Fiscal Summary
Increase State Revenue – $2,300/FY23-24/General Fund
$681,000/FY24-25/General Fund
$2,042,600/FY25-26/General Fund
$2,723,300/FY26-27 and Subsequent Years/General Fund
$1,560,000/FY23-24/Medical Cannabis Fund
$8,460,900/FY24-25/Medical Cannabis Fund
$14,493,500/FY25-26/Medical Cannabis Fund
$21,756,500/FY26-27 and Subsequent Years/
Medical Cannabis Fund
$2,077,000/FY23-24/Department of Agriculture
$6,231,000/FY24-25/Department of Agriculture
$8,307,900/FY25-26 and Subsequent Years/
Department of Agriculture
$1,661,600/FY23-24/Department of Economic and Community Development
$4,984,700/FY24-25/Department of Economic and Community Development
$6,646,000/FY25-26 and Subsequent Years/
Department of Economic and Community Development
$415,400/FY23-24/Peace Officer Standards and Training Commission
$1,246,200/FY24-25/ Peace Officer Standards and Training Commission
$1,661,600/FY25-26 and Subsequent Years/
Peace Officer Standards and Training Commission
$415,400/FY23-24/Department of Veterans Services
$1,246,200/FY24-25/ Department of Veterans Services
$1,661,600/FY25-26 and Subsequent Years/
Department of Veterans Services
$100/FY23-24/Secretary of State
$8,900/FY22-23/TBI
$700/FY23-24 and Subsequent Years/TBI
Increase State Expenditures - $1,495,700/FY24-25/General Fund
$1,473,500/FY25-26 and Subsequent Years/General Fund
$1,169,200/FY23-24/Medical Cannabis Fund
$1,561,284/FY24-25/Medical Cannabis Fund
$1,541,284/FY25-26 and Subsequent Years/
Medical Cannabis Fund
$5,700/FY23-24/TBI
$500/FY24-25 and Subsequent Years/TBI
Decrease State Expenditures – $9,000/FY23-24 and Subsequent Years/General Fund
Increase Local Revenue - $1,938,500/FY24-25/Permissive
$5,815,500/FY25-26/Permissive
$7,754,000/FY26-27 and Subsequent Years/Permissive
Other Fiscal Impact – It is assumed that this legislation may result in a decrease in state and local expenditures by decreasing jail and prison time for certain defendants; however, due to the fact that this legislation limits cannabis use by qualifying patients to certain cannabis-infused products, any such impact cannot be determined with reasonable certainty.
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 declassified as a controlled substance at the federal level.
Generally, this bill enacts the Tennessee Medical Cannabis Act to establish a functional framework within which to authorize access to medical cannabis on a regulated basis for patients with qualifying medical conditions and which licenses and regulates the processes for cultivating, producing, distributing, transporting, selling, and acquiring cannabis for medical use and research. This bill also makes various changes to present law concerning the medical cannabis commission.
QUALIFYING PATIENTS
Under this bill, a Tennessee resident who has been diagnosed with a qualifying condition will be eligible to apply for a medical cannabis card to permit the use of medical cannabis, subject to various conditions. For purposes of this bill, a "qualifying condition" means any of the following conditions diagnosed by a medical doctor, physician's assistant, or nurse practitioner:
(1) Cancer;
(2) Glaucoma;
(3) Epilepsy;
(4) HIV or AIDS;
(5) Inflammatory bowel disease, including Crohn's disease and ulcerative colitis;
(6) Multiple sclerosis;
(7) Opioid addiction;
(8) Renal failure;
(9) Severe nausea or chronic pain;
(10) Any medical condition producing cachexia, persistent muscle spasm, or seizures;
(11) PTSD;
(12) Chronic radiculopathy;
(13) Severe psoriasis;
(14) Post-laminectomy syndrome;
(15) Psoriatic arthritis;
(16) Complex pain syndrome, including trigeminal neuralgia, amyotrophic lateral sclerosis (ALS), and Parkinson's disease;
(17) End-of-life pain management or palliative care;
(18) Traumatic brain injury (TBI);
(19) Tourette syndrome;
(20) Autism spectrum disorder;
(21) Fibromyalgia;
(22) Sickle cell disease;
(23) If the patient is younger than 18 years of age: cerebral palsy; cystic fibrosis; osteogenesis imperfecta; and muscular dystrophy;
(24) Terminal conditions; and
(25) Any additional conditions approved by rule of the commission.
