Tennessee Enacts New Sales Tax on Products Containing Hemp-Derived Cannabinoid

Effective July 1, 2023, Tennessee enacted a new 6% sales and use tax on the sales price of products that contain a hemp-derived cannabinoid sold at retail. The 6% tax applies in addition to the standard 7% state sales and use tax and the applicable local option sales tax. The 6% tax does not apply to hemp-derived fiber, grain, or topical products.

Hemp-derived cannabinoid means:

• A cannabinoid other than delta-9 tetrahydrocannabinol (“THC”), or an isomer derived from such cannabinoid, that is derived from hemp in a concentration of more than one-tenth of one percent (0.1%); or
• A hemp-derived product containing delta-9 THC in a concentration of three-tenths of one percent (0.3%) or less on a dry weight basis. This includes, but is not limited to, delta-8 THC and delta-10 THC.

The tax is reported on the Tennessee Sales and Use Tax Return and is due monthly. Taxpayers must file a return with the Department of Revenue and remit payment on or before the 20th of each month. (Important Notice No. 23-12, Tennessee Department of Revenue, May 2023)