Written by The 2025 Tennessee General Assembly has passed Tennessee’s most expansive cannabis/hemp reform law to date in the form of PC 526. Like most legal reforms of its magnitude, industry opinions of the changes are mixed. I have practiced cannabis law since 2014, representing growers, processors, manufacturers, wholesaler distributors, and retailers of all shapes and sizes. I served as Chairman of the Tennessee Medical Cannabis Commission where I had the opportunity to study and learn from cannabis thought and regulatory leaders across the country. I have practiced alcoholic beverage law in the state of Tennessee for over 15 years and interface with our Tennessee Alcoholic Beverage Commission on a daily basis. Our team at Harrington Beverage Law provides legal counsel to cannabis/hemp industry members inside and outside of Tennessee and have been fielding constant questions regarding how PC 526 works, how regulation will look under the Tennessee Alcoholic Beverage Commission (“TABC”), and how suppliers should best plan for the upcoming changes. So let’s dive in.
You are a cannabis/hemp supplier and are wondering what changes will come under the new law that affect you and how you interface with retailers and consumers in Tennessee. You have questions regarding the finer points of testing, importation, wholesale distribution, taxes, and where and how your products can be sold. We will begin with a broad-brush summary of the law’s major components and then drill down in the form of FAQs.
Summary of PC 526
The passing of PC 526 marks a significant shift in Tennessee’s approach to hemp-derived cannabinoids. The previous framework had ambiguity around how these products should be regulated and taxed. With PC 526, the state aims to bring a clearer, more structured regime — particularly as the market for hemp and cannabinoid products has grown.
What Is PC 526?
- PC 526 is a law passed by the Tennessee General Assembly in 2025.
- It amends existing Tennessee law regarding hemp-derived cannabinoid products (HDCPs), particularly as to their taxation, regulation, and oversight.
- The law becomes effective January 1, 2026.
Major Components of PC 526
Beginning January 1, 2026:
- Regulation and oversight is moved from the Department of Agriculture to the TABC.
- Taxes increase.
- Certain products such as THCa flower, THCp cannabinoid, and synthetic cannabinoids
are banned.
- Retail outlets are limited.
- New testing and labeling guidelines that will be enforced.
- Labs must be state approved.
- No online ordering, shipping or delivery.
- All suppliers, in state or out of state, must be licensed.
Cannabis/Hemp Supplier FAQs
How will the HDCP industry be regulated in Tennessee under the new law?
Regulation of HDCPs is moving away from the Tennessee Department of Agriculture (“TDA”) to the Tennessee Alcoholic Beverage Commission (“TABC”). For any products which have been harvested from the growth stage, whether they were grown in state or out of state, the TABC will have regulatory authority over the products. For plants still in the cultivation stage in Tennessee, the TDA will have regulatory authority.
What products are banned under the new law?
- Any product over the federal delta-9 THC threshold of .3% on a dry weight basis.
- Synthetic products that do not originate from an actual hemp plant.
- THC-p.
- Any product with a total THC content over .3% on a dry weight basis no matter the delta-9 concentration.
- THC-a products, including flower, having a total THC concentration greater than .3% on a dry weight basis.
- Products outside of the allowable dosage limitations.
- Products not sold by a licensed retailer and that also failed to pass through a licensed wholesalers warehouse location.
- Products without proper paperwork/documentation.
- Products not following the restrictions on marketing and labeling of HDCPs.
What types of products do not fall under the new law and can be sold without a HDCP license?
CBD and some other non-intoxicating cannabinoids do not fall under the new licensing system and are not defined as HDCs. The wholesale taxes also do not pertain to these products.
If a product contains only one or more of the products listed below, it does not fall under the HDCP law:
(i) Cannabichromene (CBC/CBCa/CBCv);
(ii) Cannabicitran (CBT/CBTa);
(iii) Cannabicyclol (CBL/CBLa);
(iv) Cannabidiol (CBD/CBDa/CBDv/CBDp);
(v) Cannabielsoin (CBE/CBEa);
(vi) Cannabigerol (CBG/CBGa/CBGv/CBGm);
(vii) Cannabinol (CBN/CBNa);
(viii) Cannabivarin (CBV/CBVa);
(ix) Hemp-derived feed products allowed under title 44,
chapter 6;
(x) Hemp-derived fiber, grain, or stalk; provided, that the
product does not contain a hemp-derived cannabinoid in a
concentration of more than three-tenths of one percent (0.3%) on
a dry weight basis;
Who must obtain a license?
