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Commercial cultivation, retail and marketing

Business licensing requirements

What licensing requirements apply to businesses seeking to cultivate, distribute, produce and sell cannabis products in your jurisdiction? What procedures, timeframes and fees apply in this regard, and on what grounds can a licence be revoked?

The possession, use, cultivation, and distribution of marijuana with a tetrahydrocannabinol (THC) concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). Only state-approved four-year institutions of higher education are permitted to manufacture and distribute cannabidiol as part of clinical studies (Section 39-17-402(16)(E) of the Tennessee Code Annotated). Therefore, there are no business licenses available to businesses seeking to cultivate, distribute, produce, or sell marijuana products in Tennessee. 

With regard to “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—individuals must seek and obtain a hemp license from the Tennessee Department of Agriculture during the open application period to cultivate hemp (Section 43-26-102(4)(B) of the Tennessee Code Annotated). The current application period runs from 15 November to 15 February. License fees range from $250 to $350 and applications must be accompanied by an aerial photo of the growing area. Tennessee has not updated its regulations to reflect the Agriculture Improvement Act. Therefore, hemp production in Tennessee will continue under the state’s previous pilot program until new regulations are promulgated (Sections 43-26-101 et seq. of the Tennessee Code Annotated).

Are any businesses specifically prohibited from selling cannabis products?

The possession, use, cultivation, and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). Only state-approved four-year institutions of higher education are permitted to manufacture and distribute cannabidiol as part of clinical studies (Section 39-17-402(16)(E) of the Tennessee Code Annotated). 

In addition, products derived from hemp are exempt from the definition of “marijuana” if they contain less than 0.3% THC (Sections 39-17-402(16) and 43-26-102(4)(B) of the Tennessee Code Annotated). Therefore, with the exception of state-approved clinical studies at institutions of higher education, all businesses is prohibited from selling marijuana products that fall within the definition of “marijuana.”

Zoning and real estate considerations

Are there any zoning restrictions on where businesses can cultivate, produce and sell cannabis products?

The possession, use, cultivation, and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). Only state-approved four-year institutions of higher education are permitted to manufacture and distribute cannabidiol as part of clinical studies (Section 39-17-402(16)(E) of the Tennessee Code Annotated). Therefore, all businesses is prohibited from selling marijuana products with a THC concentration greater than 0.3% with the exception of state-approved institutions of higher education.

In addition, Tennessee has enhanced penalties for the distribution, possession, use, or cultivation of marijuana within 1,000 feet of a public or private elementary school, middle school, secondary school, preschool, childcare agency, public library, recreational center, or park (Section 39-17-432(b)(1) of the Tennessee Code Annotated). However, there are no zoning requirements for hemp licenses.

Are there any other notable real estate issues pertinent to cannabis businesses, including with regard to landlord/tenant relationships and real estate market activity?

The possession, use and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). Therefore, marijuana businesses cannot use real estate in Tennessee for the cultivation or distribution of marijuana with a concentration greater than 0.3%.  

The Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration or 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.”

In addition, Tennessee’s hemp program permits private individuals to cultivate hemp with a state-issued license (Section 43-26-103 of the Tennessee Code Annotated). The state requires only an aerial photograph of the land to be used prior to receiving a license to produce hemp.

Product restrictions and specifications

Are any cannabis products and accessories prohibited from sale? Do any product specifications apply?

The possession, use and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). However, the Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.” Therefore, all marijuana products with a THC concentration greater than 0.3% is prohibited from sale in Tennessee.

Further, it is illegal to use, possess with the intent to use, or sell drug paraphernalia in Tennessee (Section 39-17-425 of the Tennessee Code Annotated). Tennessee law defines “drug paraphernalia” as:

all equipment, products and materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling or otherwise introducing into the human body, a controlled substance as defined [by Tennessee law]. (Section 39-17-402(12) of the Tennessee Code Annotated.)

Packaging and labelling

What packaging and labelling requirements apply to the sale and distribution of cannabis products and accessories?

The possession, use, and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). The Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.”

Tennessee has yet to promulgate regulations relating to hemp packaging and labelling. Therefore, no labelling requirements apply to the sale and distribution of marijuana products. Further, it is illegal to use, possess with the intent to use, or sell drug paraphernalia in Tennessee (Section 39-17-425 of the Tennessee Code Annotated). Tennessee law defines “drug paraphernalia” as:

all equipment, products and materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling or otherwise introducing into the human body, a controlled substance as defined [by Tennessee law]. (Section 39-17-402(12) of the Tennessee Code Annotated.)

Since marijuana accessories are illegal, no packaging or labelling requirements concern marijuana accessories. In regard to legal cannabidiol oil, Tennessee requires users of cannabidiol to list the oil’s THC level on the bottle (Section 39-17-402(16(F)(i) of the Tennessee Code Annotated). Thus, while Tennessee prohibits the legal sale of cannabidiol—with the exception of cannabidiol derived from hemp with a THC concentration of 0.3% or less—it would likely require manufacturers to list a product’s THC content on its packaging.

Advertising and marketing

What rules and restrictions govern the advertising and marketing of cannabis products and accessories (including online)?

The possession, use, and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). The Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.” However, Tennessee has yet to promulgate regulations relating to the advertising and marketing of hemp. Therefore, no specific rules or restrictions govern the advertising and marketing of marijuana products. With regard to accessories, it is unlawful in Tennessee:

for any person to place in any newspaper, magazine, handbill, or other publication, any advertisement, knowing, or under circumstances where one reasonably should know, that the purpose of the advertisement, in whole or in part, is to promote the sale of objects designed or intended for use as drug paraphernalia. (Section 39-17-425(c)(1) of the Tennessee Code Annotated).

Tennessee law defines “drug paraphernalia” as:

all equipment, products and materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling or otherwise introducing into the human body, a controlled substance as defined [by Tennessee law]. (Section 39-17-402(12) of the Tennessee Code Annotated).

Branding

What rules and restrictions govern the branding and trademarking of cannabis products and accessories? Are there any other special branding considerations for cannabis businesses?

The possession, use, and distribution of marijuana with a THC concentration greater than 0.3% is prohibited under Tennessee law (Section 39-17-417 of the Tennessee Code Annotated). Further, it is illegal to use, possess with the intent to use, or sell drug paraphernalia in Tennessee (Section 39-17-425 of the Tennessee Code Annotated). Tennessee law defines “drug paraphernalia” as:

all equipment, products and materials of any kind which are used, intended for use, or designed for use in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling or otherwise introducing into the human body, a controlled substance as defined [by Tennessee law]. (Section 39-17-402(12) of the Tennessee Code Annotated.)

Tennessee permits individuals to obtain state trademarks under certain circumstances (Sections 47-25-501 et seq. of the Tennessee Code Annotated). While the statute does not address marijuana or marijuana accessories, it does provide that the statute is meant to be consistent with the Trademark Act 1946 (Section 47-25-518 of the Tennessee Code Annotated). The U.S. Patent and Trademark Office requires a mark used lawfully in commerce to be trademarked and therefore does not register marks for marijuana. Because marijuana and marijuana accessories are illegal in Tennessee, the state would be unlikely to register a marijuana or marijuana accessory trademark. However, as hemp is legal in Tennessee, trademarks relating to hemp are likely registerable. There are otherwise no rules or restrictions governing the branding or trademarking of marijuana products and accessories in Tennessee.