Tennessee Court Issues Injunction On THCA

As detailed in an earlier July 2024 Kight Law blog, last year the Tennessee legislature passed a law that contained many new requirements for the hemp industry. On September 27, 2024, the Tennessee Department of Agriculture (the “Department”) promulgated and filed permanent rules for hemp producers, retailers, and suppliers of hemp-derived cannabinoid (“HDC”) products. These regulations were set to become effective on December 26, 2024, but a Tennessee court has intervened and issued an injunction.

The temporary injunction, issued by a Tennessee Chancery Court in Davidson County on December 23, 2024, paused the implementation of certain requirements contained within the Department’s hemp regulations. The temporary injunction specifically prohibits the Department from regulating “mere hemp or raw hemp flower” and implementing concentration limits for THCA in HDC products which would, in effect, ban those products. The injunction is narrow in scope and will remain in effect until February 18, 2025. It allows all the parties time to provide additional evidence on the rules in question.

Chancellor I’Ashea L. Myles, author of the court order, cited the need for additional information to determine if the Department’s testing regulations are “arbitrary and capricious”, the legal standard that applies in these circumstances. The injunction allows the parties to provide expert testimony and other evidence regarding how “post decarboxylation” (sometimes referred to as “total THC”) testing will be conducted on HDC products. Specifically, the injunction provides an opportunity for the parties to discuss whether or not hemp testing should account for both THC and THCa content within THC concentration levels. Additionally, the court requested additional information on the scientific composition of “raw” hemp, “mere” hemp, and cannabinoids.

The Plaintiffs in the case, which include the Tennessee Healthy Alternatives Association, the Tennessee Growers Coalition, Saylor Enterprises LLC dba CBD Plus, and Gold Spectrum CBD LLC, met the legal threshold to prove the harms that would be inflicted if the rules were to take effect. The Department submitted no evidence in response and conceded the Plaintiffs would suffer an immediate and irreparable harm to their business interests should the rules takes effect.

The plaintiffs also argued that “mere hemp” and “raw hemp flower” are not HDC products because they are not “derived from hemp”; rather, they are hemp. While the Defendants asserted that “mere hemp” and “raw hemp flower” were not the subject of the Tennessee hemp statute, the cannabinoids found in them are. The court order indicated a need for the court to understand whether or not cannabinoids can be tested separate and apart from the actual plant cannabis sativa L or if the cannabinoids derived from hemp are in fact “hemp” or separate derivatives of the plant.

Plaintiffs were ordered to submit additional information by January 22, 2025. The Department was given a deadline of February 5, 2025. The final declaratory hearing in this matter is scheduled to take place on February 18, 2025, but the parties can file for an extension.

Importantly, Chancellor Myles notes in the court order the federal legality of hemp, the extent to which the Department’s regulations go beyond Tennessee’s hemp law, and the impact the hemp industry has had as a source of revenue for both the nation as a whole and the State of Tennessee through a boost in local economies and state and federal taxes. Citing Whitney Economic’s 2023 National Cannabinoid Report, the court order reflects that in 2023 the national HDC market was valued at an estimated $28b on an annual basis and had created over 300,000 jobs. Further, in Tennessee, the same newfound industry of HDC products has reportedly earned between an approximate $280b and $560b in retail sales and employed an estimated 6,495 Tennesseans who collectively earned more than $260m. (Note – The court’s finding on the economic impact to Tennessee may be misstated given that it pegs the state’s figure at ten times the national figure. That being said, the court appears to be referring to the total sales of HDC products in the state, rather than the “value” of the state’s market.)

Tennessee is one of the most notable markets for THCa hemp in the country and we will be watching this case closely. Kudos to the plaintiffs for bringing this case and to attorney Alex Little of the Litson Law Firm in Nashville for their work on this important case.

January 6, 2025

This article was written by Kight Law attorney Amber Lengacher. Kight Law represents hemp businesses in the US and throughout the world.