SUT-114 - Hemp - Sale of Hemp Byproducts

The sale of hemp or products that are derived from hemp, such as extracted oil with no additives, are not subject to sales tax or business tax in Tennessee when they are sold by the hemp grower or farmer, as they are considered agricultural products. However, sales of creams, oils containing additives, and other products made out of hemp that you have grown are subject to sales tax and business tax whenever other ingredients are added to these products. Such products are not exempt for medical purposes from either sales tax or business tax. However, the additional 6% sales tax that applies to the sale of hemp-derived products does not apply to sales of hemp-derived fiber, grain, or topical products. See Important Notice 23-12 and the Department’s Sales and Use Tax Manual for more information. 

Producers, distributors, and retailers of hemp or hemp byproducts 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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