Tennessee Department of Revenue Issues Notice on Taxability of Hemp and Nicotine Products

December 9, 2020

The Tennessee Department of Revenue recently issued Notice #20-21 regarding the taxability of hemp and nicotine products.

The Tennessee tobacco tax imposes a 6.6 percent tax on the selling of cigarettes and other tobacco products (OTP). OTP is defined as “cigars … manufactured tobacco and snuff of all descriptions whether made of tobacco or any substitute for tobacco.” The notice states that due to the variety of new tobacco substitute products being introduced in the state, the Department will not apply the tobacco tax to non-tobacco products without a statutory clarification on what is considered a tobacco substitute.

The notice also specifically covers the taxability of hemp cigarettes and herbal cigarettes, e-cigarettes and vape devices, and other nicotine products, stating that as long as these products do not contain tobacco, they are not subject to the tobacco tax. Read the full notice.