If a retailer purchases hemp from a hemp grower or producer for resale to the retailer's customers, the retailer must collect sales tax from its customers on the hemp sales. The sale of hemp or any products associated with hemp by retailers are treated similar to sales of other types of tangible personal property. Sales and use taxes will apply to sales of hemp that is not grown by the seller. And effective July 1, 2023, Pub. Ch. 423 (2023) creates a new 6% sales tax for the privilege of engaging in the business of selling products containing a hemp-derived cannabinoid at retail in Tennessee. This tax applies in addition to the standard 7% state sales tax rate and the applicable local option sales tax rate.
See Important Notice 23-12 and the Department’s Sales and Use Tax Manual for more information.