Brandon Styll dedicates this special PSA episode to Tennessee's newly signed HB 1376, which moves all hemp derived cannabinoid products (beverages, edibles, smokeables) under the Tennessee Alcoholic Beverage Commission starting January 1, 2026.
Brandon Styll dedicates this special PSA episode to Tennessee's newly signed HB 1376, which moves all hemp derived cannabinoid products (beverages, edibles, smokeables) under the Tennessee Alcoholic Beverage Commission starting January 1, 2026. To break down what it means for restaurants, bars, and retailers, he brings on Ken Pelletier, co-founder of Calexo, the THC seltzer brand distributed in Tennessee by Lipman Brothers.
Ken walks through the operational headlines: 21 plus environments only, licenses required at every tier, no direct to consumer or third party delivery, a 15 milligram per container serving cap, and new wholesale taxes that replace sales tax. The good news for the hospitality industry is that bars and restaurants with existing liquor by the drink licenses are essentially grandfathered in, while grocery and convenience stores will largely be cut out of the category.
Ken frames the bill as a net win for on premise operators and a step toward sensible regulation, even as smoke shops selling hemp flower face significant losses. Nothing changes immediately, and operators have six months to register through a forthcoming state portal before the law takes effect.
"It's not only OK. We just got an explicit blessing by the state to do this. Specifically bars, restaurants, places that are 21 plus. They have said that up to 15 milligrams per drink you can do."
Ken Pelletier, 16:55
"I've been calling it the great American hazing of our category. It's like, can we keep up, can we shake up whatever they throw us."
Ken Pelletier, 19:50
"A lot of your local smoke shops are talking about having 30 to 60 percent of their retail profits just eviscerated by this."
Ken Pelletier, 17:51
"Anything where the beverage travels outside of somebody who can card the individual they're handing it to is where they stop."
Ken Pelletier, 12:50
00:00Welcome to Nashville Restaurant Radio, the tastiest hour of talk in Music City. Now here's your host, Brandon Styll. Hello Music City and welcome to Nashville Restaurant Radio. My name is Brandon Styll and I am your host. We are bringing you a very special episode today. This is some, like the more you know, kind of a PSA episode because we, there's this new product on the market and it is a THC product, it's a seltzer, it's a mocktail zero proof and there's a bunch of them. We love Calexo here at Nashville Restaurant Radio and there's all this talk that this passed and it was just signed by the governor and I am bringing on Ken Peltier.
01:04He is the co-founder of Calexo, our favorite and I wanted to break down all of the nuts and bolts of what is going on. So this episode today is really going to be, if you are somebody out there who owns a restaurant or you're a liquor store anywhere and you want to know what this law means for you, I'm going to give you the ones and twos and then we're going to bring Ken in and we're going to ask him some questions. So the bill, let's see, it is the newly signed HB 1376, comprehensive framework that moves all hemp derived cannabinoid products, beverages, edibles, smoke bowls under the alcohol beverage commission and this is as of January the 1st, 2026. So here's the operational headlines for hospitality. This is going to be for 21 plus environments only. Grocery and convenience channels are now out. Licenses required at every tier, supplier, wholesaler and retailer.
02:07No direct to consumer or third party delivery. Transactions must occur face to face. Serving limits drops to 15 milligrams THC equivalent, multi-serve containers must be and CAG limits are 650 milligrams, 15.5 gallons or 325 milligrams for a 7.75 gallon. There's a wholesale tax, $4.40 per gallon of HDCP liquid, I'm going to ask him what that means, plus one cent per milligram for other formats, replacing the sales tax. 12 ounce and larger cans are exempt from barrier placement. Smaller high potency items must stay behind the physical barriers. Like if you go to a total wine and you want to buy some THC beverages, they're in like a glass case. You can't just pick them out and get them. You have to get somebody to let you in. Not for the 12 ounce, five milligrams. You can place those outside of there. That's what I'm getting. To translate all this into day to day business, we're going to bring him in right now.
03:13Ken Peltier, what's up man? How much man? How about yourself? It's good to see your face. You know what? It's Memorial Day today. Yeah, man. And we are we are celebrating Memorial Day over here. We had a big fireworks show last night. It was lots of fun. Amazing. I love a good fireworks show. Yeah, we were we have just been enjoying a little bit of a slow week because it's it's it's usually bad, bad taste to call on distributors and restaurants in the week leading up to Memorial Day because many people's hairs are on fire. You don't want to be messing with people at that time. So it's been a slow week for us, but that gives us time to kind of look back and check in on some of our states that we're operating in. And we noticed that, you know, our inbox lit up with, hey, this bill finally got signed. So that's when I reached out and happy to be here and talking about the new things in Tennessee. So tell me, tell me, just give me from your perspective, what's going on when you first heard about this? What were you guys thinking?
