Fiscal Summary

Increase State Revenue – Net Impact - $65,256,000/FY24-25/General Fund $134,742,400/FY25-26/General Fund $134,782,400/FY26-27/General Fund $134,955,200/FY27-28 and Subsequent Years/General Fund $63,454,600/FY24-25/Department of Agriculture $126,909,200/FY25-26 and Subsequent Years/ Department of Agriculture $25,381,800/FY24-25/Department of Safety $50,763,700/FY25-26 and Subsequent Years/ Department of Safety $25,381,800/FY24-25/ State Employee Legacy Pension Stabilization Reserve Trust $50,763,700/FY25-26 and Subsequent Years/ State Employee Legacy Pension Stabilization Reserve Trust $6,345,500/FY24-25/Department of Education $12,690,900/FY25-26 and Subsequent Years/ Department of Education $6,345,500/FY24-25/Department of Revenue $12,690,900/FY25-26 and Subsequent Years/ Department of Revenue $600/Each FY24-25 through FY26-27/Department of State $200/FY27-28 and Subsequent Years/Department of State Increase State Expenditures – $232,300/FY24-25/Department of Revenue $223,900/FY25-26 and Subsequent Years/ Department of Revenue $1,713,900/FY24-25/Department of Agriculture $785,900/FY25-26 and Subsequent Years/ Department of Agriculture Decrease State Expenditures - $71,100/FY23-24/Incarceration $143,500/FY24-25/Incarceration $144,900/FY25-26 and Subsequent Years/Incarceration Increase Local Revenue – Net Impact – $65,486,600/FY24-25 $131,083,400/Each FY25-26 through FY26-27 $131,166,000/FY27-28 and Subsequent Years Decrease Local Expenditures - $10,525,800/FY23-24 $21,051,600/FY24-25 and Subsequent Years Other Fiscal Impact – Decreases in incarceration expenditures will continue through FY32-33. Exact amounts of annual decreases over the next 10 years are included below. Additionally, this legislation could result in reduced expenditures for incarceration at the state and local level, and increased expenditures at the state and local for additional public benefits; however, due to multiple unknown variables, any such impacts cannot be reasonably determined at this time.

Bill Summary

Under present law, it is generally a criminal offense for a person to manufacture, deliver, or sell, or possess with the intent to manufacture, deliver, or sell, marijuana. The classification of the offense and authorized penalties depend on the amount of marijuana involved in the offense. Under present law, certain products that are derived from the cannabis plant (such as hemp, FDA-approved prescription medications, and products with limited amounts of THC that are used for clinical research or treatment of specific medical conditions) are excepted from the definition of marijuana and, therefore, not subject to criminal penalties.

Present law also establishes the medical cannabis commission to study and make recommendations related to the medical use of cannabis in Tennessee should cannabis be reclassified or declassifies as a controlled substance at the federal level.

This bill decriminalizes the use of marijuana under certain circumstances and creates a regulatory framework for the cultivation, transport, researching, processing, and distribution of marijuana.

AUTHORIZED USE

This bill generally authorizes a person who is 21 years of age or older to:

(1) Use, possess, and transport up to 60 grams of marijuana, except that not more than 15 grams of that amount may be in the form of marijuana concentrate;

(2) Transfer without remuneration to another person who is 21 years of age or older up to 60 grams of marijuana, except that not more than 15 grams of that amount may be in the form of marijuana concentrate;

(3) Cultivate for personal use up to 12 marijuana plants in a secured, private area on the premises of the person's private residence;

(4) Possess, store, or process on the premises of the adult's private residence not more than the amount of marijuana produced from plants cultivated on the premises; and

(5) Use, possess, transport, or transfer to another adult without remuneration marijuana-related drug paraphernalia.

This bill authorizes a parent, legal guardian, or conservator to administer for medical purposes a non-smokable marijuana product to a minor with a medical condition, or symptoms resulting from a medical condition, for which the patient, parent, guardian, or conservator seeks to use a marijuana product to treat the medical condition, or alleviate the symptoms.

PROTECTION FROM LEGAL ACTION

Generally, this bill specifies that a person is not subject to a civil or criminal penalty for engaging in an authorized use of marijuana, or for acting within the scope of license to grow, process, dispense, transport, test, or conduct research on marijuana.

This bill specifies that engaging in conduct that is protected under this bill does not in itself constitute grounds for:

(1) Denying, limiting, or restricting conservatorship or custody or possession of or access to a child;

(2) Denial of public assistance benefits, unless required by federal law;

(3) Denial of unemployment benefits, unless other cause for termination exists; or

(4) Restricting firearms ownership.

