The hemp market in Tennessee is growing rapidly, with more opportunities every day for entrepreneurs to get involved. As of 2019, Tennessee is one of the top producers of hemp in the country, and the state is poised to reap the benefits of its efforts. By 2022, the national industry is projected to more than double to a value of $2.6 billion dollars.
Hemp businesses are able to cultivate the plant for a variety of different products, including construction materials, fabric, rope, and cannabidiol (CBD). Because hemp is federally legal, CBD derived from hemp is also legal in Tennessee and nationwide. The CBD market specifically has seen a recent surge as its un-verified yet expansive health benefits become more widely publicized. CBD can be sourced as oil and implemented into bath products, cosmetics, capsules, and even food. The CBD market alone is projected to pull in $16 billion by 2025.
To grow your own hemp and ensure your business is established for success, you’ll need to understand the legalities of the market, including both federal regulations and those specific to Tennessee.
The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”). The 2018 Farm Bill gave the U.S. Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. At the state level, individual states have the option to maintain primary regulatory authority over the crop grown, processed and sold within their borders by submitting a plan to the USDA.
In May 2014, Tennessee enacted House Bill 2445 (Senate Bill 2495), which “authorizes growing of industrial hemp subject to regulation by the Department of Agriculture.” Shortly thereafter, the Department of Agriculture instituted the Industrial Hemp Pilot Program which allowed anyone (except those convicted of a felony for controlled substance in the past 10 years) to obtain a license to grow industrial hemp.
The Tennessee Right to Farm Act (T.C.A. § 43-26-101 et seq. and § 43-27-101 et seq.) defines “hemp” as “the plant cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (THC) concentration of not more than three-tenths of one percent (0.3%) on a dry weight basis.”
In 2018, the Department of Agriculture opened the application window for licenses to grow, process and sell industrial hemp from November 2018 to February 2019. As of June 2019, the application window has been opened year-round.
Under the Industrial Hemp Pilot Program, there are three (3) types of licenses for hemp: Industrial Hemp Grower License, Industrial Hemp Certified Seed License and Industrial Hemp Processor License.
Industrial Hemp Grower License
An industrial hemp grower license is required per person for each physical address where the person cultivates industrial hemp. There is no limit to the number of growing areas a licensee may cultivate at a licensed address. No grower license shall be issued for a growing area within ten (10) miles of a certified seed license growing area without the certified seed licensee’s consent. The annual fee is determined according to the total size of the growing area(s) at the licensed address as follows:
- > 5 acres: $250
- 5 – 20 acres: $300
- 20+ acres: $350
Every crop grown and every variety may be inspected and sampled by a Department of Agriculture plant inspector prior to harvest, and the grower should contact the Department of Agriculture thirty (30) days prior to harvest for inspection. The license holder is responsible for paying all fees associated with the sample, which costs $150. The Department of Agriculture encourages self-monitoring of industrial hemp crops, thus sending your samples off to be tested is permitted and encouraged.
Once inspection is complete, only viable industrial hemp can be transferred to a licensed hemp processor.
Industrial Hemp Certified Seed License
Industrial hemp certified seed licenses are required for any person who cultivates industrial hemp for certified seed. In order for applicants to become certified, they must be members of the Tennessee Crop Improvement Association (“TCIA”) and provide the names and addresses for three letters of recommendation.
There is no limit to the number of locations or growing areas a licensee may cultivate for certified seed. No certified seed license shall be issued for a growing area within ten (10) miles of another certified seed license growing area without the consent of both certified seed licensees. The annual fee for an industrial hemp certified see license is $350. An applicant for a certified seed license must submit evidence of membership with the TCIA.
Similar to an Industrial Grower License, an inspection through the TCIA is required for Industrial Hemp Certified Seed Licenses. The crop field must meet the standards laid out in the TCIA Hemp Seed Standards.
Industrial Hemp Processor License
Any person who processes industrial hemp for distribution in commerce shall annually register with the Department of Agriculture. You’ll need to register each processing facility where the person processes industrial hemp, and there is no fee for a processor registration.
The first step to any application is gathering the necessary information that you’ll need to obtain a license. For all of the applications listed above, you’ll need:
- Name of applicant (individual or corporate)
- Address and contact information
- Name of an agent (person cultivating the hemp)
- State the goal of your hemp research
- GPS coordinates of growing area
- Arial photos of growing areas
To get started today, contact Schaffer Law Firm to assist in preparing your application submitting your application.