How Tennessee’s New Hemp Ban Is Changing Nashville Businesses

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It's Monday, August 10th. I'm your host, Rachel Yakobone, and this is what Nashville's talking about. Before we get into today's show, we've got some more CityCast Nashville swag up for grabs. Shout out to all of y'all who got your hands on our pennant last week. But if we couldn't entice you with home decor, how about a very portable and multi-use tote bag? It's not just the Citycast Nashville logo adorning it, but in a lovely Sarah font, it boasts Neighbors Make Nashville. I know y'all have heard me say this in many ways since my move back to Music City, but it was exactly that. our culture of closeness and kindness that had me turning on my heel back to our city. So won't you be a neighbor? For $10 a month or $100 a year, you can become a member and we can exchange knowing smiles when we spot each other's bags at the Richland Park Farmers Market. Deal? Join today at membership.citycast.fm slash Nashville. And now on with the show. All right, Mariana, I want to start with the basics here. What exactly changed on July 1st and which hemp products can no longer be sold in Tennessee? So it's any sort of hemp derived product that has a certain level of THC to it. Really what changed is that a lot of growers and sellers, their license to grow and sell THC products above a certain level has lapsed. So this is actually a law that was passed, not this year, but last year. It initially had a different deadline, but a lot of growers and sellers needed more time to basically scale down operations, decide whether or not they would continue in business. Some didn't. Some are continuing. As far as products that are available, you would still likely be able to find THC beverages because of the very low dose of THC that they have still sort of complies with state law. But things like smokable flour. So when we talk about the THC products that were available, it was THCA, which is a type of THC that is not necessarily psychoactive unless it is lit. Basically, a lot of smoke shops, vape shops, you know, things with a lot of tie-dye with Marley's name in them, those had products that essentially when they were lit would convert kind of into THC. So those sorts of products will no longer be available. If I'm remembering correctly, you brought up those THC drinks. When you were reporting, I remember you were looking into those because it seemed like some of the big name stores, like quark dorks, were more willing to, like, put in the money to, I guess, like, update their license, like you were saying. Is it still true or are these smaller liquor stores now part of it and totally fine to continue carrying them?

It really comes down to the cost for some of these businesses. So some have continued to sell it. Some have taken it off their shelves just because it's a sort of a separate license that they have to have and have to pay for. And so they're sort of weighing, am I making enough money off of these drinks to justify this new sort of permitting process? And when we saw at the start of the year, which is when this ban was initially supposed to go into effect, was that... For a long time, all THC or hemp products were under Tennessee Department of Agriculture. And part of this law also moved that under the Alcohol and Beverage Commission. So that meant that liquor stores who were selling it had to sort of update their license and go through a different permitting process. Some stores, when sort of switching over, had a momentary, you know, they stopped selling it for a while because they were waiting for that. new sort of license to come through. But for some of them the plan was always to continue selling it. Will liquor stores be carrying more hemp than just those drinks? I would say the drinks and certain edibles might still be available at liquor stores and at smoke shops because, again, of the low THC dosage that those have. But other things that people might have gotten used to, anything smokable probably won't be sold. Do you happen to know how expensive the licensing is? Because I remember in your reporting, a lot of places were saying it wasn't. worth it to go through that. But is this like a really pricey or maybe even comparable to an alcohol license? I would say it's comparable to an alcohol license. Part of it is also just going through all of the paperwork takes time. And if it's not a significant percentage of your sales, then. So I see liquor stores, you know, staying with THC beverages. And I see bars that used to offer. on their non-alcoholic menu, some sort of CBD or THC drink. Now, the CBD drinks don't violate the law at all, but we're still seeing bars take those sorts of things off of their menus. So can we zoom out to the legislation itself? Can you remind us why legislators decided to enact this ban? A lot of growers and sellers that I've talked to have felt like this was sort of a long time coming because the 2018 Farm Bill made a lot of like your Delta's 8 through 10 available because essentially the Farm Bill allowed trace amounts of THC to be legal. And some of those trace amounts can be used to create sort of synthetic. products that mimic the effects of THC. And lawmakers saw this sort of as a loophole because THC, you know, weed is not legal in the state for people to have hallucinogenic products on the market. They wanted to close that loophole.

