As your verified source of cannabis and hemp licensing data, Cannabiz Media analyzed key facts and figures from the hemp programs in Tennessee, Texas and Connecticut. All have unique licensing schemes – especially around testing and processing. We also provide insights into the likelihood of vertical integration where license holders have chosen to do multiple activities.

Tennessee

Hemp has been an important crop throughout the history of the U.S., and to a certain extent in Tennessee according to Tennessee’s Department of Agriculture. The history of hemp production in Tennessee dates to the early 19th century with the arrival of pioneer families.

Details

· License fees are based upon the total acreage of growing areas for the corresponding physical address: < 5 Acres: $250 5-20 Acres: $300 > 20 Acres: $350 University: waived

· Grower licenses are provided per physical growing address and one address may have multiple growing areas.

· A growing area is indoors if it is fully enclosed and temperature controlled

· Hemp grown without a license will be treated as marijuana – which IS NOT legal in Tennessee

Key Findings

· 8,720 growing areas registered

· 4,186 licenses issued

· Average grow area is 5.6 acres

· 2,475 growing areas are indoor accounting for 1,270 acres

· 6,232 growing areas are outdoor accounting for 48,113 acres

Testing

In the case of Tennessee the state is responsible for testing. According to the state, every crop grown and every variety may be inspected and sampled by a TDA plant inspector prior to harvest. The grower should contact TDA 30 days prior to harvest for an inspection. The license holder is responsible for paying all fees associated with the sample. Each sample is $150. Samples are conducted by collecting cuttings from a statistically representative number of plants into a composite sample. This contrasts with Texas where farmers can obtain a testing license to test the hemp of other farmers.

Processing

And as we have seen in other states processors are not required to be licensed or registered with the state for processing hemp. However, If you plan on making a product for human consumption, you are required to be

licensed as a food manufacturing facility. This is similar to what we are seeing in other states where regulators share the burden.

Texas Background

The 2018 Farm Bill legalized the commercial production of hemp and authorized states to submit state plans to administer hemp programs. In June 2019 the state hemp bill was signed into law by Texas Governor Greg Abbott. The bill authorized the production, manufacture, retail sale, and inspection of industrial hemp crops and products in Texas. This also includes products for consumable hemp products which contain cannabidiol (CBD), as well as other edible parts of the hemp plant.

The regulation of CBD consumables, including CBD oil, is handled in accordance with Food and Drug Administration (FDA) guidelines. The state agency with oversight of CBD consumables is the Texas Department of State Health Services (DSHS).

The state has authorized three types of licenses:

· Producer – a person who grows hemp. A producer also means a person who stores the hemp plants they produced within Department-registered locations.

· Handler – a license to possess or store a hemp plant on premises or in a vehcle owned, operated, or controlled by a license holder for any period of time. The license is limited to harvesting, possessing, storing, transporting, and disposing of hemp plants.

· Handler/Sampler – Sampler means a person or entity authorized by the Department to conduct the sampling and collection of hemp plants.

Key Findings

· Thus far there are 758 Texas Hemp licenses

· 81% of the licenses are cultivators, 18% are processors and 6% are for testing

· A person who negligently racks up three violations in any five-year period may not cultivate, process, or otherwise produce hemp for five years and can land on a list of banned producers

· The regulation of CBD consumables is being handled by a different regulator – a model we seeing with increasing frequency.

Vertical Integration

In reviewing trade names it is evident that some firms have received multiple licenses. Because lot sizes are not restricted there is little incentive to register for lots of licenses – it can also get very expensive in terms of license fees. 41 license holders account for 87 licenses with 38 businesses holding two each and 671 opting for just one.

Connecticut Background

Connecticut has three types of licenses that include cultivation, processing and manufacturing. Between Pending and Active there are 217 licenses and here is how they break down across activities:

Manufacturer License: To make hemp products intended for human ingestion, inhalation, absorption or other internal consumption (collectively “consumables”), you must apply for and receive a manufacturer of hemp consumables license. Such license is required to engage in the conversion of the hemp plant into a byproduct by means of adding heat, solvents, or any method of extraction to modify the original composition of the plant into a consumable.

Processor License: To use or convert hemp to make a product that is not a consumable, you must obtain a license from the Department of Agriculture. The processor license will be required to produce all animal food, and non-consumables, such as textiles and building products.

Grower License: Issued to a person in the state licensed by the commissioner to cultivate, grow, harvest, handle, store and market hemp.

Key Findings

· There are 217 active and pending Connecticut hemp licenses so far this year

· 66% of the licenses are cultivators, 25% cultivators and 9% processors

· 73 of the licenses have been formed with other licenses to create a vertically integrated operation. 84% of the processors are integrated with other licenses. · Incredible Edibles, a well-known brand, received both a cultivator and manufacturer license.

Vertical Integration

In evaluating the 217 hemp licenses we have determined that 73 of these licenses – or about a third have been vertically integrated into stacks of two or three licenses. 144 operate as stand alone licenses.

In other words, 66% are stand alone businesses and in looking at the % table above we can see that Cultivators have the highest likelihood to be a stand alone business followed by Manufacturers and Processors.

The processing function is most likely to be vertically integrated or stacked – only 3 of the 19 processing licenses are standalones.

Why does this matter?

This supports a trend we have seen in hemp licensing where states expand the activities they permit and utilize existing regulators to help carry the burden.

We have seen this play out in Florida and Louisiana where existing regulators manage the licensure of retail sales. This is a stark contract from cannabis regulatory schemes where monolithic entities are created to handle the process.

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This content is provided as a membership benefit to our valuable business level members. Due to several factors including the variances in state hemp laws and the differences in interpretation of federal law, NHA makes no warrants of the legality, efficacy or safety of any product, service or statement made by any third party.

We encourage all members and the general public to do their own due diligence on any business or product, and understanding their state’s and federal laws, before choosing to purchase any product or contracting for any service.