- All suppliers (manufacturers, brand owners, anyone selling to wholesalers) whether in state or out of state must obtain a license.
- All wholesalers, purchasing from suppliers or other wholesalers.
- All retailers of HDCPs.
- Testing labs must be certified and approved by the TABC and be in their approved database.
Is vertical integration allowed in Tennessee under PC 526?
Yes. Provided the vertically integrated entity holds all three license types, a business can be vertically integrated and can also sell at retail on the retail portion of its premises.
If I am not a vertically integrated business, do I have to sign up with a wholesaler for the distribution of my products to retail outlets?
Yes. All lawful products must pass through a licensed wholesaler in Tennessee so that the taxes can be remitted to the state and so that the state will have a pre-retail market licensed facility where it can inspect all products for full compliance.
What are license costs?
- Supplier license – $500 one-time application fee and annual license fee of $2,500 per location.
- Wholesale license – $500 one-time application fee and annual license fee of $5,000 per location.
- Retail license – $500 one-time application fee and annual license fee of $1,000 per location.
What are the lab testing requirements?
All products will be required to be tested and certified for compliance by a lab which is approved and registered with the TABC. Laboratory testing must be performed by a third-party laboratory registered with the state, verifying compliance with thresholds for THC content, heavy metals, residual solvents, pesticides, and other potential contaminants.
Labs will also have to meet accreditation standards set forth by the TABC in its rules governing HDCPs. The TABC is currently in its rulemaking phase and the first draft of proposed rules can be found here: TABC Proposed HDCP Rules.
What are the label requirements?
Labeling must include an ingredient list, batch number, mandatory warning statements, and a QR code linking to a valid Certificate of Analysis (COA). In addition, the making of any health-related claims or the use of any marketing phrases or imagery which may appeal to minors is strictly prohibited. More can be found regarding specific labeling requirements in the TABC’s proposed rules: TABC Proposed HDCP Rules. Our firm has submitted comments to revise several components of the proposed rules, such as the proposed labeling requirements which would impose tougher restrictions on multi-state suppliers in the way of larger font sizes and strict warning language that is above that required in other states.
Is there a location restriction for retail licenses?
Yes. Under the old law, a retailer could not be located within 1000 feet of a school (any grade kindergarten through 12th grade), measured from property line to property line. Now, under the new law, the 1000 feet restriction still applies but the measurement is conducted from closest exterior wall to closest exterior wall, possibly allowing for more eligible retail locations.
How must products be displayed? Is there still a behind a counter requirement?
HDCPs must be displayed as follows:
- Behind a barrier or otherwise inaccessible to the consumer (unless the product is an HDCP beverage in a container 12 ounces or greater).
- In an area of the retailer which is marked with clear signage notifying the consumer that the products are intoxicating. The TABC will likely roll out a uniform sign to be displayed, likely similar to the below.
- HDCPs must be displayed in an area of the retailer which is visible to a clerk at all times.
Where can HDCPs be sold under the new law?
Under the new law, HDCPs may only be sold in the following retail establishments:
- TABC-licensed retail package stores.
- TABC-licensed LBD establishments (bars, restaurants, hotels, venues, etc.).
- Establishments which restrict access to individuals who are 21 years of age or older to enter the premises.
- Manufacturers of HDCP products.
Can HDCPs be sold in grocery stores or convenience stores under the new law?
No.
What are restrictions on product marketing under the new law?
The new law contains prohibitions on labels containing cartoon features or otherwise containing any graphics that can be seen as marketing to minors. In addition, no products can make health-related claims or statements. If products claim to relieve stress, reduce anxiety, provide pain relief, or promote sleep, the TABC may decide that these are prohibited claims.
When will I need to apply for my license under the TABC?
After 12/31/25, all new applications will be submitted through the TABC RLPS online system. If you have a license that expires after 12/31/25, you will simply wait until your license naturally expires and then apply through the TABC for your new license. So, if you currently have a TDA license that expires in June of 2026, you will operate under your current license until you apply with the TABC in June of 2026.
