Written by The Tennessee General Assembly recently passed two laws that will significantly impact retailers across the state. Beginning July 1, 2026, Tennessee will prohibit the retail sale of certain nitrous oxide products and will ban the possession, manufacture, sale, and distribution of kratom.
For businesses holding TABC licenses or local beer permits, these changes carry risks that extend well beyond ordinary fines.
Nitrous Oxide Sales Restricted
Under Public Chapter 702, retailers may no longer sell nitrous oxide products intended for recreational use. These products are often marketed under names such as Galaxy Gas, FastGas, ExoticWhip, and Whip-It!.
While nitrous oxide remains legal for certain medical, dental, and food-service purposes, recreational products will no longer be permitted for retail sale in Tennessee.
The penalties are substantial. A first violation carries a $2,500 fine, while a second violation can result in a $5,000 fine. For businesses holding a TABC license or local beer permit, a second violation also triggers mandatory license revocation, with no opportunity to reapply for at least twelve months.
In other words, a product generating minimal revenue could ultimately cost a retailer its license to operate.
Kratom Becomes Illegal in Tennessee
The legislature also enacted Public Chapter 950, which effectively bans kratom statewide beginning July 1, 2026.
Kratom, a product derived from a Southeast Asian tree, has been marketed as an energy booster, pain reliever, and opioid alternative. Under the new law, however, possession becomes a Class A misdemeanor, while manufacturing, selling, or delivering kratom becomes a Class C felony.
That means retailers who continue selling kratom after July 1 are exposing themselves to potential criminal liability, including felony charges.
Why Alcohol Licensees Should Pay Attention
Although these laws are not part of Tennessee’s alcohol code, they can still create serious problems for businesses regulated by the Tennessee Alcoholic Beverage Commission.
Violations of state law often lead to administrative scrutiny, fines, suspensions, or even license revocation proceedings. As I often remind clients, protecting your license is often more important than protecting revenue from any single product line.
What Businesses Should Do Now
Retailers should review their inventory, work with suppliers to remove prohibited products, and ensure employees understand the upcoming changes before July 1.
The businesses that avoid regulatory headaches are usually the ones that prepare before enforcement begins—not after.
Sources: Tennessee Public Chapter 702 (2026); Tennessee Public Chapter 950 (2026); Tennessee General Assembly, 2026 Legislative Session.
Last modified: June 10, 2026