04:14This is this is the this is the sine wave of change happening. The the call and response back and forth here that's that's happening is is a little bit to be expected. So so without going too deep into it, to break back into it, you know, a lot of the reason these HDCP, as they're calling them, hemp derived cannabis products are are existing in the market right now is because of an access issue where Americans want cannabis products, but just can't get them because of regulatory problems. You know, some states are very into it. Some states are not. It's usually a red, blue sort of issue. But in the recent days, southern states especially have said, hey, we can get our cannabis products from hemp and have found that smokeables, edibles and even drinks are really interesting components of of an adult choice that you can make about how you imagine that.
05:16Imagine that. And just like having a drink at a bar or taking a taking a little airplane bottle of Jack Daniels and pop it in your pocket and liquid courage and different things like that. You know, this is this is an evolution of that that just involves cannabis And, you know, the the regulations didn't exist initially because hemp was made legal by a sweeping federal regulation that didn't have a lot of the nuances about serving sizes, legal limits, ages, even things like that. So in a way, the federal government gave gave the country a choice to get on or off with this. And some states like Minnesota have wholeheartedly just thrown their arms around it and made it a very welcoming environment. And what I would say the Tennessee is done here is somewhere in between. You know, it's not an outright ban like Texas just pulled where they criminalized it.
06:18Really? Yeah, I imagine having a product in. I'm sorry, I'll back up. The governor still has to sign it into law, but it's it's kind of sailing through both houses as a ban where we were trying to push it to something more like this. We want the T.A.V.C., you know, to to to be in control of these products, just like the adult beverages that they're very used to. And this is the Tennessee Alcohol Control Board is very used to to to policing, regulating and, you know, and dealing with these products on the alcohol side. And we think a lot of that that application of regulation should be very similar to the hemp derived products. Agreed. So what does this mean for you? So you're you're selling Calexo in Tennessee, distributed by Litman Brothers. Correct. Correct. To make sure we can get those those things out there if you wanted to purchase some Calexo.
07:19Yes, absolutely. What does this mean? Can I still like let's just use me as an example, right? So let's use like Chago's Cantina, right? I'm selling Calexo there. What do I need to do? 100 percent. So I tapped out some notes as I was making my little my dog walk this morning just to make it a little easier for me. So so so the total recap, you did a great job at the beginning of the state. You know, 15 milligram per container limits, some new taxes, 21 plus only licenses are required. All these things have been applied. The total impact. We'll see how this goes. But for bar and restaurants, I think let's start and unpack there. So you're already 21 plus establishments. You already have licenses for for, you know, serving liquor beer, wine, liquor beer, wine. And those are going to be grandfathered in as as immediate access to be able to serve these products. So you're going to find a lot of retailers where this isn't going to work as well, especially grocery and convenience.
08:24Those are two that the state is very particular about saying, hey, we draw the line like here ish. And so, you know, general area, I know some brands that that were just that were just, you know, pulled in, you know, because they're making a set at Mapco's, which is which is pretty big, pretty big deal. And now Mapco's going to have to kind of pull back on that a little bit at the beginning of next year. What about for now? For right now, it's it's steady as she goes until the law transitions January 1st. But for bars and restaurants, it there should be no major changes. Part of the reason for that, I think, is is because what is there's a lot of TBD yet on how the ABC is going to regulate this for off premise at liquor stores, for example. There's there's a lot of gray area for alcohol on premise, bar and restaurant.
09:27There's a lot regulated there, you know, and they carry almost everything over from the alcohol side. There's fines for not properly carting. There's, you know, controls and suggestions for over consumption. All these things we've been talking about for years, they finally actually put into law. And that's a win, I think a really good win. It's a step in the right direction that the the the there's going to be a portal that will open up where brands that want to be in good standing with the state can register just like alcohol. And I would expect that most good restaurants and bars would be checking that as they're onboarding brands to their menus to make sure that they're going to be on this on the list, just like if they were doing any other alcohol brands. I'm sure a lot of this is going to be happening at the distributor level. You won't be having distributors distributing products that aren't on the list.
