23 Aug Follow the Money: Alcohol Industry Spending Spiked as Tennessee Lawmakers Reshaped the Hemp Market

Big Alcohol Lobbying and Tennessee’s New Hemp Law

There is an old rule in politics: when a new law does not make sense at first, follow the money.

Tennessee’s latest hemp overhaul becomes much easier to understand once you do.

As state lawmakers considered sweeping restrictions on hemp-derived cannabinoid products, organizations connected to the alcohol industry dramatically increased their political spending. The resulting law did far more than establish age limits, testing standards and sensible consumer protections.

It transferred oversight of hemp-derived cannabinoid products to the Tennessee Alcoholic Beverage Commission, established a distribution system resembling the alcohol industry’s three-tier model and opened new opportunities for alcohol-licensed businesses—all while threatening many of the independent hemp retailers that built Tennessee’s market.

According to an investigation published by the Kingsport Times News, the Wine and Spirit Wholesalers of Tennessee spent approximately $7.3 million on lobbying and campaign contributions over a 15-year period. The newspaper also found that alcohol-industry spending spiked while Tennessee lawmakers were considering legislation that would fundamentally restructure the hemp industry.

That does not automatically prove that anybody purchased a vote. It does, however, raise a perfectly reasonable question:

When a powerful industry spends heavily while lawmakers write that industry into a competitor’s regulatory system, who is the law really designed to protect?

What Tennessee’s New Hemp Law Does

Tennessee lawmakers passed HB 1376, the companion bill to SB 1413, during the 2025 legislative session. Governor Bill Lee signed it on May 21, 2025, and it became Public Chapter 526.

The legislation transferred responsibility for regulating hemp-derived cannabinoid products from the Tennessee Department of Agriculture to the Tennessee Alcoholic Beverage Commission and Department of Revenue.

That represents more than a simple administrative change.

Hemp began as an agricultural commodity. Tennessee decided to regulate many legal hemp products through the same agency responsible for overseeing alcohol.

The law created three primary hemp license categories:

• Suppliers
• Wholesalers
• Retailers

All three applicants must pay a $500 application fee. According to the Tennessee Alcoholic Beverage Commission, annual license fees are:

• $2,500 for suppliers
• $5,000 for wholesalers
• $1,000 for retailers

Prospective wholesalers must also demonstrate access to at least $750,000 through cash, a bond or a line of credit.

Businesses face background checks, physical-location requirements, inspections, product-registration rules and additional taxes. Operating without the appropriate license can result in criminal penalties and product seizure.

Those requirements may appear neutral on paper. In practice, they create substantial barriers for independent retailers, small manufacturers and new businesses.

Large companies can afford compliance departments, attorneys and professional lobbyists. A family-owned hemp store operating one or two locations usually cannot.

Tennessee Did Not Simply Regulate Hemp—It Alcoholized It

There is an important difference between regulating a product and forcing it into another industry’s business model.

Tennessee could have adopted clear age restrictions, independent laboratory testing, child-resistant packaging, accurate labels, reasonable serving limits and serious penalties for selling adult products to minors.

Responsible hemp businesses have supported those types of protections for years.

Instead, Tennessee created a system that looks remarkably familiar to liquor wholesalers.

The new framework divides the hemp-derived cannabinoid market among suppliers, wholesalers and retailers. The Tennessee Alcoholic Beverage Commission notes that this is not identical to the traditional alcohol system because a person may hold an interest in more than one of the three hemp-license categories.

Nevertheless, the resemblance is obvious.

Hemp products must move through licensed channels overseen by the state’s alcohol regulator. Wholesalers receive an established role in the supply chain, and bars, restaurants, hotels and liquor stores gain opportunities to participate in hemp-derived cannabinoid sales under specified conditions.

Think about what happened here.

Independent hemp businesses spent years building the market. They educated consumers, developed products, paid taxes and survived constantly changing rules. Tennessee then rewrote the system around an agency and distribution structure the alcohol industry already understands.

That is not merely consumer regulation.

It is a transfer of market power.

The THCA Ban Delivered the Hardest Blow

One of the most damaging parts of Tennessee’s overhaul involves THCA.

THCA is a naturally occurring cannabinoid found in raw cannabis and hemp flower. It is not the same molecule as delta-9 THC, but heat converts THCA into delta-9 THC through a process called decarboxylation.

Federal hemp policy historically focused largely on a plant or product’s delta-9 THC concentration by dry weight. That distinction allowed a nationwide market for legally compliant THCA-rich hemp products to develop.

Tennessee adopted a more restrictive approach based on total potential THC after conversion. In practical terms, the policy eliminated most intoxicating THCA flower and related products from the state’s legal hemp market.

