Tennessee’s hemp industry is heading into a major shakeup this summer. Starting July 1, some of the most popular hemp-derived products on the market, including THCA, will no longer be legal to sell in the state as new regulations take full effect.
The Tennessee Alcoholic Beverage Commission officially took over as the state’s hemp regulatory agency at the beginning of the year. A last-minute agreement allowed businesses operating under the old framework to keep selling products like THCA through June 30, but that window is closing fast.
Commission officials presented their finalized rules to the legislature’s government operations committee in May. Executive Director Russell Thomas acknowledged that the majority of public feedback centered on opposition to the THCA ban. “Our focus was to faithfully implement the framework enacted by the general assembly,” Thomas said.
The rise of hemp-derived products in Tennessee traces back to the federal 2018 Farm Bill, which opened the door for a new wave of smokable, drinkable, and edible cannabis-style products. Because these items came from hemp rather than marijuana, they initially fell outside Tennessee’s existing THC ban while still delivering similar effects to users.
THCA became the biggest gray area. On its own, THCA technically falls below the state’s legal THC threshold. But when it’s burned, it converts directly into THC, the psychoactive compound in marijuana that remains illegal in Tennessee. That chemical reality made THCA one of the most widely sold products in the state’s hemp market.
Shops carrying these products spread quickly across Tennessee, and the industry grew into a significant economic force. By 2022, the state’s legislative fiscal review committee estimated the hemp sector carried an economic impact of around $180 million.
State Republicans began pushing back on the industry around that same time, partly due to concerns that there were no age restrictions in place for purchasing these products. Early attempts at an outright ban stalled in the legislature due to financial blowback, but prohibition-minded lawmakers eventually got the votes they needed. In May 2025, the legislature passed a bill closing the THCA loophole. Later that year in November, Congress passed a federal measure to do the same thing nationwide by 2026.
The financial fallout is already being felt. Industry experts estimate that THCA accounts for roughly 75% of all hemp sales, and many in the business expect the July 1 deadline to effectively gut what remains of the market. State officials have already slashed hemp wholesale tax revenue projections from over $55 million down to under $10 million for the current fiscal year.
Some lawmakers have raised concerns about the impact on local businesses. Rep. John Crawford, a Republican from Kingsport, noted during the committee hearing that a hemp wholesaler in his district is likely to shut down because of the ban. “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.
Adding another layer to the situation is a move by the Trump administration in April to reclassify marijuana from Schedule 1 to Schedule 3, a shift that acknowledges the plant’s potential medical benefits. Tennessee had a standing provision requiring the state health department to review its options if federal marijuana classification ever changed, but Republican lawmakers removed that language this year. Under the new setup, any future medical marijuana program in Tennessee would require the legislature to pass its own law.
Medical marijuana proposals are expected to come up during the next legislative session in January.