Starting in July, a combination of state and federal regulations will fundamentally reshape Tennessee’s booming hemp industry by banning its most popular products, such as THCA. While a 2018 federal hemp bill initially allowed these hemp-derived, psychoactive products to bypass state marijuana bans, subsequent actions—including a 2025 Tennessee law and a late-2025 federal law—effectively closed the loophole that allowed THCA to be sold legally. The Tennessee Alcoholic Beverage Commission has taken full regulatory control and finalized the enforcement rules, which will take effect on July 1 after a temporary extension granted to businesses expires.

This impending ban is expected to deal a devastating blow to the state’s hemp industry, as experts estimate THCA accounts for roughly 75% of all hemp sales. Beyond forcing local wholesalers and retailers out of business, the regulatory shift will heavily impact Tennessee’s budget, causing projected hemp wholesale tax revenues to plummet from over $55 million to less than $10 million.

Amid these industry contractions, a federal reclassification of marijuana to a Schedule 3 drug has prompted state Republican lawmakers to remove an automatic health department review trigger, ensuring that any future medical marijuana program must be directly created by the state legislature. As a result, the conversation around cannabis in Tennessee will pivot toward the next legislative session, where new medical marijuana proposals are anticipated.