Are direct-to-retail from supplier sales allowed? Are direct-to-consumer sales allowed?
No. The new law bans all shipping of HDCPs within or into Tennessee. There will be no lawful sales from supplier direct to retailer or direct to consumer. All HDCPs, whether coming from out of state or within the state, must pass through a licensed wholesaler. One exception is actual manufacturers of HDCPs that are located in Tennessee may sell products that it manufactures on its own premises, but it still must have a relationship with a wholesaler.
Can retailers deliver HDCPs like alcohol or beer, through an employee or through a third party technology company?
No. All sales to consumers by retailers must happen in a face-to-face transaction on the premises of the retail licensee. Delivery of HDCPs will be banned on 1/1/26 as will any vending of HDCPs.
What are the allowable serving and container sizes for HDCPs starting on 1/1/26?
A serving size under the new law is defined as an amount intended for a person’s use over a 24-hour period. Serving sizes are limited to 15 milligrams of HDC.
- Edibles/gummies – edibles such as gummies can contain no more than 15 mg per serving for a total of (20) servings, or 300 mg, in the entire package. The package must satisfy federal child resistant packaging requirements (CFR 1700.01 et seq.).
- Beverages – beverage containers must be 750 ml or less with the exception of 7.75 gallon and 15.5 gallon kegs of HDCP beverages, which can only be sold to retailers by wholesalers and not sold to consumers.
Beverages may utilize traditional alcohol beverage tops, such as cork-style tops, screw tops, and can pull-tabs.
If a beverage is in a container smaller than 750 ml, it can only contain (2) servings of HDC, for a total of 30 mg.
Any container 750 ml or more can contain up to (20) servings for a total of 300 mg of HDC.
- Vape Cartridges – vape cartridges can only be sold by the single cartridge and each cartridge is limited to (40) servings of HDC, for a total of 500 mg of HDC per cartridge.
- Plant material/buds/flower – flower can be sold in a package that does not contain more than ½ ounce by weight of plant material.
- Other – oral pouches may be sold in a container that contains no more than 15 pouches having no more than 6 mg of HDC per pouch. Any other products such as topicals, etc. must abide by the (20) servings of 15 mg per serving limitation.
How will taxes be collected under the new law?
All HDCP-specific taxes will be paid by the wholesaler. The 6% retail tax on HDCP products will no longer be in effect on 1/1/26. Retailers will still pay any other applicable state and local taxes, such as sales tax.
Will taxes on HDCP products increase under the new law?
Yes. As of 1/1/26 HDCP products will be taxed as follows:
- Beverages – taxed at $4.40 per gallon, prorated for all quantities.
- Edibles/gummies/vape cartridges/other – taxed at .02 (2 cents) per milligram of HDC.
- Flower/plant material – taxed at an effective rate of $50.00 per ounce.
How are non-intoxicating vape products, like CBD/CBG/CBN products regulated?
Though CBD products are not regulated under the new HDCP laws (no behind the counter, no wholesale taxes like the ones mentioned above like for Delta-9 and Delta-8 products, etc., they are still regulated in Tennessee. In April of 2025, Governor Lee signed into law Public Chapter 324 which tightens the regulation of vape products, including hemp in addition to nicotine. New requirements include retailers to check the ID of anyone that looks less than 50 years old and for all products to be registered, like alcohol, through a Tennessee Department of Revenue registration system. Sales of these products are limited to individuals 21 years of age or older. Certain advertising restrictions also exist under the new law which prohibit advertising or marketing to consumers under 21 years of age and also limiting where billboard advertising of the products can be located.
Closing Remarks
Tennessee’s PC 526 installs major regulatory framework, it attempts to bring clarity, structure, and a trusted and consistent path for the rapidly-evolving market of hemp-derived cannabinoids to travel. The law doesn’t just tweak an existing statute — it retools the entire regulatory architecture for these products in the state. For affected businesses, the time to act is now. Knowledge, adaptation, and head’s up business planning will be key to navigating the shift and becoming or remaining a trusted player.
Have more questions? Get in touch with us today via the form below and we’d be happy to chat further.
Last modified: September 30, 2025
