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Wednesday, September 28, 2022

Tennessee boosts legal cannabis market despite legislation

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Tennessee remains one of 13 states in which cannabis is illegal; however, the cannabis industry and culture have grown rapidly as regulations in the state have changed in the last five years.

The state of cannabis legislation in Tennessee has often come down to differences in terminology and seemingly minute concentrations of substances. The back and forth, however, has been the difference of millions of dollars in state tax revenue and countless jobs.

The term “cannabis” generally refers to the products from the Cannabis sativa plant. However, much of the industry deals in “cannabinoids,” which refer more generally to the byproducts from the plant that can be chemically isolated — most popularly referring to tetrahydrocannabinol, THC, and cannabidiol, CBD.

While these are the most popular cannabinoids, there are potentially hundreds of cannabinoids being utilized in products and studied by the cannabis industry.

In May 2017, Tennessee passed a law that defined “industrial hemp” as any Cannabis sativa plant that produces less than 0.3% Delta-9 THC. The bill allowed for the legal growing and processing of these hemp plants throughout the state with proper licensing. Since this change, the hemp industry has boomed in the state.

While there are limitations on the Delta-9 THC in these products, there is no regulation on CBD, Delta-8 THC, Cannabigerol, CBG and countless other cannabinoids still found in hemp plants.

Possession of cannabis that does not meet these defined concentrations can result in a Class A misdemeanor, which can be a fine of up to $2,500 or a year of jail time. In 2016, Nashville and Memphis passed legislation to decriminalize cannabis possession in minimal amounts, less than half an ounce, to a $50 fine and 10 hours of community service. However, the legislation was later blocked by state regulation in April 2017 by Governor Bill Haslam.

In May 2021, the passage of another cannabis legislation marked a breakthrough in the state’s market. The bill created a state medical cannabis commission, which consists of local medical professionals. It also made an exception for medical cannabis usage of CBD oil that contains no more than 0.9% THC for people who experience seizures, Alzheimer’s, cancer and other life-threatening or fatal conditions with written permission from a medical professional.

Coming into 2022, a few cannabis-related bills were up for the year. In March 2022, a bill to enact the “Free All Cannabis for Tennessee Act” did not make it out of the senate or house subcommittees. The bill aimed to recreationally legalize and regulate cannabis sales for adults over 21 years old and place a 15% tax on marijuana sales. The bill was expected to accumulate $65 million in state tax revenue in the first year and around $130 million in the years following.

Less than a week later, a bill was introduced to ban the sale of Delta-8 THC products. The ban was predicted to cause an over $2 million net decrease in state revenue per year, and it was quickly amended to regulate and tax Delta-8 THC instead.

The bill ultimately would limit sales of Delta-8 THC products to adults over 21 and require testing in facilities producing Delta-8 THC products. It would also place a 5% tax on these products. However, the bill was never discussed or voted on in the legislative period.

That is the most recent legislative action on cannabis in the state; however, it lacks consideration of the already present cannabis market and interest in the state.

On June 8, Big Plan Holdings hosted the first Nashville cannabis live chat, which brought together a panel of executives in the cannabis market.

Josh Joseph, CEO of Big Plan Holdings and founder of Grassroots Cannabis, stood on the panel to offer perspective from his time running Grassroots Cannabis, a multi-state cannabis producer and seller.

He was accompanied by David Belsky, founder of FlowerHire, which helps hire higher-level management in the cannabis industry, and Jordan Reed, a former NFL player and founder of BPH Legacy, which focuses on diversity and equity in the cannabis industry.

The panel primarily focused on the cannabis business from a national level, using examples from states with legalized cannabis. They covered typical regulations once a state passes legislation to legalize cannabis and how that changes the market.

“The state enacts legislation, and that provides you a guideline of exactly where you can be in terms of how far you can be from a church or a mosque or a synagogue or a public playground or a swimming pool,” Joseph said. “(The state gives) the local cities and towns and municipalities the ability to opt in or opt out to a candidate’s program … then those local municipalities, if they opt in, have the ability to add to restrictions that the state has put in place.”

While this legislation may be a way out for Tennessee, the cannabis industry continues to grow nationally, which requires a specialized workforce and access to arable land as many producers control the entire process from plant to product.

“What I’ve seen from an economic impact standpoint is a lot of cannabis cultivation is really not done in city centers. It’s done downstate, in the country, areas of the world that have been left behind by globalization,” Belsky said. “Facilities that have literally had nothing in them for 20 or 30 years and communities with no jobs except for Walmart now have hundreds of jobs in a production facility. It’s really amazing to see kind of the rebirth of middle America through cannabis jobs.”

Ultimately, this event is meant to be the first of many talks in Nashville to help educate people about the cannabis industry nationally and provide more awareness about cannabis products in general.

“The train has left the station. Cannabis is here to stay,” Joseph said. “It’s a booming industry that creates jobs, creates tax revenue and creates the ability for folks to live a healthier lifestyle.”

While traditional cannabis is yet to be legal in Tennessee, the cannabinoid industry is running strong and legally throughout the state. One of the best examples can be seen in the company Consider It Flowers.

Consider It Flowers was founded by couple Dexter and Kelsey Palmer in 2020. During the early stages of the COVID-19 lockdown, they started making edibles using high concentrations of hemp flowers and delivering them to their friends.

They decided to launch the delivery-based cannabis business. The business has grown and covers a 20-mile radius of Nashville’s city center. They offer high quality products containing cannabinoids derived from legally and often locally grown medical-grade super hemp, calling it “recreational hemp.”

“Our goal is to offer both a friendly, professional service and products that our customers can rely on for specific effects. We’re offering custom blends and can tell the customers exactly what’s in each product and how much is an appropriate dose,” Kelsey Palmer said. “We’re educating our customer base and in the process normalizing the use of cannabis. We’re letting people know that cannabis can be fun and healthy giving.”

The couple emphasized the importance of testing and ensuring the products they release meet the ingredients and specifications found on the packaging. They also include dosage recommendations on the packaging and further explanation of expected cannabinoid effects on their website.

The business aims to reach people who may be new to the cannabis industry and could be turned away by the stigma of a smoke shop or would alternatively turn to illegal drug deals.

“I think the coolest thing is that we’re allowed to do this now in Tennessee. For the longest time, not having legal cannabis products or services has criminalized a lot of people in this state,” Dexter Palmer said. “Two years after our launch, we are still so excited to be Nashville’s own recreational hemp delivery service providing legal cannabis and THC products to our community.”

For Dexter and Kelsey, their business has not been at risk even with the proposed regulation of Delta-8 THC, as they already follow strict testing guidelines for their products.

The most significant shift seemingly coming to the cannabis industry in Tennessee is a broader medical cannabis exemption. The Tennessee Medical Cannabis Commission is set to hold a meeting on Aug. 26 at 9 a.m., which may hint at the future of medical marijuana in Tennessee.

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