Tennessee lawmakers are headed for a showdown over the hemp law, which could significantly limit products containing intoxicating derivatives under the Senate version.

Both measures were considered by the House and Senate Finance Committee on Tuesday and could affect regulated industries that earn tens of millions of revenues on sales of between estimated $280 million and $560 million.

The biggest difference between the bills is in THCA. THCA is a derivative that when heated or burned gives it a height similar to marijuana. The house version allows THCA to continue being sold in some stores, but the Senate bill limits that.

Hemp industry lawyer Clint Palmer said Tennessee could be the first state in the country to regulate the THCA market.

Both versions of the bill will move police for hemp-derived products under the Department of Agriculture’s Alcoholic Beverage Commission from the Department of Agriculture and will enact a wholesale tax of 1 cent per milligram of hemp products.

Originally, both versions banned THCA, but the amendments imposed on the House bill were designed to prevent hemp farmers from losing their business.

The hemp industry fears that restrictive bill slates could hinder the industry

House majority leader William Lambers, sponsoring the House version, confirmed Monday that the biggest sticking point between the two versions is the level of Delta 9 THC permitted in the product.

Hemp is distinguished from marijuana based on the concentration of a compound called delta-9 THC. Cannabis with less than 0.3% of cannabis with Delta-9 THC is defined as legal hemp by the state of Tennessee and federal governments. High concentrations of cannabis are classified as marijuana and are illegal to grow, sell, or own in the state.

Senator Richard Briggs, sponsor of the Senate version, revised the bill later last week to ensure that the measures would not hurt the nation financially. He said it is expected to maintain a surplus of up to $14 million from fees and taxes on growers, wholesalers and sellers.

Briggs, a Knoxville Republican, said the bill would ban hemp from marijuana. He builds his views on a 2024 letter from the U.S. Department of Justice, which states that the Controlled Substances Act classifies THCA as “controlled.” However, the law excludes hemp from the definition of marijuana as long as the THC concentration is below 0.3%.

“We’re not interested in recreational marijuana,” Briggs said.

If both measures have not changed their respective chambers, the bill can be settled in a conference committee and the differences can be resolved as the annual assembly postpones.

The issue remains tied up in lawsuits after last year demanding a new test of Delta-9 THC’s HEMP product. The Tennessee Growers Union and Tennessee Healthy Alternative Association said the rules that come into effect in late December 2024 correspond to “overreach” leading to a product ban.

The conflict also focuses on moving around the liquor store industry, taking over most of convenience and THC beverage sales from grocery stores.

According to Rob Icard of the Tennessee Grocery and Convenience Store Association, the stores are trying to continue their business as the law allows.

“The grocery stores and convenience stores already in this business under current law do a really good job of age enforcement and regulation,” Icard said.

Briggs said Monday that he believes too many products on store shelves contain higher THC levels than allowed by law. He believes the Alcoholic Beverage Commission should be involved in industry regulation, adding that the Tennessee Bureau of Investigation could play a role in enforcement.