HB 1376

Present law requires the de partment of agriculture to regulate the manufacture, production, and sale of hemp-derived cannabinoid products ("HDCP""). This bill transfers such responsibility to the alcoholic beverage commission (""ABC"") and the department of revenue and makes various c hanges and additions to present law concerning the regulation of HDCP, as follows: (1) Present law defines hemp as the plant cannabis sativa L. with a delta-9 THC concentration of not more than 0.3% on a dry weight basis. This bill adds that ""dry weigh t"" means the weight of plant material with a moisture content that does not exceed 13%; (2) Present law specifies that tetrahydrocannabinolic acid (THCa) is a HDCP. This bill instead specifies that THCa is not a HDCP and defines THCa as the precursor of delta-9 THC. This bill also specifies that a synthetic cannabinoid is not a HDCP and defines ""synthetic cannabinoid"" to mean a substance with a similar chemical structure and pharmacological activity to a cannabinoid, but that is not extracted or derive d from hemp plants, or hemp plant parts and is instead created or produced by chemical or biochemical synthesis; (3) This bill adds a definition of ""HDCP, which is a product that contains or that is labeled as containing a hemp-derived cannabinoid and th at is produced, marketed, or otherwise intended to be ingested orally, inhaled, or absorbed through the skin, and that may contain a hemp-derived cannabinoid that is extracted from hemp plants or hemp plant parts. This bill specifies that HDCP includes i n termediate products intended for subsequent use as a component in a later finished HDCP and harvested hemp plant parts, otherwise known as hemp flower; (4) Present law defines ""THC"" to mean delta-9 tetrahydrocannabinol. This bill instead defines THC to mean tetrahydrocannabinol, THCa, a THC component, or any derivative thereof. This bill defines ""THC component"" to mean a naturally occurring cannabinoid component of industrial hemp or hemp; (5) Present law requires that a person obtain a license in or der to engage in the business of manufacturing or selling HDCP, including as a supplier or retailer. This bill specifies that a license is also required for engaging in the wholesale distribution of HDCP and defines ""wholesaler"" to mean a person that pur c hases finished and packaged for consumption HDCPs, not considered intermediate products still in the pre-packaging stage, from licensed suppliers, or from other licensed wholesalers, and that sells HDCPs for resale and not for consumption; (6) Present la w defines ""retailer"" to mean a person that sells HDCP for consumption and not for resale. This bill expands the definition of retailer to mean a person that sells, markets, or advertises as a seller, provides samples with or without a fee or charge, or o t herwise distributes to the public, with or without compensation, HDCPs for consumption and not for resale; (7) Present law defines ""supplier"" to mean a person that manufactures hemp-derived cannabinoids or sells products containing hemp-derived cannabin oids to retailers. This bill expands the definition of supplier to mean a person or entity that manufactures hemp-derived cannabinoids or HDCP or contracts for the manufacture of hemp-derived cannabinoids or HDCP, whether located inside or outside of thi s state, and that sells finished, packaged HDCP to licensed wholesalers for resale and not for consumption; (8) Present law generally requires that a HDCP be maintained behind the counter of a retail establishment in an area inaccessible to a customer. A place of business that limits entry to persons 21 years of age or older is not required to comply with the ""behind the counter"" requirement. A violation of the present law requirement is a Class A misdemeanor. This bill changes present law to authorize the sale of HDCP at retail in the following locations: (A) An establishment that limits entry into the premises to individuals who are 21 years of age or more; (B) An establishment that holds a license for the sale of alcoholic beverages on the prem ises. An establishment that qualifies under this subdivision (B) may only sell HDCPs in a quantity and manner intended for on-premise consumption while present at the establishment in accordance with rules of the ABC; (C) An establishment that holds a license for the retail sale of alcoholic beverages; or (D) An establishment owned or leased by a licensee that holds a valid supplier license, wholesale license, and retail license for the same location where HDCP will be manufactured and sold at retail, or an establishment owned or leased by a licensee that holds a valid supplier license and retail license for the same