SB 489

Under present law, it is generally a criminal offense for a person to manufacture, deliver, or sell, or possess with the intent to manufacture, deliver, or sell, marijuana. The classification of the offense and authorized penalties depend on the amount o f marijuana involved in the offense. Under present law, certain products that are derived from the cannabis plant (such as hemp, FDA-approved prescription medications, and products with limited amounts of THC that are used for clinical research or treatme n t of specific medical conditions) are excepted from the definition of marijuana and, therefore, are not subject to criminal penalties. Present law requires the medical cannabis commission to study and make recommendations related to the medical use of can nabis should cannabis be federally reclassified or declassified as a controlled substance. This bill makes various changes to present law concerning the medical cannabis commission. T his bill enacts the Tennessee Medical Cannabis Act , which creates the T ennessee medical cannabis program commission ("commission"") . The commission must make medical-grade cannabis available to qualified patients. The commission will terminate on June 30, 2027. MEDICAL CANNABIS CARD This bill authorizes the commission to issue medical cannabis cards to qualifying patients and caregivers. It is prohibited to produce, process, dispense, possess, or use a medical cannabis-infused product without a valid card . The initial application must be signed with an affirmation that ( i) the information provided is true and correct, (ii) the person acknowledges that false statements may result in criminal penalties, denial, revocation, or suspension of the card, and (iii) each person holding a card must be locatable in the registry syst em with adequate identifying information. Each card must clearly state an expiration date. Cards expire two years from the date of issuance and may be renewed after a renewal fee is paid . Diagnosis This bill provides various qualifying conditions, including, but not limited to, cancer, PTSD, chronic pain, and terminal conditions. E xcept for a medical cannabis card for a minor, a qualifying patient's diagnosis of a qualifying condition must be made by a healthcare provider licensed in this state, in cluding a medical doctor, physician assistant, or nurse practitioner . The diagnosis must be in writing and clearly stated in the patient's medical records or in a certification by the healthcare provider confirming that the patient has been diagnosed with a qualifying condition. By January 1, 2026, this bill requires the commission to ensure that a process is available for healthcare providers to provide a certification electronically as part of the patient medical cannabis card registry process. Qualif y ing Patients This bill requires a person to obtain a valid medical cannabis card issued by the commission to acquire, possess, or use a medical cannabis-infused product . However, a woman who knows, or reasonably should know, she is pregnant may not use medical cannabis or a medical cannabis-infused product while pregnant. A licensee may not dispense or sell medical cannabis or a medical cannabis-infused product to a qualified patient who is known to be pregnant. T o qualify, this bill requires a n adult patient do all of the following:  Provide proof of residency in this state by means of state-issued photo identification .  Complete and sign a written application form .  Pay an application fee of $65, or other amount as determined by the commission .  Submit a certification from a healthcare provider confirming that the patient has been diagnosed with a qualifying condition or medical records confirming that the patient has been diagnosed with a qualifying medical condition . This bill provides that i n order for a medical cannabis card to be issued by the commission to a parent or legal guardian of a minor for use by the minor, a parent or legal guardian must do all of the following:  Obtai n a certification from a physician licensed in this state that the minor suffers from a qualifying condition .  Complete the application for minors, promulgated by the commission, and copies of the physician certification and proof of diagnosis of a qualifying conditio n.  Submit proof that the parent or legal guardian has qualified as a caregiver . This bill provides that i f a qualified patient is under 18, then only a caregiver may purchase or administer medical cannabis to the qualified patient. Qualifying Caregivers This bill provides that a qualified patient may designate a caregiver to assist with the purchase and use of medical cannabis . T he caregiver must obtain the caregiver medical cannabis card, and the patient must be issued a valid patient medical cannabis card by the commission. When a qualified pat ient has a designated caregiver, only the designated caregiver is authorized to purchase medical cannabis, not the patient . T o qualify, a caregiver must meet the same requirements of an adult applying for a card and, in addition, (i) h ave no ownership int erest in or contract or employment relationship with a licensee, and (ii) i dentify each patient for whom the caregiver provides care, limited to 10 qualified patients per caregiver at any given time. A caregiver may receive compensation from the qualified patient or other entity for any services provided to the qualified patient. However, a caregiver may not use medical cannabis without the caregiver actually being diagnosed with a qualifying medical condition and issued a medical cannabis card as a qualified patient. Revocation This bill requires the commission