Tennessee Department of Revenue Sales Tax on Hemp-Derived Cannabinoids
The Tennessee Department of Revenue has issued a sales and use tax notice regarding the taxability of hemp-derived cannabinoids in compliance with HB0403. This notice, labeled Notice #23-12, provides important information for businesses operating in Tennessee that sell products containing hemp-derived cannabinoids.
Effective July 1, 2023, a new 6% privilege tax, in addition to Tennessee state sales tax, will be imposed on the privilege of engaging in the business of selling such products. This article will outline the key points from the notice, including the definition of hemp-derived cannabinoids, reporting requirements, and additional resources for more information.
Key Points:
1. Taxability of Hemp-Derived Cannabinoids:
- Public Chapter 423 (2023) introduces a new 6% sales tax on products containing hemp-derived cannabinoids.
- The tax is in addition to the standard 6% state sales tax rate and any applicable local option sales tax rate.
- Hemp-derived fiber, grain, and topical products are exempt from this tax.
2. Definition of Hemp-Derived Cannabinoid:
- Hemp-derived cannabinoid refers to a cannabinoid, excluding delta-9 tetrahydrocannabinol (THC) and its isomers, derived from hemp inmoree than 0.1% concentration.
- It also includes hemp-derived products containing delta-9 THC in a concentration of 0.3% or less on a dry weight basis.
- Notable examples of hemp-derived cannabinoids include delta-8 THC and delta-10 THC.
3. Reporting and Payment:
- The additional 6% sales tax applies to the sales price of products containing hemp-derived cannabinoids sold at retail in Tennessee.
- Businesses are required to report and remit the tax monthly, using the same reporting method as sales tax.
- Taxpayers must file a return with the Tennessee Department of Revenue and make the payment on or before the 20th day of each month.
- The Department will update its Sales and Use Tax Return to include a new schedule specifically for retailers to comply with this additional tax.
More Information:
- For more details and guidance, businesses can visit the official website of the Tennessee Department of Revenue at www.tn.gov/revenue.
- By clicking on "Revenue Help," users can search for answers or submit an information request to one of the department's agents.
- Additional information on this topic can be found in the Department's Sales and Use Tax Manual.
References:
1. Tenn. Code Ann. § 67-6-232
2. Public Chapter 423 (2023)
The Tennessee Department of Revenue's Sales and Use Tax Notice #23-12 outlines the taxability of hemp-derived cannabinoids, introducing a new 6% sales tax for products containing these compounds. It is essential for businesses operating in Tennessee to understand and comply with this new tax requirement, which goes into effect on July 1, 2023. By adhering to the reporting and payment guidelines outlined by the Department, businesses can ensure compliance and avoid any potential penalties. For additional information and assistance, businesses are encouraged to utilize the available resources provided by the Tennessee Department of Revenue.
