A Republican lawmaker is seeking to tax and regulate the existing cannabis industry in the state.
Rep. Chris Hurt (R-Halls) filed House Bill 1690 this week. The bill seeks to regulate psychotropic hemp-derived cannabinoids, which include products that have more than 0.1 percent THC (current federal regulations limit THC to 0.3 percent). That includes products containing the newly popular Delta-8 but not pure CBD products, which do not contain THC.
As a member of the Agriculture and Natural Resources Committee, a former hemp farmer and current co-owner of CBD ProCare — a CBD company in Dyersburg — Hurt said he filed the bill in an effort to “legitimize the industry.”
According to Hurt and Joe Kirkpatrick of the Tennessee Growers Coalition, who collaborated with Hurt on the writing of the bill, no other state has legislation that specifically taxes and limits the sale of hemp-derived cannabidiol products.
“People think that Tennessee is the last to do anything when it comes to the hemp industry,” Kirkpatrick said, “but they are forgetting that Tennessee was the first state to allow and define smokable hemp and the first state to allow the feeding of hemp to livestock.”
HB1690 would do three things: create a licensing requirement for retailers and wholesalers, establish a 6.6-percent excise tax on the wholesale of hemp-derived cannabinoids and limit sale of psychotropic hemp-derived products like Delta-8 to those 21 and older.
The bill would require retailers and wholesalers to apply for an annual $200 license through the Tennessee Department of Agriculture. Based on the licensing structure outlined, Kirkpatrick said he would expect the state to collect $160,000 annually in fees. (The legislative Fiscal Review Committee has not yet analyzed the potential economic impact of the legislation.) Licenses could be revoked or suspended at the discretion of the Department of Agriculture.
Kirkpatrick estimates that the proposed 6.6-percent tax, modeled after the tax on tobacco, could generate as much as $4-5 million in annual revenue for the state. Hurt and Kirkpatrick would like to see the money collected from licensing and the wholesale tax used to increase the resources at the Department of Agriculture to ensure product safety.
“No one is testing these products to make sure products have what they really say they have in them,” Hurt said.
In an ideal world, Hurt said, products would be tested for cannabinoid content, contaminants and adulterants. According to Hurt and the TGC, there are a number of hemp-derived products that claim to increase libido, but some of those manufacturers are including substances like Viagra in their merchandise to give users those effects rather than relying on the cannabinoids themselves.
The bill places most of the responsibility on the Tennessee Department of Agriculture, but the department has yet to respond to a request for comment.
Another lingering question: whether the bill is a conflict of interest for Hurt, who has ownership in a company that manufactures and sells products containing hemp-derived cannabinoids.
“It’s frustrating when you hear there are politicians who seem to be working for more of their own interests than the interest of the people they serve,” said Holly Ramsey, an advocate for the expansion of Tennessee’s medical marijuana program. “I am hopeful that the focus will remain on the medical needs of Tennessee patients and not the use of this plant for recreational purposes.”
Hurt said he filed the bill in order to legitimize the industry, protect consumers and help the hemp farmers in his district. He adds that he uses CBD products daily. He could not, however, tell the Post how many hemp farmers were in his district or the number of retailers or wholesalers this would impact in his district.
The TGC contends that the legislation requires a subject-matter expert, like Hurt, and does not consider it a conflict.
The second year of the legislative session is in its early days, and it could take weeks or months before lawmakers fully consider Hurt’s proposal, which as of Thursday does not yet have a Senate sponsor.
This certainly won’t be the last cannabis-related bill proposed this year. In fact, Kirkpatrick told the Post that the TGC is in the final drafting stage with Rep. Bob Freeman (D-Nashville) on a more expansive bill that would legalize cannabis for both medicinal and recreational purposes. Kirkpatrick said the bill will likely be filed next week. (Freeman’s father, Bill Freeman, owns Post parent company FW Publishing.)
According to Freeman, the so-called FACT Act would “create the best cannabis program in America much like we have created for the hemp industry in Tennessee.” The in-the-works bill would include “retroactive criminal justice reform,” tax revenue for rural and minority business development and support for Tennessee farms, among other features touted by Freeman. The proposal “could be a game changer for Tennessee,” he added.