A Kentucky-based hemp company has filed a federal lawsuit challenging Tennessee’s new hemp regulations, set to take effect in January 2026.

Cornbread Hemp, headquartered in Louisville, argues that Tennessee’s House Bill 1376 unfairly discriminates against out-of-state businesses by requiring hemp wholesalers and retailers to maintain a physical presence in the state. The law also prohibits suppliers from shipping directly to Tennessee consumers, limiting online sales and forcing products through a three-tier distribution system similar to alcohol.

The company, which says it sold nearly $1 million worth of hemp products to about 11,000 Tennessee customers last year, is being represented by the Pacific Legal Foundation at no cost. PLF attorney Chris Barnewolt said the law “will require out-of-state suppliers to abandon their customer base, open brick-and-mortar operations in Tennessee, or route products through in-state middlemen,” adding that such restrictions run afoul of the U.S. Constitution’s Commerce Clause.

The lawsuit also challenges the law’s marketing restrictions, which ban health-related claims on hemp product labels, arguing it violates the First Amendment.

Supporters of the measure say the tighter rules are needed to regulate hemp more effectively. The law shifts oversight from the Tennessee Department of Agriculture to the state’s Alcoholic Beverage Commission, and it restricts hemp sales to licensed outlets or businesses that only allow customers age 21 and older. Convenience and grocery store sales will no longer be allowed.