The Tennessee Department of Revenue has announced a new tax on products containing cannabinoids derived from hemp, including CBD and delta-8 and delta-10 THC.
The department’s Notice #23-12 states that effective July 1, 2023, “Public Chapter 423 creates a new 6% sales tax for the privilege of engaging in the business of selling products containing a hemp-derived cannabinoid.”
This tax “applies in addition to the standard 7% state sales tax rate and the applicable local option sales tax rate”. However, the tax “does not apply to hemp-derived fiber, grain, or topical products.”
Hemp-derived cannabinoid, according to the department, “means (i) a cannabinoid other than delta-9 tetrahydrocannabinol (“THC”), or an isomer derived from such cannabinoid, that is derived from hemp in a concentration of more than one-tenth of one percent (0.1%); or (ii) a hempderived product containing delta-9 THC in a concentration of three-tenths of one percent (0.3%) or less on a dry weight basis. This includes, but is not limited to, delta-8 THC and delta-10 THC.”
The additional 6% sales tax applies to the sales price of products containing hemp-derived cannabinoids when sold at retail in Tennessee. The tax is reported in the same manner as sales tax. Therefore, the tax is due monthly.
“Taxpayers must file a return with the Department and remit payment on or before the 20th day of each month. The Department will revise its Sales and Use Tax Return to add a new schedule that retailers will use to comply with this additional tax.”
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