location where HDCP will be manufactured and sold, and that has contracted with a wholesale licensee for remitting the tax levied under t his bill and for the wholesale distribution of the supplier's products. For the products that are manufactured on the supplier's licensed premises and that are sold at retail on the supplier's licensed premises, if applicable requirements are met, a supp l ier is not required to have the products that it manufactures and sells at retail on its licensed premises warehoused by the supplier's contracted wholesale licensee; This bill adds requirements for retail sales of HDCP, including warning signs, maintain ing HDCP in an area that is constantly visible to a retail licensee's employee, prohibiting self-checkout and vending machine sales, and changing the ""behind the counter"" requirement to a ""behind a barrier"" requirement, subject to an exception for certain retailers in the case of HDCP beverage products. A violation of any of the requirements described in (8) is a Class A misdemeanor; (9) Under present law, the department of agriculture is generally responsible for licensure related to HDCP and regulating HDCP manufacture and distribution, while the department of revenue is generally responsible for ensuring compliance with tax requirements and regulating retail sales of HDCP. This bill transfers the responsibilities of the department of agricu l ture to the ABC to the responsibilities of the department of revenue. The full text of this bill specifies various duties and authority for the ABC and the department of revenue to exercise in executing their regulatory responsibilities concerning HDCP; (10) This bill makes various changes and additions to the requirements for licensure or suppliers and retailers. Among the more significant changes and additions are: (A) This bill specifies that, if a person holds multiple licenses under this bill, th e person shall maintain the business conducted under each license on a separately designated premises or in wholly separate facilities in a manner to be determined by the ABC by rule; (B) This bill increases the application fee for a retailer's license f rom $250 to $500. This bill increases the annual license fee from $250 to $1, 000 for a retail location, and $500 to $2, 500 for a supplier location; and (C) This bill prohibits the shipping of HDCP directly to a retail licensee in this state or directly to a consumer in this state. This bill requires that all sales of HDCP and transfers of product from a retailer to consumer take place at a licensed retail location in a face-to-face transaction; (11) The full text of this bill specifies the requirement s for obtaining a wholesaler license from the ABC. The application fee for a wholesaler license is $500 and the annual license fee is $5, 000, per warehouse location. An applicant for a wholesaler license must, among various other requirements, have acce s s to a warehouse that meets certain requirements and demonstrate access to $750, 000; (12) Under present law, testing of HDCP must employ liquid chromatography tandem mass spectrometry, in a manner similarly reliable to post-decarboxylation, to determine a cannabinoid profile of samples tested, including their THC concentrations. This bill instead requires that the testing be conducted by post-decarboxylation to determine a cannabinoid profile of samples tested, including their THC concentrations; (13) This bill imposes a tax upon the sale of HDCP at wholesale in the amount of one cent per milligram of hemp-derived cannabinoid in each HDCP sold at wholesale in this state. The tax is payable monthly. Fifty percent of the tax is to be appropriated for u s e by local governments for local road infrastructure projects in the manner prescribed by the general assembly and the remaining 50 percent is for the use of the ABC to enforce the laws concerning HDCP. This bill specifies reporting requirements for whol e salers to determine the amount of tax due; (14) Present law specifies packaging and labeling requirements for HDCP. This bill adds packaging requirements specific to HDCP beverage products. Present law prohibits selling an ingestible HDCP in a serving that contains more than 25 milligrams, in the aggregate, of one or more hemp-derived cannabinoids. This bill adds that, for HDCP other than beverage products, HDCP must be packaged in a single package, container, or cartridge that contains no more than t h e milligram equivalent of 10 servings, or 250 milligrams of hemp-derived cannabinoids, in the aggregate, in a manner to be determined by the commission by rule; (15) This bill prohibits mixing HDCP with or otherwise using HDCP as an ingredient in beer or alcoholic beverages; (16) This