With new hemp regulation and taxation laws going into effect January 1, local business owners said the changes are having a major impact.
The new laws consist of a new licensing framework, prohibiting products that have over 0.3 percent of THCa. The rules also replace sales tax with a new wholesale tax on HDC products. Local Owner Cole Ebel said his business is looking at a 70 percent drop in business across the board under the new laws. Ebel said constant law changes are why he and many others are leaving Tennessee.
“My company, we are already making transitions to other states,” Ebel said. “North Carolina and Mississippi, those are two states that we are working to sell more in. These laws make it extremely difficult to forecast [the industry’s future].”
Many business owners said they decided to shut down once the new laws were passed last year. Ebel said the changes were made to reduce the amount of “bad actors” in the industry, but he believes it will fail to do so.
“If you want to have good actors create laws that will encourage good actors, not encourage bad actors, and right now these laws are very much encouraging bad actors,” Ebel said. “And they will continue to do so as long as they are not getting guidance from the industry that is actually part of it, instead of keep getting their guidance from the alcohol lobby.”
One of the big changes was prohibiting online sales and delivery to in-state customers. Ebel said Tennessee is a leader in online sales for hemp products compared to the rest of the nation.
“What is gonna happen with a lot of people, no one is gonna stop smoking their THCa flower,” Ebel said. “They will buy it from out-of-state, and they will have it delivered to their house and through mail, and they will send that money out-of-state, and they will get it taxed out-of-state, and they will have to deal with people online out-of-state.”
The new laws transfer regulatory authority for hemp‑derived cannabinoid products (HDCs) from the Tennessee Department of Agriculture to the Tennessee Alcoholic Beverage Commission. Ebel said the hemp industry started competing with the alcohol industry, which he said is the number one lobbyist in Tennessee.
“When you don’t have guidance, or you have changes in the laws that just don’t [make sense], it’s so bureaucratic it doesn’t match what the actual product is doing, or if there is a cost effectiveness to create a product,” Ebel said. “It’s basically, there are things they want to kill.”
Ebel said though most products will disappear, the THC drink and gummy market will stick around.
“I do know that the alcohol distributors are seeing the bank in that,” Ebel said. “They are picking up THC drinks left and right. I do compete with them, even though we were the first distributor in the state of Tennessee for cannabis products. They just have a lot more backing and a lot more infrastructure to deliver drinks.”
Ebel said most of the hemp business owners are not in it for the money but are in it for the product. Ebel said he encourages more people to get involved and talk with their representatives.
“They know where this is going,” Ebel said. “The other thing I would like to add is I do feel that cannabis is now starting to become a Republican issue because of Trump’s executive order. Which I do feel is really gonna help in Tennessee, because I do notice a lot of legislators in Tennessee will take marching orders from the Trump administration. So this is starting to become a pro-marijuana, pro-cannabis administration, and that will do good for all Tennesseans, no matter what side of the aisle you are on.”