In order to qualify for and obtain a medical cannabis card from the commission, a patient must:
(1) Be an adult;
(2) Provide proof of Tennessee residency with state-issued photo identification;
(3) Complete and sign a written application form, promulgated by the commission;
(4) Pay an application fee of $65.00, or other amount as determined by the commission; and
(5) Submit a certification from a healthcare provider confirming that the patient has been diagnosed with a qualifying condition or medical records from a healthcare provider confirming that the patient has been diagnosed with a qualifying medical condition.
In order for a medical cannabis card to be issued by the commission to a parent or legal guardian of a minor for use by the minor, a parent or legal guardian must:
(1) Obtain a certification from a physician licensed in this state that the minor suffers from a qualifying condition;
(2) Complete the application for minors, promulgated by the commission, and copies of the physician certification and proof of diagnosis of a qualifying condition; and
(3) Submit proof that the parent or legal guardian has qualified as a caregiver.
CAREGIVERS
This bill authorizes a qualified patient to designate a caregiver to assist with the purchase and use of medical cannabis. If a qualified patient is a minor, then only a caregiver may purchase or administer medical cannabis to the qualified patient. When a qualified patient has a designated caregiver, only the designated caregiver is authorized to purchase medical cannabis; a patient with a designated caregiver is not authorized to purchase medical cannabis. In order to qualify for and obtain a medical cannabis card, a caregiver must:
(1) Be an adult;
(2) Provide proof of Tennessee residency with of state-issued photo identification;
(3) Pay an application fee of $65.00, or other amount as determined by the commission;
(4) Have no ownership interest in or contract or employment relationship with a licensee under this bill; and
(5) Identify each patient for whom the caregiver provides care, including a confirmation of the caregiver relationship in writing from each qualified patient; provided, that a caregiver is not authorized to provide care to more than 10 qualified patients at any given time.
A caregiver may lawfully acquire and possess medical cannabis, but not use medical cannabis under this bill without the caregiver being issued a medical cannabis card as a qualified patient. A caregiver may receive compensation from the qualified patient or other entity for any services provided to the qualified patient.
MEDICAL CANNABIS AND INFUSED PRODUCTS
For purposes of this bill "medical cannabis":
(1) Means all parts of any plant of the genus cannabis, whether growing or not, including the seeds, extractions of any kind from any part of the plant, and every compound, derivative, mixture, product, or preparation of the plant that is grown and sold pursuant to this part; and
(2) Does not include hemp.
For purposes of this bill "medical cannabis-infused product":
(1) Means a product infused with medical cannabis that is intended for use or consumption other than by smoking; and
(2) Does not include raw plant material, any product administered by smoking, combustion, or vaping, or a food product that has medical cannabis baked, mixed, or otherwise infused into the product, such as cookies or candies until such modalities are authorized by the commission.
REGISTRY SYSTEM AND MEDICAL CANNABIS CARDS
In order to commence, use, and maintain a reliable patient registry system, by no later than January 1, 2024, this bill requires the commission to:
(1) Publish application forms and procedures for obtaining all patient and caregiver medical cannabis cards; and
(2) Establish and commence using an integrated, electronic registry system to track the status of medical cannabis cards and applications for the cards.
The department of agriculture and state and local law enforcement agencies will have access to the registry for compliance and enforcement purposes. A medical cannabis card is valid for two years and may be renewed after payment of a renewal fee. The making of a false statement on an application for a medical cannabis card application may result in criminal penalties, denial, revocation, or suspension of the card.
LICENSURE
Under this bill, all of the cultivation, processing, transportation, manufacturing, packaging, dispensing, sale, and use of any form of medical cannabis is subject to licensing by the commission.
Under this bill, managed medical wellness phase 1 licenses are the first run of licenses that will be issued provisionally before rulemaking is complete. This bill categorizes provisional managed medical wellness phase 1 licenses as urban omni licenses and rural vertically integrated (RUVI) licenses. The full text of this bill specifies numerous requirements for the issuance of each category of license.
