Tennessee lawmakers last year passed legislation aimed at imposing regulations — and taxes — on the sale of delta 8, a THC compound derived from hemp that is legal under federal law. 

Under the state law, Monday was the deadline for wholesalers and retailers of the product to obtain licenses from the state. But after months of rising concern about the lack of guidelines from the state, the Department of Agriculture announced it wouldn’t even begin taking applications until July 1 and set a new deadline of Sept. 30 to obtain a license. Meanwhile, the agency said it would “conduct outreach to businesses to provide education about requirements.”

The bill sponsored by House Majority Leader William Lamberth, R-Portland, and Senate State and Local Government Chair Richard Briggs, R-Knoxville, established annual licensing fees of $500 fee for suppliers and $250 for retailers. According to the Legislature’s estimates, 4,000 retailers and 200 suppliers will be required to  undergo background checks to obtain the requisite paperwork. And anyone found in violation could face civil penalty fees set by the Agriculture Department.

The law creates a new 6% tax on the retail sale of hemp-derived cannabinoids. Revenues are designated to cover the costs of Revenue and Agriculture departments to oversee licensure, regulation and collections. The market in question is valued at $200 million per year, meaning the state could reap about $12 million per year in new taxes, plus $1.1 million in licensing fees.

The law also gave the department wide latitude to establish rules for growing hemp products containing THC in Tennessee. The Tennessee Growers Coalition has said the proposed rules could make current products illegal, which could conflict with federal law. A lawsuit appears increasingly likely.

“These are emergency rules, and so it looks like the department is still working through the 19,000 comments and they haven’t finished their final rule,” Growers Coalition CEO and lobbyist Kelley Mathis Hess told The Tennessee Journal on Wednesday. 

Hess said while that means “things aren’t permanent” just yet, “we’re thinking we might seek some clarifications and some answers in the court with litigation later this year to give everybody some clarification.”

Hess called the emergency rules “confusing,” adding “they don’t make a lot of practical sense from a business standpoint, from an industry standpoint. So we’ll definitely seek some clarification and some answers.”

One top concern for hemp growers is how the rules treat hemp-derived tetrahydrocannabinol and specifically THCa. When heated — like when someone smokes it or bakes in cookies and the like — it converts into delta-9 tetrahydrocannabinol. 

Agriculture Department spokeswoman Kim Doddridge said in an email that THCa flower above 0.3% total THC “has not been legal to grow in Tennessee since 2021.” 

“The department expects that if the testing standards in the emergency rules remain in the final rule version, any cannabis flower that exceeds a delta-9 THC content of 0.3% on a dry weight basis which is tested in a manner similarly relatable to post-decarboxylation “will not be compliant with the department’s regulator program.”

Decarboxylation is a fancy term for heat. And that’s raising the temperature on growers.