to promulgate rules that include crite ria by which medical cannabis cards may be revoked, suspended, and reissued. However, a rule may not prohibit the issuance or use of a medical cannabis card based on an arrest for any felony or misdemeanor unless the arrest is for a violation of this bill . In the event a medical cannabis card is revoked by the commission, the most recently paid registration fee is to be refunded to the cardholder. PATIENT REGISTRY By January 1, 2026, this bill requires the commission to commence, use, and maintain a reliable patient registry system to p ublish application forms and procedures for obtaining all patient and caregiver medical cannabis cards . An integrated, electronic registry system must track the medical cannabis card application process through issuan ce or denial and t rack medical cannabis cards that are denied, issued, revoked, suspended, or reinstated. S tate and local law enforcement agencies must have access to the patient registry to prevent the counterfeiting of cards, minimize illegal usage, and attain maximum compliance . Data must not be sold, and patient information must remain confidential and not be transferred or sold. MEDICAL CANNABIS PROGRAM COMMISSION This bill creates the medical cannabis program commission to establish a medical cannabis system. The commission consist s of 12 members, each at least 30 years old, United States citizens, and residents of this state for at least three continuous years immediately preceding the appointment. Initial appointment s must be made no later than August 30, 2025. Member A ppointments In order for commission members to be qualified individuals with experience in complex agriculture, health, science, business, and government systems, t his bill requires the governor, the senate speaker, and the house speaker to each appoint four members to the commission following certain requirements for professional history or certifications. A full term is four years. However, initial appointments will serve staggered terms of two, three, and four years with an option for reappointment for one additional full term. No commissioner may serve more than two consecutive four-year terms. In the event of a vacancy, the appointing authority must fill the vacancy for the unexpired term. This bill prohibits a member of the commission from being a registere d lobbyist. Member Removal This bill authorizes the governor to remove commissioners for cause . Commissioners must not miss more than three meetings in one calendar year. Payment and Reimbursement This bill requires e ach member to be paid $ 700 for each commission meeting that the member attends. Each member must also be reimbursed for actual and necessary expenses incurred in connection with official duties. All reimbursement fo r travel expenses must be in accordance with the comprehensive travel regulations as promulgated by the department of finance and administration and approved by the attorney general. Procedure This bill requires the commission to elect one of its own members as chair . A majority of members constitute a quorum for the transaction of any business, or for the performance of any duty, power, or function of the commission . T he concurrence of a majority of those present and voting in any matter within its duties is required for a determination of matters within its jurisdiction. The commission may hold a special meeting at any time it deems necessary and advisable to perform its official duties. A special meeting may be called by the chair, or upon the w r itten request of two or more members. All members must be duly notified by the commission secretary of the time and place of any regular or special meeting at least five days in advance. The chair is responsible for setting and keeping a meeting schedule . Required Meetings Th is bill requires the commission to meet at least once a month. However, beginning no later than October 15, 2025, the commission must hold a minimum of two regular meetings each month during its first 12 months to create and publi sh the application, establish a website, process phase 1 license applications, and promulgate rules. After these tasks are accomplished, the commission may reduce meetings to once a month or vote on a schedule appropriate for meeting all obligations regar ding patient medical cannabis cards. Executive Director This bill authorizes the commission to appoint a full-time executive director (""director"") that is licensed to practice law in this state and to fix such director's salary . The director must be a t least 30 and have been a citizen and resident of this state for at least three years prior to appointment. The director's office must be in Nashville. The director's responsibilities to the commission include s upervis ing personne l, k eep ing records, s er v ing as secretary, keeping minutes, and serving as hearing officer. The director may accept service of process on behalf of the commission . This bill authorizes the commission to appoint an assistant director to perform duties as assigned by the director or the commission. The assistant director, if licensed to practice law in this state, may also be designated by the commission to sit, act, and serve as a hearing officer, and when designated as a hearing officer, the assistant d i rector is authorized to perform the same duties and functions as the regular hearing officer. This bill requires t he director and assistant director to be reimbursed for travel expenses . Chief Inspection and Enforcement Officer This bill requires t he commission to coordinate with the department of agriculture (""department"") to