10:30So so some of this filtration of of products in good standing will be happening over the next six months or so, I'm sure. OK, so let me just I'm going to stop for one second. I don't want to get too in the weeds with some of the regulatory everything. I want to know what if I'm a restaurant out there, what do I need? Can I still sell the stuff at Chagos right now? Right now? Absolutely. OK, so and there's no immediate effect. Do I need to apply for a license to be able to sell it in January? You have a license already. And this is and this is where it does get a little wonky and they're going to have to the ABC is going to have to tell us what the actual procedure is. But but the the T.A.V.C. because you already have a license with them to sell alcohol when you get your liquor license. That that's the that's the the the sort of barrier met of. What about my bartenders? Do they have to get a different because everybody has to have an ABC card or an alcohol beverage commission card that says I went through a class?
11:37I understand that I'm not going to do this. This can you is there any laws that so well, I need I'm going ahead myself. Do I need to get a new license to serve for my servers to serve THC products? This is a really good question for the T.A.V.C. And I think they're going to get a lot of knocks on the door about this and some of this stuff. They may not have even started thinking about, but it is probably going to be coming soon. The best that I can tell is that they're going to hold all of you to a liquor by the drink style license. OK. And and that covers, you know, restaurants, bars, hotels. It's, you know, the carding environment. It's going to be, you know, available. Allow you're going to be allowed to have it in a cooler. Um, uh, and the the limit for you is probably that you won't be able to let them go out the building anymore. OK, so I can't sell them to go anymore. That's that's what we're what we're reading, because they've they've put a ban on direct consumer shipping.
12:44And we think that they're going to be sticklers about that. Anything where anything where the beverage travels outside of somebody who can card the individual they're handing it to is where they they stop. OK, that makes sense. That does make sense. Yeah, so I can't. Hey, I'm ordered to go. Here's my idea. Then we get home and give it to somebody else. Yes, absolutely. Yeah. Uh huh. All right. So right now, everybody is good. We don't need to change anything. We should already have a license through the ABC, but with some of this stuff is to be determined whether or not they're going to make the servers come in and do this. Distributors, you'll order it the same way you've been ordering it. And starting in January 1st, 2026. This all go into effect. What about taxes? I have to pay different. One of the things with taxes, I have to pay different levels of taxes for liquor, beer, wine. Sometimes I include it in the drink.
13:47If one of the restaurants are included in one of the restaurants, they're not included. I charge extra like the tax on top. Yeah, this is an interesting layer. So so we think that it's actually going to get slipped upstream into an excise tax. I'm sorry, not not an excise tax, a wholesale tax. So so instead of it ringing at the till, it would be applied at this limit that they that they've kind of pointed out on the purchase. It's like 440 no on the wholesale. So so there's they keep saying it's 440 a gallon for beverages, which which we're all reading is as as not a measurement of the cannabinoids like the other tax, which is a two cent per milligram on a vaporizer, for example. OK, this winds up being about a 41 cent fee on a 12 ounce drink. So when we calculate that into all of our pricing model, what it really kind of does is mirrors what's happening at the retailer level.
14:54This would be very hard for a for a can at at retail at grocery store to to absorb. It would probably wind up, you know, increasing the price of the beverage. And on premise, with the extra margin that's played there, I have a feeling that that the wholesalers and retailers will will all be able to absorb this easier with the with the on premise application of it, with the higher kind of final price point that that that tax is going to be eliminated at the hospitality level, I believe. That that's our best reading of this. And I'm again, I'm going to I'm going to press pause just right here because I should at one point. This is not legal advice. Talk to your own lawyers about this. Yeah, I'm not a lawyer. Brandon is not a lawyer. We are trying to kind of sift through this stuff and make ourselves ultra informed as possible.
16:00And and, you know, we have we have some very, very helpful legal teams that have that have been perusing over this and have given us that that kind of top line overview. And I'm sure it's ever changing as the TBC decides what they want to do. I just really want to bring you on today because obviously you guys are a sponsor of the show and I'm excited to share your story. And I'm I know I've got a lot of restaurants that have tried using tried collect so and love collect so. And I know that there's this what does this mean? Does this mean I can't sell it anymore? What does this mean? And I just wanted to give a good overview because I was talking to somebody of the day and they said, oh, we've pulled that until we we're not selling any THC products until we know what the deal is. And I'm like, you don't have to do that. We're still selling it like we're still selling it. It's OK. Like you and I don't know if it's OK, but I wanted to find out. I can from you one. I can reframe this one better for you next time. It's not only OK. We just got an explicit blessing by the state to do this.
