SUT-112 - Hemp - Tennessee Tax Implications

In Tennessee, growers of agricultural products are exempt from the business tax and the sales tax on the sales of agricultural products that they grow. Hemp producers who sell the hemp they grow are therefore exempt from the business tax and are not required to collect sales tax. They do not need to get a business license from the city or county.

However, retail sales of hemp are subject to sales and use tax and effective July 1, 2023, subject to an additional 6% sales tax. See Important Notice 23-12 and the Department’s Sales and Use Tax Manual for more information. 

Hemp producers, distributors, and retailers that operate in Tennessee under a corporate form including, but not limited to, corporations, S corporations, LLCs (including single-member LLCs owned by individuals), and LPs are subject to Tennessee's franchise and excise taxes.

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