PROHIBITION BY EMPLOYERS AND PRIVATE PROPERTY OWNERS

This bill does not prohibit an employer from:

(1) Disciplining an employee for using marijuana or a marijuana product in the workplace or for working while under the influence of marijuana or a marijuana product; or

(2) Considering a job applicant's use of marijuana as a basis for refusing to hire the applicant for a safety-sensitive position.

This bill generally authorizes a person to prohibit or restrict the possession, consumption, cultivation, distribution, manufacture, sale, or display of marijuana or marijuana products on property the person owns, occupies, or manages. However, a person will not be permitted to prohibit a residential tenant under a lease agreement from possessing marijuana, marijuana products, or marijuana-related drug paraphernalia or consuming marijuana by means other than smoking on the premises.

UNAUTHORIZED CONDUCT AND VIOLATIONS

The full text of this bill lists several forms of conduct that this bill does not authorize, which generally involve the consumption or possession of marijuana in vehicles, at public places, on school property, and at correctional facilities.

Under this bill, it is a criminal offense for a person acting pursuant to a license or other authority provided pursuant to this bill to:

(1) Sell, give, or cause to be sold or given, marijuana or a marijuana product to a minor; or

(2) Sell, give, or cause to be sold or given, marijuana or a marijuana product to another person knowing the other person intends to deliver the marijuana or marijuana product to a minor.

It is also an offense for a person to sell marijuana or a marijuana product in or from:

(1) A marijuana dispensary that is not in compliance with this bill; or

(2) A marijuana establishment other than a dispensary and such sale is not authorized under this bill.

It is a defense to prosecution under the above-described offenses that the person to whom the marijuana or marijuana product was sold or given presented a government-issued photo identification and purports to indicate that the presenter is 21 years of age or older.

A first, second, or third violation will be a Class C misdemeanor. A fourth or subsequent violation will be a Class A misdemeanor and result in revocation of any license issued to the violator under this bill.

DUTIES OF THE DEPARTMENT OF AGRICULTURE

The full text of this bill specifies various subjects for which the department of agriculture will be required or authorized to promulgate rules as part of its duty to implement and administer this bill. Generally, the department must promulgate rules for:

(1) The reasonable regulation of marijuana establishments and marijuana research facilities;

(2) The involvement of the state in sanctioning research projects or licensing marijuana research facilities;

(3) Establishment of classes of licensure and qualifications for licensure.

This bill requires the department to:

(1) Establish an image indicating that marijuana or a marijuana product contains THC (a "universal symbol") and publish the symbol on the department's website;

(2) Submit an annual report concerning the regulation of marijuana to the governor and to the chief clerks of the senate and the house of representatives; and

(3) Prioritize the issuance of licenses according to a five-tier list that gives first priority to disadvantaged businesses, veteran-owned businesses, and businesses located in tier 4 enhancement counties, which have held a hemp license in the prior year.

LICENSURE

An applicant for licensure under this bill will be required to apply to the department, pay an application fee in an amount set by the department, submit fingerprints for the purpose of obtaining criminal history record checks from the TBI and the FBI, register to conduct business, and comply with local regulations.

Other than a conviction for an offense that involves the delivery, sale, distribution, or casual exchange of a controlled substance to a minor under 18 years of age where the person was an adult who was at least two years older than the minor at the time of the offense, a person's conviction for an offense does not disqualify an applicant for licensure under this bill.

This bill authorizes the department to suspend or revoke a marijuana-related license for good cause. Upon suspending or revoking a license, the department may seize or place under seal all marijuana, marijuana products, and marijuana-related drug paraphernalia owned or possessed by the licensee. If a license revocation order becomes final, any property seized from the licensee may be forfeited to the state as contraband.

DUTIES OF LICENSEES

Before dispensing marijuana to an adult consumer, this bill requires that a marijuana dispensary must make reasonable efforts to verify that:

(1) The recipient is 21 years of age or older;

(2) The marijuana complies with testing and labeling rules promulgated by the department; and

(3) The amount of marijuana dispensed is not greater than the amount authorized for personal use.

The full text of this bill specifies security measures that licensees must meet.

This bill prohibits licensees from employing minors.

This bill requires marijuana dispensaries to submit a monthly report to the department specifying the amount of marijuana sold and the amount of money collected in sales by the establishment during the preceding month.

TAXES

This bill specifies that marijuana is taxable as tangible personal property and subject to sales and use taxes. This bill authorizes local governments to levy a local sales tax of up to 5 percent on the sale of marijuana within their jurisdictions.