Generally, urban omni licenses, or licensees, as applicable:
(1) Will be issued for businesses in Davidson, Hamilton, Knox, and Shelby counties;
(2) Are limited to three per county, with an overall state limit of 12;
(3) Authorize the licensee to conduct all activities from cultivation to sale within the designated county of operation. A licensee may transport materials or product outside the county. Sales to an RUVI licensee may occur upon receipt of a waiver issued by the commission;
(4) Are subject to an application fee for an urban omni license of $85,000, of which $15,000 is nonrefundable. If the license is granted, then the full application fee is nonrefundable. If the provisional license is denied due to any failure by the entity to provide requested information or failure to pass the on-site inspection, the commission may deem up to $38,300 of the fee to be nonrefundable to offset administrative costs;
(5) Must have majority ownership attributable to an individual with proof of Tennessee residency for a continuous period of no fewer than three years preceding the application date, and an individual who meets such residency requirement must serve as an officer or executive director of the entity;
(6) Must submit a detailed business and operations plan;
(7) Owners, officers, board members, and managers must, during the application and operation period, pass a federal bureau of investigation level 2 background screening process;
(8) May own and operate up to three medical cannabis wellness dispensaries per license, each of which must be located in the primary county; and
(9) Promptly provide supplemental information pursuant to a written request from the commission.
Generally, RUVI licenses:
(1) Are limited to four per each grand division of Tennessee, with an overall state limit of 12;
(2) Shall not be issued for a county eligible for an urban omni license; and
(3) Are generally subject to the same requirements as an urban omni license, except that:
(A) A RUVI licensee may conduct business activities in its primary county, and to aggregate cultivation, processing, and manufacturing of medical cannabis in adjacent counties;
(B) The application fee for a RUVI license is $45,000, with the refundable portion in the event of denial $40,000, and the potential retained amount to cover administrative costs associated with processing the application $18,300;
(C) Subject to certain conditions, a RUVI licensee may work cooperatively with up to six additional entities or persons at an equal number of additional physical locations in order to cultivate, process, or manufacture medical cannabis or medical cannabis-infused products; and
(D) A RUVI licensee is authorized to own and operate up to three medical cannabis wellness dispensaries per license, each of which must be located within the primary county or an adjacent county.
This bill requires the commission to issue or deny urban omni and RUVI licenses based on compliance with statutory requirements and the applicant's business plan.
This bill requires the commission to authorize by rule an additional number of licenses that are based on market demand for stand-alone medical cannabis wellness dispensaries, stand-alone cultivation, and stand-alone processing or manufacturing facilities and for similar vertically integrated operations.
The full text of this bill specifies requirements for a transfer of license or change of ownership of a licensee.
A person may have a majority ownership interest in only one license. A person may own a minority interest in any other license, except that a person who has any financial interest in a medical cannabis testing facility is prohibited from holding any license or having any financial interest in another type of medical cannabis establishment.
This bill requires the commission to create a statewide licensure class system, and corresponding fee structure, for medical cannabis cultivation operations, which may be based on any reasonable metrics.
This bill authorizes the commission to limit medical cannabis production through placing or modifying a limit on the number of licenses that it issues, the amount of production permitted by a medical cannabis cultivation operation license or class of licenses based upon some reasonable metric(s), or the total amount of production by medical cannabis cultivation operation licensees in the state, collectively, based upon some reasonable metric(s). The full text of this bill specifies considerations that the commission must consider when deciding whether to limit the number of licenses or production.
EXPEDITIOUS IMPLEMENTATION
This bill requires the commission to take certain actions to make medical-grade cannabis available to qualified patients without delay dependent on rulemaking, including the following:
(1) Issue provisional licenses in advance of the July 31, 2024, deadline. However, approved provisional managed medical wellness phase 1 licenses must be issued no later than April 1, 2024. This bill specifies that provisional approval of managed medical wellness phase 1 rural and urban licenses must be completed by April 1, 2024, and final approval or denial of the provisional managed medical wellness phase 1 licenses must be completed by June 30, 2024;
(2) Commencing approval of all medical cannabis card requests by June 1, 2024; and
(3) Promulgate rules by January 1, 2024
(4) Implement the statutory duties outlined in this part.
DEPARTMENT OF AGRICULTURE
This bill requires the department of agriculture to perform all statutory and regulatory inspection and enforcement requirements under this bill. Costs related to department staffing needs and implementation and enforcement of this bill are to be borne by the commission.
Under present law, the commission is administratively attached to the department of health. This bill changes such attachment to administratively attach the commission to the department of agriculture.
LOCAL REGULATION
This bill specifies that the regulation of medical cannabis from seed to sale to use is preempted. A county or municipality seeking to ban the cultivation, processing, manufacture, or sale of medical cannabis within its jurisdiction may do so by a two-thirds vote of the local legislative body; provided, that the vote occurs no later than August 31, 2023.
A county or municipality may tax the sale of medical cannabis and medical cannabis-infused products at a rate of up to 2.1 percent.