For many Tennessee hemp retailers, THCA flower was not some obscure product sitting in the back corner. It represented a substantial portion of their revenue.

Removing it meant lost sales, layoffs, closed locations and businesses holding inventory they could no longer legally sell in Tennessee.

Supporters called the change the closing of a loophole. Hemp retailers saw something very different: the state eliminated one of their most important product categories while simultaneously creating a path for alcohol retailers and wholesalers to profit from the portions of the hemp market that remained.

Direct-to-Consumer Hemp Sales Were Also Targeted

Tennessee’s law also restricts direct-to-consumer shipping and delivery of hemp-derived cannabinoid products.

This is another provision that benefits a traditional wholesale-distribution model.

Direct shipping allows smaller manufacturers to reach adult customers without surrendering part of every sale to a middleman. Prohibiting those transactions forces more products through licensed, physical distribution channels.

Supporters may argue that face-to-face transactions improve age verification and enforcement. That is a legitimate policy concern.

However, states can require online age verification and an adult signature at delivery. Similar systems are already used for other regulated products.

A broad restriction on direct sales does more than verify the customer’s age. It determines who must stand between the producer and the consumer—and who gets paid for being there.

The Alcohol Industry’s $7.3 Million Political Presence

The Kingsport Times News investigation examined spending by alcohol-industry organizations as Tennessee lawmakers debated their hemp overhaul.

The report found that the Wine and Spirit Wholesalers of Tennessee spent a combined $7.3 million on lobbying and campaign contributions over approximately 15 years.

Long-term political spending by a major trade association is not unusual or inherently illegal. Businesses and advocacy organizations regularly spend money to communicate with lawmakers and support candidates.

The timing and subject matter are what deserve scrutiny.

Tennessee lawmakers were not merely debating rules that affected alcohol and hemp equally. They were considering whether hemp should be placed under alcohol-agency oversight and pushed into a distribution structure that could economically benefit established alcohol interests.

That is precisely when the public should ask who helped write the legislation, who promoted its major provisions and which political committees or elected officials received industry support.

The issue is not whether alcohol businesses deserve representation.

The issue is whether small hemp businesses received anything approaching the same access and influence.

Regulation Was Necessary—This Particular System Was Not

Let us be clear: the hemp market needed consistent rules.

Products intended for adults should not be sold to children. Packaging should not imitate popular candy or appeal directly to minors. Labels should accurately disclose ingredients, serving sizes and cannabinoid content.

Products should be tested by qualified laboratories, and businesses that knowingly break consumer-safety rules should face meaningful consequences.

But accomplishing those goals does not require handing control of the hemp market to the alcohol establishment.

Good regulation protects consumers while allowing responsible businesses to compete. It does not use public safety as a polite excuse for eliminating smaller competitors, creating expensive entry barriers or guaranteeing politically connected middlemen a percentage of every transaction.

If consumer safety were the only objective, Tennessee could have created a dedicated hemp regulatory framework with input from:

• Hemp farmers
• Independent retailers
• Manufacturers
• Testing laboratories
• Medical and public-health professionals
• Consumer advocates
• Local communities

Instead, Tennessee moved hemp under the Alcoholic Beverage Commission and adopted a structure that is remarkably comfortable for the alcohol industry.

Why Big Alcohol Is Suddenly Interested in Hemp

Alcohol companies and distributors did not suddenly develop a fascination with cannabinoids because they discovered a passion for hemp policy.

Consumer preferences are changing.

A growing number of adults are drinking less alcohol or choosing not to drink at all. Hemp-derived THC beverages offer another social option for adults who may want to relax without ordering beer, wine or liquor.

Those beverages compete for the same customers, refrigerators, menus, retail shelves and entertainment dollars traditionally controlled by the alcohol industry.

That makes hemp both a threat and an opportunity.

Some alcohol interests want intoxicating hemp products restricted or removed from the market. Others want the products to remain legal—but regulated, taxed and distributed through systems that give existing alcohol wholesalers and retailers a profitable role.

Those positions may sound different, but they share one assumption: the alcohol industry expects to influence what the future hemp market looks like.

This is not happening only in Tennessee.

Federal lobbying disclosures have shown major alcohol companies and trade organizations taking an increased interest in hemp-derived THC policy. Beer, wine and spirits organizations have supported proposals ranging from temporary prohibition to alcohol-style taxation and distribution.

Tennessee may not be an isolated case. It may be a preview of what other states are about to experience.

Small Businesses Carry the Real Cost

Large corporations can hire lawyers, licensing specialists, government-relations teams and compliance departments.

A family-owned hemp store cannot always do that.

A $1,000 annual retail-license fee may not sound enormous to a legislator, but it comes on top of application fees, taxes, product-registration expenses, testing requirements, insurance, rent, payroll and the loss of major product categories.

