prevention of disease. May contain unknown or unidentified substances that have harmful or toxic effects. Keep out of reach of children and animals.
- Labels. All HDC products must have:
- List of ingredients
- List of allergens
- Nutritional fact panel
- Amount of HDC in milligrams, including the amount of HDC in each serving and the method of analysis
- Expiration date
- Manufacturer – distributor information and batch number
These rules are in addition to the following that have been in effect since July 1, 2023:
- Card for 21. It is a Class A misdemeanor to knowingly sell or distribute hemp-derived cannabinoid products to any person under 21 years of age. This is the same penalty as sale of beer or alcoholic beverages to a minor.
- Take HDC off the shelves. HDC products must be stored behind the retail counter and inaccessible to a customer, if the business allows patrons that are under 21. A violation is a Class A misdemeanor.
- Tax HDC. There is a 6% tax on HDC sales. This is in addition to sales tax. Retailers should have started collecting the 6% tax on sales of HDC beginning July 1, 2023.
- No public samples. It is illegal to knowingly distribute samples of hemp-derived cannabinoid product in or on a public street, sidewalk, or park.
- 1,000 feet from a school. Locations that opened after December 31, 2023 cannot be within 1,000 feet of a public or private school. Locations open before December 31, 2023, are required to demonstrate that they were in operation and selling HDC before December 31, 2023.
Although we have heard nothing about enforcement of HDC laws, we strongly encourage businesses to begin reporting taxes, if they have not. The Department of Revenue is not forgiving about failure to pay taxes and is likely to impose penalties and interest on unpaid taxes. Remember, Al Capone went to jail for failing to pay taxes; Scarface did not get locked up for being a gangster.
The Tennessee law on Hemp-Derived Cannabinoids – aka HDC, can be found here. Most everyone else calls it CBD, Delta 8, and Delta 9.
A big shout out to Adams and Reese attorney Eric Evans for his research on HDC. Although Mr. Evans will undoubtedly chastise us for oversimplifying the law.
Agriculture has a home page for HDC information at Hemp-Derived Cannabinoids (tn.gov).