bill prohibits labeling or marketing HDCP to make any health-related claims; (17) This bill prohibits a supplier from delivering one or more HDCPs to a wholesaler for distribution in this state unless each HDCP brand is registered by the supplier with the department of revenue. Also, this bill prohibits a wholesaler from ordering, receiving, accepting, or offering for sale an HDCP brand unless the brand is registered with the department of revenue. The full text of thi s bill describes a brand registration process and sets an annual brand registration fee of $300 per brand; (18) This bill prohibits direct-to-consumer shipping and use of delivery services to delivery HDCP to a consumer. This bill established tiered civi l penalties for violations of such prohibitions ranging from $1, 000 for a first offense to $10, 000 for a third or subsequent offense; (19) This bill makes it a Class A misdemeanor offense for a person to manufacture, cultivate, produce, or sell in Tennes see: hemp or hemp plant parts which contain a THCa concentration in excess of 0.1% on a dry weight basis; any derivative of hemp or HDCP that contains THCa, hemp, hemp plant parts, a derivative of hemp, HDCPs, or another product that contains a total THC c oncentration, or a total theoretical THC concentration, in excess of 0.3% on a dry weight basis; or a synthetic cannabinoid, or a product that contains a synthetic cannabinoid; (20) Present law levies an additional 6% tax on the sales price of HDCP, the revenue from which is deposited into a special account in the state general fund, with 50% allocated to the department of revenue and 50% allocated to the department of agriculture, to be used exclusively for the regulation of HDCP in Tennessee. This bil l redirects the department of agriculture's half to the ABC, removes the requirement that the funds be used exclusively for the regulation of HDCP in Tennessee, and requires that unused funds remaining in the account at the end of a fiscal year must not re v ert to the general fund but must be carried forward and remain available for expenditure in accordance with the sales tax laws; and (21) For purposes of promulgating rules and carrying out administrative duties necessary to effectuate this bill, this bil l takes effect upon becoming a law. For all other purposes, this act takes effect January 1, 2026. ON APRIL 10, 2025, THE HOUSE ADOPTED AMENDMENTS #12, #10, AND #11 AND PASSED HOUSE BILL 1376, AS AMENDED. AMENDMENT #12 makes various technical correcti ons and clarifications to this bill, along with the following substantive changes: (1) Specifies that t etrahydrocannibinolic acid (THCa) is a hemp-derived cannabinoid and t etrahydrocannabiphorol (THCp) is not a hemp-derived cannabinoid. This amendment prohibits the sale of a derivative of hemp or an HDCP that contains THCp; (2) Replaces the exception for hemp-derived topical products with an exception for hemp-derived stalk and specifies that, in order to not be a hemp-derived cannabinoid, hemp-derived fiber, grain, or stalk must not contain a hemp-derived cannabinoid in a c oncentration of more than 0.3% on a dry weight basis ; (3) Designates as a supplier, a person who s ells HDCPs to wholesalers licensed under this bill for repackaging and for resale, but not for consumption ; (4) Makes it an offense under this bill for a supplier, wholesaler, or retailer to knowingly employ a person under 1 8 years of age for the physical manufacture, storage, sale, or distribution of HDCPs, or to knowingly permit any such underage person on the premises of its place of business to engage i n the manufacture, storage, sale, or distribution of HDCPs ; (5) Authorizes licensees of the alcoholic beverage commission (ABC) other than retail package stores to sell HDCP in a quantity and manner intended for on-premise consumption while present at th e establishment in accordance with rules of the commission; and subject to state and local laws restricting the use of vape cartridges or hemp or hemp flower in establishments and public places ; (6) Allows all retailers, instead of only retail package st ore licensees, to maintain hemp-derived cannabinoid beverages in areas that are not behind a barrier. This amendment also exempts 21-and-up establishments from the requirement to maintain HDCP behind a barrier; (7) Beginning in 2027, establishes July 1, as the due date for the ABC and the department of revenue to submit the annual report on compliance and enforcement efforts under this bill; (8) Specifies that a date of birth for each applicant, or owner of an applicant, must be submitted to the ABC as part of the application for a wholesaler license under this bill; (9) Replaces the requirement that a n identity