Suppliers and wholesalers face even greater financial requirements.

When regulations multiply, compliance becomes an economy of scale. Large businesses distribute those expenses across multiple locations, products and revenue streams. Small businesses absorb the costs directly until operating legally no longer makes financial sense.

That is how a market becomes consolidated without lawmakers ever openly voting to create a monopoly.

First, restrict the products supporting independent retailers. Then prohibit direct sales, impose expensive licenses and require well-capitalized intermediaries.

After the smaller businesses disappear, politicians can point to the handful of large companies left standing and call the system orderly.

Hemp Businesses Are Not Asking for the Wild West

The alcohol lobby and prohibition-minded lawmakers frequently frame the issue as a choice between strict control and a completely unregulated market.

That is a false choice.

Responsible hemp businesses are not asking for unlimited sales to children, mystery ingredients or untested products.

They are asking for rules that are clear, fair and based on evidence.

A responsible hemp market can include:

• Sales restricted to adults 21 and older
• Reliable age verification
• Independent laboratory testing
• Accurate cannabinoid labels
• Child-resistant packaging
• Prohibitions on marketing to minors
• Reasonable serving-size standards
• Product-registration requirements
• Serious penalties for irresponsible operators

None of those protections requires the government to build a market around alcohol wholesalers.

Consumer protection and fair competition can exist at the same time—if lawmakers genuinely want both.

Florida Should Pay Close Attention

Tennessee’s policy matters far beyond Tennessee.

Florida’s hemp industry is caught in its own ongoing fight over serving limits, product restrictions, retail access and the future of hemp-derived THC beverages.

Alcohol distributors, major corporations and established medical-marijuana companies all have financial reasons to influence those rules.

At Chillum, we believe in serious, responsible regulation. We also believe the farmers, manufacturers and independent retailers who built the legal hemp industry deserve a seat at the table.

Florida should require adult-only sales, legitimate testing, honest labels, responsible packaging and meaningful penalties for selling intoxicating products to minors.

What Florida should not do is copy a system that uses those reasonable concerns to push independent businesses aside and hand their market to another politically powerful industry.

Once a state creates a mandatory distribution structure, reversing it becomes extraordinarily difficult. The companies granted control acquire more money, more influence and a permanent incentive to protect that system.

That is why consumers and small businesses need to pay attention before—not after—the legislation passes.

The Real Question Is Who Gets to Control the Market

The hemp debate is often presented as a simple fight between regulation and chaos.

That is not the real debate.

The actual choices are between fair regulation and regulatory capture; between consumer protection and corporate protection; and between a competitive adult market and a system designed by the industries with the largest lobbying budgets.

Tennessee lawmakers had every right to regulate hemp-derived cannabinoid products.

The public has an equal right to ask why the resulting system so closely serves established alcohol interests—and why alcohol-industry political spending increased as lawmakers considered it.

Follow the money, and the policy begins to make sense.

Unfortunately, it may make considerably more sense for alcohol wholesalers than it does for the farmers, independent businesses and adult consumers forced to live under it.

Frequently Asked Questions About Tennessee’s Hemp Law

What is Tennessee’s new hemp law?

Tennessee’s HB 1376/SB 1413 transferred regulation of hemp-derived cannabinoid products to the Tennessee Alcoholic Beverage Commission and Department of Revenue. It established supplier, wholesaler and retailer licenses, product restrictions, taxes and enforcement penalties.

Did Tennessee ban THCA?

Tennessee prohibited products exceeding its total-THC limits after accounting for the conversion of THCA into delta-9 THC. In practice, the rule eliminated most intoxicating THCA flower and similar products from Tennessee’s legal hemp market.

Why is the alcohol industry involved in hemp regulation?

Hemp-derived THC products—particularly beverages—compete with alcohol for customers, shelf space and distribution. Alcohol companies and wholesalers therefore have a financial interest in whether hemp is prohibited, restricted or placed inside an alcohol-style regulatory structure.

Is Tennessee’s hemp system identical to its alcohol system?

No. The Tennessee Alcoholic Beverage Commission says hemp suppliers, wholesalers and retailers may have interests in more than one license tier. Traditional alcohol laws generally place stricter separation requirements between tiers. Nevertheless, Tennessee’s hemp framework uses three license categories and places oversight under the state’s alcohol regulator.

Does Chillum oppose hemp regulation?

No. Chillum supports responsible, adult-focused regulations, including age verification, accurate labels, legitimate laboratory testing, sensible packaging and penalties for businesses that sell intoxicating products to minors.

The concern is regulation designed to benefit entrenched industries at the expense of responsible independent businesses.