Cannabusiness in Tennessee

Market snapshot

Trends and prospects

How would you describe the current state of the cannabis industry in your jurisdiction, including areas of growth, market prospects and trends, and M&A activity?

The possession, manufacture, use, and distribution of marijuana with a tetrahydrocannabinol (THC) concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). As such, there is no ‘legal’ marijuana industry under Tennessee state law. However, Tennessee does have a fully developed hemp program, which permits private individuals to cultivate hemp with a license from the state (Section 43-26-103 of the Tennessee Code Annotated). Tennessee has seen a steady increase in hemp production since the program’s inception in 2014. The program, combined with the state’s abundant farmland and relatively inexpensive labor force, are strong indicators of positive market prospects now that large-scale commercial hemp production has been legalized by the Agriculture Improvement Act 2018.

What primary and secondary legislation governs the use, cultivation and retail of cannabis in your jurisdiction?

The Tennessee Drug Control Act 1989 (Sections 39-17-401 et seq. of the Tennessee Code Annotated) prohibits the use, manufacture, distribution, and possession of marijuana with a tetrahydrocannabinol (THC) concentration greater than 0.3% in Tennessee. However, the Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant containing 0.3% or less THC concentration—by removing it from the Controlled Substance Act’s definition of “marijuana.” 

The Agriculture Improvement Act permits states to assume control of the regulatory authority over hemp and expressly does not pre-empt them from implementing more stringent regulations in regard to hemp. Tennessee already has a fully developed hemp program (Section 43-26-102(4)(B) of the Tennessee Code Annotated); however, it has not updated its regulations to reflect the Agriculture Improvement Act. Therefore, hemp production in Tennessee will continue under the state’s previous pilot program until new regulations are promulgated (Sections 43-26-101 et seq. of the Tennessee Code Annotated).

The original article, "Cannabusiness in Tennessee," originally appeared on Lexology Navigator on February 4, 2019.