Tennessee THCA Ban Costs State Fifty-Four Million In Lost Tax Revenue

Revenue Shortfall Exposed

The Tennessee ban on THCA products has cost the state $54 million in tax revenues, WPLN News reports. Last year, state lawmakers approved the ban along with a new tax on intoxicating hemp products but has only collected 3% of what the new tax was projected to bring in. In February, the state had anticipated collecting about $8.8 million from the new tax but has only brought in $61,000.

The THCA effectively ended the sale of smokable hemp and full-spectrum CBD products, which were the most profitable in the market. The lower sales have also impacted the sales tax the state had previously collected on hemp products. The ban was initially supposed to take effect January 1 but was delayed until the summer so cultivators and retailers could shift their business models.

Business Disruption and Response

Lee Crabtree, a hemp farmer, told WPLN that he is “not making the money” he did “back when CBD was huge there for a minute.” Ally Drumright, manager of Clara Jane in East Nashville, says the impact on her store is severe. “It’s a huge hit for us. The products that we’re losing are about 60% of our business.” Drumright plans to keep the store open by shifting focus to beverages, edibles and self-care products that remain legal under Tennessee’s concentration limits, and employees have already taken pay cuts to avoid layoffs.

Drumright also warns of broader consequences for Tennessee consumers. “We are going to definitely be seeing people travel out of state. Not just businesses, but consumers.

They’re going to be buying things on the black market. They’re going to be traveling out of state to the recreational states around us. We’re going to see those recreational states get millions of Tennessee tax dollars to go toward their schools, their roads and their productive lives.”

State Financial Patching

Addison Ginsberg, owner and chief operating officer of Green Treez Company Dispensary in West Nashville, has established a new headquarters in North Carolina and says the business faces an uncertain path. “We’re pretty sure that we’re going to be facing some financial hardships.” Rodney Croteau, owner of Green Daisy in Franklin, points to the federal direction as reason to doubt the law’s longevity. “I think this whole thing is going to be short-lived, to be honest with you.

At the federal level, we’re kinda going in the other direction.”

The state has patched the $54 million deficit with surpluses from other taxes, including franchise and excise taxes, and sales tax more broadly.

Related Stories

• Florida Legalization Battle Meets Federal Reform and Prosecution Decline
• Florida Legalization Bid Clashes With Record Low Federal Prosecutions
• California Judge Tentatively Upholds Cannabis Tax Cuts Despite Childcare Funding Challenges