Tennessee Marijuana Business

What is the Demand for Marijuana in Tennessee?

Tennessee remains one of the few states where marijuana is illegal for medical and recreational purposes. As a result, there are no legal sales of the substance. However, findings by various research groups have projected a high demand for marijuana if legalized in the state. As of 2014, an independent report revealed that Tennessee had over 165,000 marijuana smokers. Some of them in some parts of Tennessee crossed state lines into neighboring states where marijuana is legal to purchase and use cannabis.

How is Marijuana Taxed in Tennessee?

Recreational and medical marijuana are illegal in Tennessee. As a result, the state does not collect taxes on cannabis. In 2020, a bill, HB 1968, known as the Free All Cannabis for Tennessee Act, would have legalized recreational marijuana but did not make it out of the House or Senate subcommittees. HB 1968 proposed a 15% tax on cannabis sales and allocated the proceeds of the 15% tax as follows:

• 5% to the Department of Revenue (DOR) for administrative costs incurred under the Free All Cannabis for Tennessee Act

• 5% to the Department of Education (DOE) to fund education programs for secondary and elementary pupils regarding the potential legal and health risks of underage use of marijuana

• 20% to the State Employee Legacy Pension Stabilization Reserve Trust

• 20% to the Department of Safety (TDOS) to support law enforcement officers and educate and educate them on state marijuana-related laws

• 50% to the Tennessee Department of Agriculture (TDA) for grant initiatives in tier 3 and tier 4 counties and education and marketing programs related to implementing the Free All Cannabis for Tennessee Act

The Free All Cannabis for Tennessee Act anticipated generating $65 million in state tax revenue in the first year of legalization. The bill also projected about $130 million in subsequent years after legalizing marijuana. However, it did not pass.

What is the Agency Taxing Marijuana Business in Tennessee?

Although Tennessee does not collect taxes on marijuana since marijuana is still illegal, its Department of Revenue (DOR), is likely to be the agency tasked with collecting marijuana taxes if it legalizes medical and/or recreational marijuana. Although it failed, HB 1968 had proposed the DOR as the agency to collect marijuana taxes in Tennessee. For inquiries on tax-related issues in the state, call the Tennessee DOR or contact them at:

Department of Revenue

500 Deaderick Street

Nashville, TN 37242