history summary issued by the FBI for the person identified as legally responsible for the management of each applicant's operations be inclu ded as part of the application for a wholesale license under this bill. This amendment instead specifies that such person must submit to a criminal background check by the TBI and FBI; (10) Allows an applicant for a wholesaler license to provide documen tation of a bond or line of credit in order to establish access to a minimum of $750, 000; (11) Adds that a laboratory with which a supplier contracts for product testing may be located inside or outside Tennessee so long as it is certified for testing by the ABC; (12) Requires that the ABC use high-performance liquid chromatography, instead of post-carboxylation, when testing samples of HDCP; (13) Revises the tax on wholesale sales of HDCP to be two cents per milligram of hemp-derived cannabinoid in e ach HDCP based on the most recent HDCP lab test results provided to the wholesaler by the supplier, except in the case of HDCP in the form of hemp plant parts or hemp flower, in which case the tax is $50.00 per ounce of weight; (14) Revises the manner in which monies collected from the tax described in (13) will be deposited. Instead of requiring that all such monies be deposited in the general fund with half being appropriated for use by local governments for road projects and the other half being appr o priated for use by the ABC to administer and enforce this bill, this amendment requires that 80% be deposited in the general fund, 10% be deposited into a special account in the state general fund to be appropriated for use by the ABC (at least 50% of whic h must be used to administer and enforce this bill, and not more than 50% of which may be used to administer and enforce alcoholic beverage laws), and the remaining 10% of which must be deposited into a special account in the state general fund to be appro priated for use by the department of revenue in the administration and enforcement of this bill. Any unused funds remaining in the special accounts for the ABC and the department at the end of a fiscal year will revert to the general fund; (15) Adds tha t labeling for hemp plant parts or hemp flower must state the percentages and identity of each hemp-derived cannabinoid present in the product; (16) Changes this bill's requirement that a non-beverage HCDP that is sold at retail be packaged in a single p ackage or container that contains no more than the milligram equivalent of 10 servings, or 250 mg of hemp-derived cannabinoids, in the aggregate . This amendment instead requires that such HDCP be packaged in a single package or container that contains no more than the milligram equivalent of 2 0 servings, or 30 0 mg of hemp-derived cannabinoids, in the aggregate ; (17) Adds to this bill's packaging requirements that containers for: (A) HDCP beverage products which hold more than a single serving must be r esealable; (B) HDCPs in cartridge form must be packaged in a single cartridge that contains not more than 40 servings, no t to exceed 500 mg per cartridge s ; (C) H emp plant parts and hemp flower, the HDCP must be packaged in a single package or container that contains not more than one-half of an ounce by weight of HDCP ; and (D) HDCPs in the form of a smokeless pouch that contains a hemp-derived cannabinoid for ingestion or absorption, be sold in a single container or tin that contains no more than 15 p ouches, and no more than six milligrams of hemp-derived cannabinoids per pouch ; (18) Reduces from 25 mg to 15 mg the maximum amount of hemp-derived cannabinoids that may be included in a serving of ingestible HDCP; (19) Expands this bill's prohibition against mixing or infusing HDCP with beer or alcoholic beverages to prohibit the manufacture, sale, or provision to a consumer in Tennessee; (20) Adds concentration limits for hemp-derived cannabinoid in beverages sold in keg containers of 650 mg of hemp -derived cannabinoid per 15.5 gal lon keg container, and 325 mg of hemp-derived cannabinoid per 7.75 gallon keg container ; (21) Specifies that e ach brand of HDCPs, distinguishable by category, type, and delivery system, must be separately registered with the department of revenue and ads authorization for the department to require a supplier to include with its submission of the registration form any supporting documents as deemed necessary by the department for registration of an HDCP brand ; (22) Clarif ies that this bill's prohibition against shipping an HDCP directly to a consumer in Tennessee does not prohibit a person or entity with a license issued under this bill from shipping an HDCP outside of Tennessee if such shipping of HDCPs is lawful in the j urisdiction in