Can I ask you what the size of Tennessee's hemp industry was prior to last month? There was a recent economic report that I think estimated it was worth $30 million. Of course, this sort of state ban is happening. ahead of a looming federal ban that would go a little bit further than Tennessee's to say that all THC-derived products. So even those THC beverages, you know, the edibles that have trace amounts would also be taken off of the market. So as growers were sort of preparing for this, there is this eye on is this federal ban going to take effect? The Trump administration has been asking Congress to delay it or not do it at all. But that is a consideration for people who have been in this business and are thinking about next moves. To my knowledge, Tennessee was a very large exporter of hemp. I remember, you know, growing up in Florida that any hemp products were often coming from Tennessee. And they actually poached the head of like hemp production here to be the head of Department of Agriculture there when I was a reporter. So are we shipping this out to other states that are more lenient? Yes. And one of the things that makes. hemp-derived THC and, you know, your Delta's 8, 9, and 10, a lot more affordable than actual marijuana is because it can be produced across the country. So states that have legal weed are sort of at a disadvantage because it's a very expensive product to ship around. You can only grow it in certain states, whereas... Hemp, a lot of states like Tennessee, where maybe the consumption is not as much as other places, or the consumption is not as much as we are growing. It can be shipped elsewhere in the country, and that keeps prices nationwide pretty low. Let's talk about... those who are likely to feel the impacts. There's the farmers we've been talking about, producers of hemp products, but also the retailers. When this legislation was first being discussed, we spoke with the owners of a company that made hemp derived products. Now they've pivoted to running a coffee shop. Have you heard similar stories in your reporting? Yeah, I think that businesses' responses sort of fall into three categories. There are the people like you described who, THC derived hemp was sort of their cash crop. And this applies to farmers, retailer, sellers, that without that product being in that business wasn't worth it and have.

completely pivoted. I talked to one farmer who he had gotten all this equipment to make his own sort of CBD gummies or CBD goods for, you know, people who are looking for pain relief alternatives to opioids. And in order to make those, he had to get this industrial kitchen installed. And now his wife is using it to make sandwiches for the farmer's market down in. Murphy'sboro. So there's all these sorts of pivots that have to be made. Some are laying off staff and sort of scaling down operations, but hoping to weather this, hoping maybe something changes on the national level, and just seeing how far they can get with the products that they can offer. And then some have chosen to move entirely out of state, like Burning Acre was a... Wholesale provider, they grew it here, they sold it here. They've moved, you know, across the border into North Carolina to continue growing. Problem with that is a lot of companies have chosen to do that. So now there's just this sort of expat Tennessee hemp grower situation going on across the border in North Carolina. And we'll sort of see if the market is kind to them over there. Do you think we will see an impact on all the smoke shops that replaced hair worlds on our major pikes? Yes, they also have fallen into an interesting situation with regards to zoning because the sort of rules around where they can be has changed after they popped up. So if you've been, you know, anywhere in South, there's like three smoke shops that are so close together that... there's sort of this mad dash to see who can get their permits in first to be the one that stays. So maybe we will see the resurgence of hair world. Maybe something else will sort of grow in its place. But a lot of these businesses, they might not have been sustainable in the first place. I mean, this now is reminding me of that place that has like food, buds and bruise. Thank you. They have closed well before. Well, another thing is like because businesses have had so long. A lot of people have pivoted way sooner than July 1st. A lot of businesses have had time to sort of weigh the pros and cons and decide what they were going to do. I know that there were a lot of sales. A lot of those were not going out of business sales. They were, we've sort of planned for this. We have the product on hand that we think the market needs up until this point. And we've planned for that. Going out of this one product sale, I guess. Well, also on July 1st, Tennessee lawmakers outright banned Kratum. Why was that included in this broader crackdown?

