Hemp retailers brace for July law that could shutter stores

Some local cannabis retailers are struggling to see a world in which their stores are able to continue operating. Last year, Gov. Bill Lee signed a bill into law overhauling Tennessee's regulatory structure for hemp, transferring enforcement power from the Department of Agriculture to the Alcoholic Beverage Commission. A primary provision of the law effectively bans THCa, by far the most popular hemp product sold in the state. When burned, THCa converts into delta 9 THC – the cannabinoid found in typical forms of marijuana. However, because the hemp-derived THCa does not change until heated, the result is a legal product that produces psychoactive effects that mirror those of typical forms of marijuana. Cannabis store owners in Tennessee estimate THCa products make up anywhere from half to three-quarters of their inventories. And many say the new law will almost entirely eliminate the state's hemp-derived cannabinoid industry. A national cannabis law firm used state data to show $245 million worth of hemp products were sold in Tennessee in 2024. The state valued the economic impact of hemp products more conservatively, at $180 million in 2022. The new legislation has already caused changes to take hold at the local level. Greenbean Ventures, LLC, a Northeast Tennessee-based hemp company, notified the state earlier this month that it will transfer operations to North Carolina in July. The move will cost 121 employees their jobs across nine locations spanning the region, including Kingsport, Bristol, Johnson City and Jonesborough. It's a roughly $750,000 annual payroll. During a rule making hearing with the ABC earlier this month, state Rep. John Crawford, R-Kingsport, appeared to comment on the situation, saying the company's exit will cost the tax base millions of dollars. "I just have a hard time, that we've given them permission over the last year or so to do this, and now we're taking that back after they've made huge monetary investments," Crawford told representatives with the ABC. Dustin Stanley owns Green Leaf Holistics in Kingsport, right across the street from the Smoky Grass Station, one of the Greenbean-owned businesses that will be closed come July. Stanley believes he and a few other Kingsport shops will be able to survive – but just barely. He will have to rent out the back half of his shop to a tattoo parlor to make ends meet, and even then, he's not sure it will be enough to keep afloat. Stanley anticipates losing about 40% of his income after the law takes effect, and he's already had to cut back on personnel, firing his two employees and opting instead to run the shop on his own. The new legislation isn't logical, says Stanley, who estimated about two-thirds of his inventory is THCa products. "Basically it'd be like having a restaurant, and all of a sudden walking in, being like, we can't sell any more meat," Stanley said. "You can sell all the vegetables you want, good luck on that, and good luck surviving." Some businesses, however, aren't as reliant on THCA. D.W. Cooper is one of Tennessee's original businessmen in the cannabis realm. Chief Business Development Officer of East Tennessee Hemp Company, he is the first to bring a vertically integrated cannabis facility in the state. Like others, his business will see the effects of the July 1 regulation. "I've donated over $400,000 in product every year to the vets and cancer folks in this area that cannot afford this product," he said. "Come July 1, if I do that, I will be committing a felony." While Cooper has various products containing THC, he maintains THC-free gummies, tinctures and topical creams. Other products with THC will be going completely away, which he said will affect a loss of sales, even if it's not the main type of product he's selling. "I have a stable clientele with the CBD business, and that's what we started and stuck our game to," he said. "That's not going to get affected. I never got into the THC and smokeables, and that's what's going away. I've stuck to my guns and the main products that I make. We focus on the medicinal side of things, while everyone else went to the recreational side of things, and the recreational side of things is going away up to a certain point." That "certain point" is THC-infused drinks. Cooper said the alcohol industry is capitalizing on the product, and part of his way to counteract the loss of sales from the upcoming regulation was to create his own line of THC drinks just to be able to compete with other businesses. "Those drinks that I'm making and being part of this, I've got a whole line where I'm getting in bed with the devil and bringing to market so I can be competitive," Cooper said. "I've got a whiskey, I've got cocktails, I've got canned drinks. That's the cultural change – it's a worldly thing. This is something that's going to take over the world." Cooper explained his business's original goal was to utilize cannabis in its natural form to help individuals who struggle with cancer and opiate addiction. However, he believes the upcoming July regulation is the result of "loopholes" created by other businesses through synthetic products. "I've had to do so much over these last eight years in changing and trying to keep up with all the industry changes, and you've got people out here that have worked in this loophole system that the government and the state has done nothing about that allow them to operate," he said. "It has destroyed everything in the platform and rock that we have built in the beginning of this." While he said his business will still have open doors once the regulation takes place, Cooper believes the first bit of adjusting to the new rules will "be a mess" for other businesses. He said because of the amount of workaround synthetic recreational products, the legislation is necessary to mitigate how THCA is being used. "It had to be done," he said. "They allowed so much trash, there was no way to fix it, and there is no way to fix it, and that's why you see a ban not only in the state, but federally. They screwed up, they don't want to admit to screwing up. The only way to clean it is to start over." He added it's likely the ban will cause some businesses to go where their products will be legal while the alcohol takes the reins on how Tennessee is perceived. "Big liquor is taking over Tennessee," he said. "Tennessee is the moonshine capital of the world, and they will make sure that they remain that way. Cannabis will never be a thing in Tennessee."