which the shipment is received ; (23) Removes t otal theoretical tetrahydrocannabinol content from this bill; (24) Requires the department of revenue to make available to the public the identity of the wholesalers and suppliers operating i n Tennessee; (25) Eliminates the 6% privilege tax on the sales price of HDCP; (26) Replaces present law authorization for the ABC to investigate and/or to arrest, without warrant or process of any kind, any person whom the arresting officer has probabl e cause to believe is committing or attempting to commit a felony in violation of the Tennessee Drug Control Act, if the felony is committed on premises licensed by the ABC, on any premises under investigation by the ABC in conjunction with its other dutie s and responsibilities, and/or any other premises selling alcoholic beverages, whether licensed or unlicensed. This amendment instead authorizes the ABC to investigate and to arrest any person whom the arresting officer has probable cause to believe is co mmitting or attempting to commit any crime occurring on premises licensed by the ABC o r arising from any investigation of violations of laws within the ABC's jurisdiction whether such violations would be criminal or regulatory in nature or committed within, or outside of, a licensed premises. Th is amendment authorizes the ABC to issue subpoenas to compel the attendance of witnesses and the production of relevant books, ac counts, records, and documents for the purpose of carrying out the duties of the commission ; (27) Defines the inhaling, exhaling, burning, or carrying any lighted h emp, hemp flower, or hemp plant part in any manner or in any form as ""smoking"" for purpose s of the Non-Smoker Protection Act, which generally prohibits smoking in various places; (28) Authorizes the department of agriculture to continue to process and renew HDCP supplier and retail applications until the later of January 1, 2026, or when the ABC has the capacity to process applications for licensure, and requires that all such licenses issued by the department of agriculture not expire before 12 months from the date of issuance; and (29) Adds a severability clause to this bill. AMENDMENT #10 impose s a tax upon the sale of HDCPs at wholesale in liquid form in the amount of $4.40 per gallon of liquid HDCP, or at a proportional rate if the liquid HDCP is sold or distributed in a container in which the volume is not measured by gallo nage. AMENDMENT #11 removes THCa from the list of cannabinoids that are a hemp-derived cannabinoid and specifies that THCa in a concentration greater than three-tenths of 0.3% on a dry weight basis is not a hemp-derived cannabinoid. This amendment clar ifies that the 0.3% is the limit for delta-9 THC content for hemp-derived cannabinoids. This amendment adds that a hemp-derived product containing a total THC content or a total theoretical THC content of not more than 0.3% on a dry weight basis is a h emp-derived cannabinoid. This amendment defines ""t otal THC"" to mean a hemp-derived cannabinoid or a combination of tetrahydrocannabinol, tetrahydrocannabinolic acid, a THC component, or a derivative thereof . This amendment defines ""total theoretical THC content"" to mean the maximum amount of possible delta-9 tetrahydrocannabinol if total conversion were to occur, calculated as the sum of the concentration of delta-9 tetrahydrocannabinol added to the amount of tetrahydrocannabinolic acid after such amount is multiplied by 0.877 on a dry weight basis and reported to two significant figures, and expressed in a mathematical formula as follows: Total theoretical THC = ([delta 9 THC] + ([THCa] x 0.877)) . This amendment clarifies that the exception from being defined as a h emp-derived cannabinoid for h emp-derived fiber, grain, or stalk, is limited to product s that do not contain a hemp-derived cannabinoid in a concentration of more than 0.3% on a dry weight basis . This amendment restores definitions for the following to this bill, which were removed from the introduced bill by a prior amendment: THCa; THC; and THC component . This amendment revises this bill's prohibition against manufacturing, producing, or selling h emp, harvested hemp, hemp plant parts, HDCPs, or another product that contains delta-9 tetrahydrocannabinol in a concentration of more than 0.3% on a dry weight basis . Under this amendment, the prohibition will apply for such products that have a total THC content, or a total theoretical THC c ontent, in excess of 0.3% on a dry weight basis . This amendment restores the requirement that the ABC utilize post-decarboxylation (rather than high-performance liquid chromatography ) to determine a cannabinoid profile of samples tested pursuant to this bill."