So sort of at the legislature, Kratum has been called a lot of things, gas station heroin. And sort of in the movement of trying to tamp down on drugs that the lawmakers felt should not have been on the market in the first place. This sort of goes hand in hand with that. I will say sort of in discussions of THC beverages at the legislature. Lawmakers last year talked a lot about like these THC drinks are very colorful. Sometimes, you know, the edibles. Their packaging mimic like arisies or a different type of gummy. Obviously the wording is different, but the logo is similar, that there might be confusion with kids who are in gas stations or other places like that. But to my knowledge, those drinks. And those products were not ever sold in gas stations. I mean, don't they make the same argument about the jewel pods and stuff? Like any product that's fruity is for children? I think there was also within that a law to have vape shops a certain distance away from K through 12 schools. All of these banned products were being taxed. So the state was benefiting from that. Can Tennessee find a way to make up for this lost revenue? Well, so last year is when lawmakers passed the ban. This year, lawmakers have sort of expanded that tax. So now that is also sort of the math for some of these businesses closing is they can't afford the higher tax rate if they are not selling as much of their cash cow product as usual. It is a little too early to tell what that overall effect will have. But... Basically, every person who is an economic analyst who sort of operates in these spaces has told me it's going to be nowhere near what the state has budgeted for. We know that Senator Heidi Campbell and Representative Afton Bain are reviving their pot for potholes bill in next year's session. Based on your conversations with legislators, do you think it has a chance of passing or at least moving the window this time? I really don't think there's any chance that that passes unless we see some sort of shakeup during the November election for a lot of these state house races. It's hard to imagine the Republican supermajority moving towards fully legalizing marijuana at a time where they have cracked down on hemp-derived THC. But I think the point that even filing this legislation makes is that Tennessee, we have such a backlog of road projects that need to be done. There is not a lot of money towards road infrastructure. And sort of offering this up as a solution might move the needle forward in discussions on how we actually address roads, if not through legalizing marijuana because the will does not seem to be there for the Republican supermajority. When it comes right down to it, is this all moralizing? Are Republican leaders really concerned about health, in your opinion? I think that there is a concern for health.

But I think that there is also a lot of moralizing. And I think two things can be true. I think that sort of based on the discussions that lawmakers have had, there is a concern of. young folks getting a hold of these products. I think in the case of the cratum, there is a concern of how addictive is it. Do we know much about this product that has sort of been put on the market without any sort of regulatory measures in place? And overall, the 2018 Farm Bill was something that happened at the national level. And Tennessee has sort of been a little bit late to the game in legislating how they think hemp-derived products. should be on the market, to what extent should they be on the market, what kind of products? So even a lot of growers that I talked with, even ones that like had to pivot and might not be making as much money as they've made in the past, still believe that it was a good thing that the market received some sort of regulation because they see a lot of... I don't want to say bad actors, but a lot of people who have gotten into the market without fully understanding the product and trying to sell it as something that it wasn't. Whereas some farmers I talked to really felt like they were doing something for public health by creating, you know, these paths to pain management for cancer patients, people who have chronic pain, people who don't want to go on opioids. There was sort of a nuanced take from a lot of these growers about... There are certain things that they saw as benefits and there are certain things that they see as, uh, detriments to having this sort of loophole, both exploited and not regulated by the state. I want to dig into that for a second. We've been talking a lot about those who are making and selling hemp products, but you just touched on those who are probably going to be the most directly personally impacted. The Tennesseans who were using it for pain management and things like that. Did any clear alternative come up in your reporting to these hemp products? CBD is still on the market. Now, of course, the growers concern is that without the little bit of THC to make it full spectrum, it's not going to be as effective. There are still gummies and THC beverages that might have closer to that ratio that you would get from full spectrum CBD. So there are still some options. Will there be enough grown to meet the demand? might be something we see play out over the coming months because we've seen production ramp down. But some of these products are still on the market. And some of the hemp derived products that might still be there might be benefiting other states who don't have the same sort of regulations that are then selling it to us or our companies or, you know, a THC beverage made out of state but sold by a seller here in Tennessee.

Well, that's all we had for you, Mariana. Thank you so much for sharing more about your reporting with us. Of course, anytime. That's all for today on CityCast Nashville. Best of Nashville voting is open now. We would love to have your vote as best podcast. Go to vote.nashville scene.com and find us in the media and politics category. You've got to vote in 20 categories for it to count, so be sure to spread the love. And don't forget, you can support this show and get great perks by becoming a Citicast Nashville neighbor. That's at membership.citycast.com. If you enjoyed the show, why not tell your friends, rate the show, leave us a review, and subscribe to our Citycast Nashville newsletter. We'll be back tomorrow morning with more news from around the city. I'll leave you with some Puerto Rican encouragement. Balante.