Tennessee to begin taxing sale of hemp based CBD products in July
CHATTANOOGA - Starting in July the state of Tennessee will begin taxing the sale of hemp-based CBD products.
It will be a 6% sales tax, according to the Tennessee Department of Revenue.
The TDOR says this is in addition to the standard 7% state sales tax rate and the applicable local option sales tax rate.
The additional 6% sales tax applies to the sales price of products containing hemp-derived cannabinoids when sold at retail in Tennessee.
The TDOR says the tax does not apply to hemp-derived fiber, grain, or topical products.
This comes after Governor Bill Lee signed a bill regulating hemp products like Delta 8 into law.
According to the FDA "Delta-8 tetrahydrocannabinol, also known as delta-8 THC, is a psychoactive substance found in the Cannabis sativa plant, of which marijuana and hemp are two varieties. Delta-8 THC is one of over 100 cannabinoids produced naturally by the cannabis plant but is not found in significant amounts in the cannabis plant."
The law makes it a class-A misdemeanor for several offenses including knowingly selling a product to someone under 21, selling to someone without seeing proof of I-D or distributing samples on a public street or sidewalk.
Robert Scott, the COO and Co-founder of Snapdragon Hemp, says they have already abide by the 21 years old part.
We've always done 21 and up just because we believe that's what's right, you know, we want to make sure adults are going to be able to make their best decisions," says Scott. "Everything is done under the same kind of law like cigarettes, tobacco, alcohol, stuff like that. So we just try to follow some of those regulations.
And then if this if somebody doesn't follow along these lines, a Class A misdemeanor, like for your perspective, like, how could that affect you guys?
Governor Bill Lee put the new regulations in place in May.
Those changes include:
- The Department of Agriculture will require a valid selling license and inspect all dosages of these products.
- Sellers and distributors will be required to check proof of age.
- Delta-8 and Delta-10 cannot be sold within 1,000 feet of a K-12 school.
- Sellers are prohibited from marketing appealing to those under 21, including any ads that feature comic book, video game, television, or movie characters.
- Edibles are prohibited from being in the shape of animal or cartoon characters.
- A 6% tax on all hemp-derived products will be introduced.
Monday we are speaking with shops who see these products to see how this tax will affect their business.
Scott says he thinks it’s a good thing, but customers will see a price change.
The customers will see a slight change for sure, we’re gonna have to do a very large overhaul of our entire inventory and stock and how we sell it for sure,” says Scott. “I think it’s really good for the industry as a whole.
We have reached out to the bill's sponsor in Tennessee's House and Senate for comment. We have yet to hear back.