This bill imposes a marijuana tax on sales of marijuana by dispensaries at the rate of 15 percent of the sales price. The marijuana tax will be allocated as follows:

(1) Fifty percent to the department of agriculture for the administration and enforcement of the provisions of this bill, educational and marketing programs related to the promotion and implementation of this bill, and grant initiatives focused on economic development and green power infrastructure in tier 3 and tier 4 enhancement counties;

(2) Twenty percent to the department of safety for training and education of law enforcement agencies and officers with regard to cannabis-related laws in this state, the support of law enforcement officers injured in the line of duty, and the support of families of law enforcement officers killed in the line of duty;

(3) Twenty percent to be deposited, in equal amounts, into the state employee legacy pension stabilization reserve trust and the pension stabilization reserve trust;

(4) Five percent to the department of education to be used for educational programs for elementary and secondary students regarding age restrictions for marijuana use and potential health and legal risks for improper or underage use of marijuana; and

(5) Five percent must be retained by the department of revenue to be used for administrative costs incurred pursuant to this bill.

This bill establishes a tax refund in the amount of 25 percent of sales and use tax levied on supplies and materials purchased from Tennessee businesses by marijuana growers, processors, and dispensaries for use in their respective businesses.

This bill authorizes marijuana-related business licensees to submit paper tax returns and pay taxes in cash. This bill authorizes the commissioner of revenue to require that paper filings under this bill are accompanied by a manual handling fee, not to exceed $25.00.

LOCAL REGULATION

This bill authorizes counties and municipalities to adopt regulations governing the hours of operation, location, manner of conducting business, and number of marijuana dispensaries; provided, that regulations must not be more restrictive than those that apply to establishments that are licensed as retail package stores.

A county or municipality seeking to ban the sale of marijuana to adult consumers or the cultivation or manufacture of marijuana products by marijuana establishments within its jurisdiction may do so by a two-thirds vote of the local legislative body; provided, that the initial vote on a local ban occurs no later than September 30, 2022. A local ban established pursuant to this bill expires one year from the ban's effective date; provided, that a ban may be renewed for successive one-year periods by two-thirds vote of the local legislative body. A county or municipality that bans the sale, cultivation, or manufacture of marijuana or marijuana products within its jurisdiction is disqualified from receiving any grant funds authorized under this bill while the ban is in effect.

Except as specifically authorized, this bill prohibits counties and municipalities from prohibiting or unreasonably restricting the cultivation, production, manufacture, dispensing, transportation, or possession of marijuana or marijuana products or the operation of a marijuana grower, marijuana processor, marijuana dispensary, marijuana transporter, marijuana research facility, or marijuana testing facility.

USE OF GAS CHROMATOGRAPHY MASS SPECTRUM TESTS

This bill prohibits the following types of government action against a person based solely on a positive confirmatory urine drug test conducted via a gas chromatography mass spectrum test: revocation of bail, parole, probation, or a suspended sentence; restriction from participation in extracurricular school activities or receiving referral information through a student's school; adverse employment action against a government employee; referral to a treatment resource; or prohibiting receipt of public assistance.

This bill prohibits healthcare licensing boards and employers of licensed health care workers from taking adverse action against a healthcare practitioner based solely on a positive confirmatory urine drug test via gas chromatography mass spectrum.

BANKING

Except where prohibited by federal law, this bill requires the department of financial institutions to promulgate rules authorizing marijuana establishments to conduct cashless transactions and use banking services, including the depositing of revenue, in Tennessee-chartered banks or other Tennessee-chartered financial institutions.

CONFLICTS OF INTEREST

The full text of this bill specifies requirements to avoid conflicts of interest in marijuana-related businesses.

OTHER PROVISIONS

This bill deletes various provisions of present law concerning: offenses involving the cultivation, manufacture, delivery, sale, possession, or transfer of marijuana; the applicability of the "drug dealer tax" to marijuana; and the use of police to dogs trained to detect marijuana. This bill does not change present law concerning driving while impaired.

This bill makes a change to present law concerning the definition of "disadvantaged businesses" so that businesses that are majority-owned by a person who was impeded from normal entry into the economic mainstream due to past service in the armed forces (rather than only those who served in the Vietnam War) may qualify.

Effective upon this bill becoming a law, this bill requires the department of correction to review the records of persons who are incarcerated in this state for the cultivation, manufacture, delivery, sale, possession, or transfer of marijuana. The department must identify and list persons incarcerated for such offenses and include information as to whether the person was also convicted of a felony offense involving violence or the use of a firearm or a felony drug offense for a controlled substance other than marijuana. The department must provide the list to the governor and the speakers of the house of representatives and the senate by December 31, 2023. Effective January 1, 2024, under this bill, persons serving a sentence for the cultivation, manufacture, delivery, sale, possession, or transfer of marijuana who are not also serving a sentence for a felony offense involving violence or the use of a firearm or a felony drug offense for a controlled substance other than marijuana are eligible for immediate release from incarceration, probation, and parole.

EFFECTIVE DATE

This bill takes effect upon becoming a law for rulemaking purposes and, except as otherwise specified in this summary, January 1, 2024, for all other purposes.