STATE TAXES AND REVENUES
This bill levies a tax on the privilege of engaging in the business of selling medical cannabis in this state at the rate of 9 percent of the sales price.
The excise tax rate for all licensees under this bill, except RUVI licensees, is equal to 10 percent of the net earnings for the next preceding fiscal year for business done in Tennessee during that fiscal year.
This bill creates the medical cannabis fund as a special account in the state treasury. All moneys collected pursuant to this bill must be deposited in the fund. Except as described below for revenues from the 9-percent privilege tax, expenditures from the fund may be made only to implement and administer this bill.
Tax collected from the 9-percent privilege tax must be distributed as follows:
(1) Five percent to the POST commission for opioid and methamphetamine drug enforcement training purposes;
(2) Thirty percent to the department of agriculture for programs and grants administered by the department that facilitate agricultural development in this state; (3) Ten percent to the department of economic and community development for community and rural development program grants;
(4) Forty-five percent to the medical cannabis fund; and
(5) Ten percent to the department of veterans services for PTSD treatment programs.
ACTS NOT REQUIRED
This bill specifies that it does not:
(1) Require an entity that provides medical coverage to reimburse a person for costs associated with the medical use of cannabis;
(2) Require any employer to allow the medical use of cannabis in the workplace or to modify the job or working conditions of a person who engages in the medical use of cannabis that are based upon the reasonable business purposes of the employer;
(3) Limit the ability of an employer to establish, continue, or enforce a drug-free workplace program or policy;
(4) Authorize the commission to fix prices for medical cannabis; or
(5) Limit a law enforcement agency's ability to investigate unlawful activity in relation to a medical cannabis establishment.
MISCELLANEOUS
The full text of this bill includes various provisions that will apply to the provision, possession, and use of medical cannabis. Generally, such provisions address the following:
(1) Promulgation of rules for criteria by which medical cannabis cards may be revoked, suspended, and reissued;
(2) Specifying that this bill supersedes state criminal and civil laws pertaining to the acquisition, possession, use, cultivation, manufacturing, processing, research and development, and sale of medical cannabis;
(3) Annual reports by the commission;
(4) Confidentiality;
(5) A woman who knows, or reasonably should know, she is pregnant is prohibited from using medical cannabis or a medical cannabis-infused product while pregnant. This bill prohibits a licensee from dispensing or selling medical cannabis or a medical cannabis-infused product to a qualified patient who is known to be pregnant;
(6) Product testing;
(7) Development of a track and trace system that tracks medical cannabis from either seed or immature plant stage until the medical cannabis and medical cannabis-infused product is sold to a customer at a medical cannabis wellness dispensary;
(8) Issuance of letter rulings;
(9) Powers that the commission may exercise in the regulation of medical cannabis;
(10) Specification of 33 subjects for which the commission will be required to promulgate rules;
(11) Physical location of cannabis operations;
(12) Manufacturing standards for medical cannabis-infused products; and
(13) Waiver of electronic payment and filing requirements for medical cannabis licensees, and authorization for the commissioner of revenue to charge a manual handling fee of up to $25.00 for receipt of paper filings.
CANNABIS COMMISSION
Under present law, the purpose of the medical cannabis commission is to serve as a resource for the study of laws regarding medical cannabis and the preparation of legislation to establish an effective, patient-focused medical cannabis program in Tennessee upon the rescheduling or descheduling of marijuana from Schedule I of the federal Controlled Substances Act.
This bill expands and modifies the commission's purposes to oversight of the medical cannabis program and serve as a resource for the study of laws regarding medical cannabis, including the preparation of legislation to provide an effective, patient-focused medical cannabis program in this state.
Under present law, the governor appoints three of the nine commission members. The governor is required to appoint one member from each grand division. This bill adds that:
(1) One gubernatorial appointee must have professional experience in industrial or agricultural systems management, including commodities, manufacturing, or distribution in a regulated industry; and
(2) Two gubernatorial appointees must have experience in complex agriculture, health, science, business, or government systems.
This bill specifies that registered lobbyists are ineligible to serve on the commission.
This bill changes the commission's meeting requirements to at least once every month; provided, that the commission must meet at least twice a month through June 2024 in order to implement the medical cannabis program.
This bill provides each member of the commission with $700 for each meeting of the commission that the member attends.
This bill specifies that the commission's conflict of interest policy, which presently applies to commission members, must also apply to employees of the commission.
EFFECTIVE DATE
For purposes of promulgating rules and forms, this bill takes effect upon becoming a law. For all other purposes, this bill takes effect July 1, 2023.
