New Tennessee Hemp Rules Threaten THCa Market And Millions Of Dollars In Sales

The Tennessee hemp-derived cannabinoid industry is at stake under new rules that are about to be finalized.

Gov. Bill Lee signed a bill into law last year that shifted hemp regulation from the Department of Agriculture to the Alcoholic Beverage Commission (ABC). The state agency became responsible for hemp at the start of 2026. However, a last-minute deal enabled hemp businesses to continue operating under the old regulatory framework until June 30.

Russell Thomas, the executive director of TABC, said the state agency has been doing what the General Assembly tasked it with, reported Tennessee Lookout.

“Our focus was to implement the framework enacted by the general assembly faithfully,” Thomas said.

The key change was the practical ban on THCa products, a move that has affected the majority of retailers, as THCa products represent 50%–75% of their inventory, being the dominant hemp-derived cannabis product statewide.

THCa has been a loophole ever since Congress passed the 2018 hemp bill, according to the state legislators who effectively changed the law.

Why? Heating THCa triggers its transformation into Delta-9 THC, producing effects similar to those of traditional marijuana. Since hemp-derived THCa remains unchanged until activation, it offers a legal way to experience effects similar to those of conventional marijuana. Until exposed to heat, hemp-derived THCa remains unchanged, making it a legal pathway to experiencing such effects.

The state Republican legislators have been promoting their prohibitionist stance for years, to eventually have the final say on the matter, passing legislation to close the THCA loophole. Congress did the same, as under a law that was green-lighted in November 2025, the THCA loophole will be closed nationally by 2026.

Either way, new rules will have a significant economic impact as Tennessee hemp sales reached roughly $245 million in 2024, according to Vicente LLP, a cannabis and psychedelics law firm. Earlier state estimates put hemp’s economic impact at $180 million.

Businesses that are reliant on THCa, like Greenbean Ventures, opted to relocate their operations, resulting in jobs lost, the closing of retail locations, and thousands of dollars in annual payroll leaving the state, according to the Kingsport Times News.

Others with product portfolios featuring various products that are THC-free will be less affected.

“I have a stable clientele with the CBD business, and that’s what we started and stuck our game to,” D.W. Cooper, chief business development officer of East Tennessee Hemp Company, said. “That’s not going to get affected. I never got into the THC and smokeables, and that’s what’s going away. I’ve stuck to my guns and the main products that I make.”

Cooper said adjusting to new rules would likely “be a mess,” as synthetic recreational products have been widespread, having emerged through regulatory loopholes.

“It had to be done,” Cooper added. “They allowed so much trash; there was no way to fix it, and there is no way to fix it, and that’s why you see a ban not only in the state, but federally.”