appoint a full-time chief inspection and enforcement officer to serve under the commissioner of agriculture. The chief inspection and enforcement officer must b e under the immed iate supervision of the executive director, be at least 30, a citizen and resident of this state for at least three years prior to appointment, h ave experience in agricultural inspections and have qualifications identical to that required for members of th e Tennessee bureau of investigation, and b e reimbursed for travel expenses . Legal Counsel In order to assist the commission and staff with establishing a functional program and achieving compliance with applicable laws, this bill requires the commission to retain legal counsel familiar with the requirements of this bill, medical cannabis licensing, and best practices in other states. Conflicts of Interest This bill prohibits a member of the commission, person employed in any capacity by the commission, or a family member of said member or employee from having any interest, financial or otherwise, either direct or indirect, in a medical cannabis cultivation operation, products manufacturer, wellness dispensary, testing facility, or transporter. Nor may any family member hold or have issued to them any medical cannabis license in this state. This bill requires that such a person in violation be dismissed and discharged from employment or position, and as a consequence the person must forfeit any pay or compensation that might be due. A violation is a Class C misdemeanor, punishable by imprisonment of no more than 30 days or a fine up to $ 50, or both . TIMELINE In order to facilitate an initial level of product availability and avoid a program de lay dependent on rulemaking, this bill requires the commission to move expeditiously to meet the following deadlines:  January 1, 2026 : R ules must be p romulgate d, and a reliable patient registry system to publish application forms and procedures for obtaining all patient and caregiver medical cannabis cards must be in use.  April 1, 2026 : Provisional approval of managed medical wellness phase 1 rural and urban licenses must be completed .  June 1, 2026 : Review and approval s of all medical cannabis card requests that meet the requirements of this bill must begin.  June 30, 2026 : F inal approval or denial of the provisional managed medical wellness phase 1 licenses must be completed.  July 31, 2026 : Final decisions to approve or deny an urban omni or RUVI license must be made and published . Annual report due each year, including, generally, number of cards issued, revenue, and research developments.  November 15, 2026 : F inal approvals and denials of urban omni and RUVI licenses under the phase 1 program must be completed. Th is bill requir e s the commission to promulgate rules that establish on-site inspection criteria applicable in the final approval or denial process for provisional managed medical wellness phase 1 licenses. A provisional managed medi cal wellness phase 1 license may not be finally approved or denied until after an on-site inspection of all facilities pursuant to rules promulgated by the commission. LICENSURE This bill requires t he commission to license all medical cannabis providers, including licenses in cultivation, processing, transportation, manufacturing, packaging, dispensing, sale, and use of any form . A person may have a majority ownership interest in only one license. A person may generally own a minority interest in any o ther license. This bill requires the commission to issue managed medical wellness phase 1 licenses as the first run of licenses, which will be issued provisionally before rulemaking is complete. This bill categorizes provisional managed medical wellness phase 1 licenses as urban omni licenses and rural vertically integrated (RUVI) licenses. Urban Omni Licenses Generally, urban omni licenses, or licensees, as applicable:  Will be issued for businesses in Davidson, Hamilton, Knox, and Shelby counties .  Are limited to three per county, with an overall state limit of 12 .  Authorize the licensee to conduct all activities from cultivation to sale within the designated county of operation. A licensee may transport materials or product outside the county. Sales to an RUVI licensee may occur upon receipt of a waiver issued by the commission .  Are subject to an application fee of $85, 000, of which $15, 000 is nonrefundable. If the license is granted, then the full application fee is nonrefundable. If the provisional license is denied due to any failure by the entity to provide requested information or failure to pass the on-site inspection, the commission may deem up to $38, 300 of the fee to be nonrefundable to offset administrative costs .  Must have majority ownership attributable to an individual with proof of residency in this state for a continuous period of no fewer than three years preceding the application date, and an individual who meets such residency requirement must serve as an officer or executive director of the entity .  Must submit a detailed business and operations plan .  Owners, officers, board members, and managers must, during the application and operation period, pass a n FBI level 2 background screening process .  May own and operate up to three medical cannabis wellness dispensaries per license, each of which must be located in the primary county .  