Tennessee’s New Law Moves Hemp-Derived Cannabinoids Under ABC Authority January 1, 2026

At the close of the 114th General Assembly, Tennessee enacted sweeping reforms to the regulation of hemp-derived cannabinoid products (HDCPs), transferring oversight from the Department of Agriculture to the Alcoholic Beverage Commission (ABC) and the Department of Revenue. This move signals a more structured and commercially viable framework, particularly for businesses that are already operating with alcohol licenses.

For the first time in Tennessee, alcohol-licensed establishments will have a clear legal pathway to sell HDCPs on-site. With the proper licensure and compliance measures, bars and restaurants can expand their offerings into this rapidly growing product category under ABC’s familiar regulatory umbrella.

The summary below outlines key changes that will impact how businesses manage compliance, inventory, and eligibility to participate in this expanded market.

New License Type

The new law creates a distinct Wholesaler License for businesses that distribute finished, packaged hemp-derived cannabinoid products (HDCPs) for resale. Unlike suppliers or retailers, wholesalers must purchase only fully packaged products and sell them exclusively for resale—not for direct consumer use.

On-Site Consumption

Businesses holding on-premise alcoholic beverage licenses (bars, restaurants, etc.) are now eligible to sell HDCPs for consumption on-site, but only while the customer is present at the establishment. These rules are still subject to state and local restrictions, including any that limit public use of vape cartridges, hemp flower, or smoking products.

HDCPs, apart from beverages, must be stored behind a physical barrier unless the establishment is restricted to patrons aged 21+. This is a change from the previous “behind the counter” standard and adds display flexibility for age-restricted venues.

HDCPs must also be sold in-person, at a licensed retail location, through a face-to-face transaction. Direct-to-consumer shipping, delivery, self-checkout and vending machine sales of HDCPs will be officially prohibited.

Smoking hemp (including flower or plant parts) is now defined under the Non-Smoker Protection Act, meaning it may be prohibited in certain indoor public spaces. Local rules may impose additional restrictions.

Prohibited Products

Licensed businesses may not sell products containing THCa in concentrations that would result in >0.3% total THC after conversion. They are also prohibited from selling products containing synthetic cannabinoids or THCp.

Product testing must use post-decarboxylation methods, as required by an amendment reversing a prior shift to HPLC-only testing (high-performance liquid chromatography). The revision ensures accurate measurement of total THC, including content derived from THCa.

HDCP’s are also now subject to new ABC-regulated dosage limits, including:

• 15 mg max per serving (reduced from 25 mg);
• 300 mg max per non-beverage package;
• For cartridges: ≤40 servings, max 500 mg per cartridge;
• Beverage containers: must be resealable if multi-serving;
• Hemp flower: no more than ½ oz. per package; Smokeless pouches: ≤15 pouches, ≤6 mg per pouch.

Product labels must identify the percentages and identities of all cannabinoids in flower or plant products. HDCPs cannot be marketed or labeled with any health-related claims.

Businesses may not mix, infuse, or combine HDCPs with alcoholic beverages. They also may not manufacture or serve cannabinoid-infused cocktails or beverages, even if sold separately.

New Taxes and Fees

• The previous 6% privilege tax on HDCP retail sales has been eliminated under the new law and replaced with a new wholesale tax of 2¢ per mg of hemp-derived cannabinoid; $50/oz. for hemp flower; and $4.40 per gallon for liquid HDCP (flat rate for wholesale).
• The Retail license application fee has increased from $250 to $500, and the annual license fee has increased from $250 to $1,000 per retail location.
• Annual license fees for Suppliers has increased from $500 to $2,500.
• A new license class, “Wholesalers,” will be subject to a $500 application fee, and an annual license fee of $500 per warehouse location. Wholesalers must also demonstrate access to $750,000 via bank account, bond, or line of credit.
• Each HDCP brand must be registered with the Department of Revenue, and will be subject to a $300 annual fee.

How Dickinson Wright Can Help

Whether your business currently holds an alcohol license, sells hemp-derived products, or is considering entry into the HDCP market, we can help you navigate the regulatory and operational changes ahead:

• Assess your eligibility to sell hemp-derived cannabinoid products under the new framework, particularly for on-premise alcohol establishments now authorized to offer HDCPs for on-site consumption.
• Guide you through ABC licensure requirements, including the newly established Wholesaler License, and assist with compliance planning for businesses holding multiple license types at a single location.
• Interpret product restrictions, including new definitions of THC, prohibited cannabinoids (e.g., THCa, THCp, synthetic cannabinoids), and total THC thresholds.
• Review packaging, labeling, and dosage limits, including rules specific to beverages, cartridges, flower, and other delivery formats.
• Prepare you for financial compliance, including new taxes, brand registration fees, and required financial disclosures tied to wholesale licensure.
• Support rulemaking readiness, helping you stay ahead of ABC and Department of Revenue implementation timelines and enforcement practices.
• Audit employment and retail policies to ensure compliance with age restrictions, point-of-sale limitations, and in-person transaction requirements.

Special thanks to Regulatory Compliance Strategist Jessica C. Kaiser for contributing to this article.