Tennessee Does Not Pre-Approve Hemp Products

A License or Brand Registration Is Not Product Approval

As Tennessee’s new hemp-derived cannabinoid product (HDCP) regulatory system has taken effect, we have received questions that suggest some confusion about the difference between licensing a business, registering a brand, and determining whether an individual product complies with Tennessee law.

The distinction is important: Neither Tennessee Alcoholic Beverage Commission (TABC) licensure nor Tennessee Department of Revenue (TDOR) brand registration constitutes state approval of an individual HDCP or a determination that the product complies with all applicable requirements.

A TABC license authorizes a business to engage in specified activities within Tennessee’s regulated HDCP marketplace. TDOR brand registration fulfills a separate registration requirement. Neither process is a product pre-approval process.

Licenses Apply to Businesses and Their Activities

TABC licenses businesses to participate in different levels of Tennessee’s regulated HDCP supply chain.

• A supplier license is required to manufacture or produce HDCPs, including intermediate and finished products.
• A wholesaler license is required to distribute HDCPs to retailers.
• A retail license is required to sell HDCPs directly to consumers.

In general, products sold to Tennessee consumers must move through this licensed supply chain. A TABC-licensed retailer purchases HDCPs from a TABC-licensed wholesaler, and the wholesaler obtains those products from a TABC-licensed supplier.

Multiple suppliers and wholesalers may be involved in the supply chain for a single product. Suppliers may sell to other suppliers, and wholesalers may sell to other wholesalers or retailers.

A TABC license therefore authorizes a business to engage in the activities permitted by that license. It does not mean that TABC has reviewed and approved each individual product manufactured, distributed, or sold by the licensee.

 Brand Registration Is Required, But It Is Not Product Approval

In addition to TABC licensure, HDCP suppliers are subject to brand registration requirements administered by TDOR. TDOR is responsible for administering and collecting HDCP-related taxes, and brand registration is part of that administrative framework.

TDOR has established specific requirements for determining what constitutes an HDCP “brand” for registration purposes. Businesses with questions about whether a particular product, product variation, or other distinction constitutes a separately registrable brand should review TDOR’s published guidance or contact TDOR for additional information.

For purposes of TABC product compliance, however, the important point is straightforward: registration of the applicable brand does not mean that TDOR or TABC has determined that the product complies with all requirements of Tennessee’s HDCP laws and rules.

Consider a fictitious supplier, Acme. Acme obtains a TABC supplier license and completes the applicable TDOR brand registration for a product it intends to introduce into Tennessee’s regulated supply chain.

Those are necessary regulatory steps, but they do not constitute state approval of the product itself. Acme remains responsible for ensuring that the product satisfies the testing and other product requirements that apply to it.

Likewise, a wholesaler should not assume that a product complies with Tennessee law simply because the supplier holds a TABC license and the applicable brand has been registered with TDOR.

Tennessee Does Not Have a Product Pre-Approval Process

Tennessee’s HDCP regulatory framework does not establish a process under which a business submits each proposed product to TABC or TDOR and receives state approval that the product complies with all applicable requirements before placing that product into the marketplace.

Instead, the framework licenses the businesses participating in the supply chain, requires applicable brand registration, and establishes requirements that businesses and the products they manufacture and distribute must satisfy.

This distinction is important. Obtaining a TABC supplier license and completing and completing applicable TDOR brand requirements are necessary steps for participating in Tennessee’s regulated HDCP marketplace, but they are not the end of a supplier’s compliance responsibilities.

The same principle applies throughout the supply chain. Likewise, a wholesaler should not assume that an individual product complies with Tennessee law simply because its supplier holds a TABC license and the applicable brand is registered.

Product and Batch Compliance Are Separate From Licensing and Brand Registration

HDCPs are subject to product-specific requirements under Tennessee law and TABC rules.

HDCPs are subject to testing requirements, including testing by a TABC-approved and registered laboratory. Testing is tied to individual batches of products, with a Certificate of Analysis (COA) documenting laboratory results for the applicable batch.

This is different from licensing and brand registration.

A supplier may be properly licensed. The applicable brand may be properly registered. But the individual products and batches placed into the regulated supply chain must still satisfy the requirements that apply to them.

Laboratory testing is also not the only consideration. HDCPs are subject to other applicable requirements under Tennessee law and TABC rules, including requirements concerning formulation, packaging, labeling, QR-code access to COAs, serving sizes, and other product standards.

The Key Distinction

The simplest way to understand Tennessee’s system is this:

TABC licenses businesses and regulates compliance with Tennessee’s HDCP laws and rules. TDOR administers HDCP taxes and brand registration. Neither TABC licensure nor TDOR brand registration is product approval.

Licensing and brand registration establish requirements for participating in Tennessee’s regulated HDCP marketplace. They should not be interpreted as a state certification, endorsement, or determination that an individual product satisfies every requirement of Tennessee law.

Suppliers and wholesalers remain responsible for ensuring that the individual products and batches they place into Tennessee’s regulated supply chain satisfy the requirements that apply to those products.