Promptly provide supplemental information pursuant to a written request from the commission. RUVI Licenses Generally, this bill provides that RUVI licenses a re limited to four per grand division, with an overall state limit of 12, and m ust not be issued for a county eligible for an urban omni license . RUVI licenses a re generally subject to the same requirements as an urban omni license, except that:  A RUVI licensee may conduct business activities in its primary county, and to aggregate cultivation, processing, and manufacturing of medical cannabis in adjacent counties .  The application fee for a RUVI license is $45, 000, with $40, 000 being refundable if denied, and the potential retained amount to cover administrative costs associated with processing the application is $18, 300 .  Subject to certain conditions, a RUVI licensee may work cooperatively with up to six additional entities or persons at an equal number of additional physical locations in order to cultivate, process, or manufacture medical cannabis or medical cannabis-infused products .  A RUVI licensee is authorized to own and operate up to three medical cannabis wellness dispensaries, located within the primary county or an adjacent county, per license. This bill requires t he commission to issue or deny urban omni and RUV I licenses based on compliance with statutory requirements and the applicant's business plan . Stand-Alone Licenses This bill requires the commission to authorize an additional number of licenses that are based on market demand for stand-alone medical c annabis wellness dispensaries, stand-alone cultivation, and stand-alone processing or manufacturing facilities and for similar vertically integrated operations described in the phase 1 licensing program. Transfers This bill authorizes the transfer of a license, or change of ownership, so long as it compl ies with certain requirement s. INSPECTIONS This bill requires t he department to perform p roduct testing during cultivation, manufacture, and final processing before sale to determine levels of c anna binoids, h eavy metals, m icrobials, m ycotoxins, r esidual pesticides, and r esidual solvents. Costs related to department staffing needs are to be borne by the commission. OPT-OUT This bill authorizes a county or municipality to ban the cultivation, processing, manufacture, or sale of medical cannabis within its jurisdiction by a two-thirds vote of the local legislative body no later than August 31, 2025. TAXES AND REVENUE This bill lev ies a tax on the sales price of medical cannabis and medical c annabis-infused products at 9% of the sales price. A county or municipality may tax the sale of medical cannabis and medical cannabis-infused products up to 2.1%. T he excise tax rate for all licensees, except for RUVI licensees, is equal to 10% of the ne t earnings for the next preceding fiscal year for business done during that fiscal year. This bill creates the medical cannabis fund as a special account in the state treasury. All moneys collected pursuant to this bill must be deposited in the fund. Ex cept as described below for revenues from the 9 % privilege tax, expenditures from the fund may be made only to implement and administer this bill. This bill requires the moneys collected from the 9 % privilege tax be distributed as follows:  5% to the peace officer standards and training ( POST ) commission for opioid and methamphetamine drug enforcement training purposes .  30% to the department for programs and grants administered by the department that facilitate agricultural development in this state .  10% to the department of economic and community development for community and rural development program grants .  45% to the medical cannabis fund .  10% to the department of veterans services for PTSD treatment programs . This bill authorizes the general a ssembly, u pon a determination that the commission has established sufficient revenues for the administration of this bill, to direct the department of revenue to transfer any excess balance in the medical cannabis fund to the general fund to repay any appr opriation made by the general assembly in the implementation of this bill . ACTS NOT REQUIRED This bill specifies that it does not:  Require an entity that provides medical coverage to reimburse a person for costs associated with the medical use of cannabis .  Require any employer to allow the medical use of cannabis in the workplace or to modify the job or working conditions of a person who engages in the medical use of cannabis that are based upon the reasonable business purposes of the employer .  Limit the ability of an employer to establish, continue, or enforce a drug-free workplace program or policy .  Authorize the commission to fix prices for medical cannabis .  Limit a law enforcement agency's ability to investigate unlawful activity in relation to a medical cannabis establishment. MISCELLANEOUS T his bill includes various provisions that will apply to the pro duction, possession, and use of medical cannabis. Generally, such provisions address the following:  Development of a track and trace system that tracks medical cannabis from either seed or immature plant stage until the medical cannabis and medical cannabis-infused product is sold to a customer at a medical cannabis wellness dispensary .  Powers that the commission may exercise in the regulation of medical cannabis .  Issuance of commission and letter rulings .  Specification of 33 subjects for which the commission will be required to promulgate rules .  Creation of a statewide licensure class system and corresponding fee structure.  Physical location of cannabis operations .  Manufacturing standards for medical cannabis-infused products .  Waiver of electronic payment and filing requirements for medical cannabis licensees, and authorization for the commissioner of revenue to charge a manual handling fee of up to $25 for receipt of paper filings."