17:03Nice. Specifically, bars, restaurants, places that are 21 plus. They have they have said that up to 15 milligrams per drink you can do. They are like the specificity that they went down to down to the keg level of milligrams is telling me that that that that the powers that be that they're going into the ABC, it making it easier for you, less taxes. All of these are are the most of a net win for you. 100% take a half a step back and say where this law really just like cuts into people is for people who consume THC, a hemp flower. That is going to be decimated as an industry. And a lot of your local smoke shops and things like that are talking about having 30 to 60 percent of their retail profits just eviscerated by this. That and the truth is, is that, you know, the the the state has decided that that that the THC, a which is non psychoactive, like in the flower that everybody is selling, turns into Delta 9 when it's heated up, when you start smoking it.
18:18And now and the state is recognizing that and saying, hey, because it's a precursor and nobody consumes it as just THC, a what we're going to do is we're going to assume that whatever percentage THC is also part of the percentage. So if it goes over point zero three again, then boom. So so they've been very clever about it and really drawn the line at smoking. But the fact that they've given a pass to beverages and edibles in some cases and in low cases and in some cases there will be smokeables. They'll just be very, very low potency smokeables. I think that kind of shows you where they'd like the industry to head as the state. And I'm sure that there's been a lot of incredible lobbying from, you know, powers unknown who have interests up and down with this that are that are both thrilled and and not thrilled at the outcome.
19:19But I think for me, what this says is is this is this is progress. This is like this is us finding a happy medium where where we get regulation that makes sense. It really keeps that out of kids hands. It really makes it actual an actual law with teeth to to card somebody where it wasn't before. And and those are all good pieces of progress. And all the rest of it is just, you know, you know, the gears grinding of regulation. I've been calling it the great American hazing of our category. It's like, you got to see if we can keep up. If we can shake up that throw us. Oh, my God. Let me ask you a quick question. You said twenty one and up places is anywhere that has a good carding system where they're serving alcohol to people who are twenty one and over considered a twenty one and up place. As far as I can tell. Yeah. OK. Because like twenty one and up places are like some bars are only twenty one and over. And I just wanted to delineate that it's not just those place that can sell that regular restaurants that serve anybody.
20:24You just have to have a program in place where twenty one and up is a thing. You may have to help me out with a little bit of the Tennessee application of this. But there's but there's liquor stores that can still sell hard liquor. And we've now been put at that equivalency. So if a grocery store can't do hard liquor in Tennessee. Correct. So they can do wine and beer there. But a restaurant can do hard liquor and wine and beer. Are there two different licenses for that? Yes. OK, there's the beer board and then there's the liquor and wine. If you have the liquor board license, then you're good. This is, again, my guess. Check with your own people. But that's my guess is where that's where they've drawn the line. OK, I was just thinking of my friends right there. Bill's Sandwich Palace. I don't think they have a liquor license, but they're really doing really great with the THC products because there hasn't been any regulation. You can go there, have a sandwich, have a THC drink.
21:24And it's going to mean you can obviously for twenty one or over. But it's just been really nice for some people who didn't have to have liquor licenses to be able to sell the THC product and not have to deal with that. Here's my Hail Mary here, and this is where it would be really great to have the kind of the Nashville community figure this out. And you'll probably get some feedback on this if you ask for it. So so one of the things that I am reading is is that there's going to be there is going to be some sort of a license add on that that will have a a an application fee and an annual fee. But if that that add on is a hemp. An HDCP, like they're calling it license hemp derived cannabis product license, maybe somebody like Bill's could get an HDCP. Without getting a liquor license.
22:27And I think you should be it should be easier. It should be. And which is crazy. Maybe the government will work for us that way. There is a lot to unpack. Lawyers are unpacking it. There's a lot of articles you can kind of find that have done a pretty good job. But but, you know, I just want to get everybody on the on at least the same page to know that nothing immediate is happening. It's January 1st, 2026. And that gives you six months to figure out what the license is. Go to the portal and do the steps if if we want to continue doing this. And Collexo is going to be there. We're going to follow all the laws. We'll register with the state and and continue to be making merry wherever we find ourselves. I love it. Well, can everywhere but Texas. Thank you. Thank you for coming on on on a holiday to get in here to help kind of shed some light on what this bill means to everybody out there. Thank you for all that you do.
23:29Love your beverage. I know people are out there selling it right and left. And I'm so excited if you want to. I always had this idea that, like, hey, if I go ahead and bring it on, I'm going to be grandfathered in when anything happens. They'll be like, oh, you've already been doing it. So you're you're good. You're good. If you are out there and you want to see what I guess you have like six months, if you want to just test it before anything else, just go go. Pick the product up and go try it right now. It's really nice. And thank you again for joining. Go ahead. Yeah. And feel free to reach out to us on social or LinkedIn or however you can. Any of our forward facing emails generally land in my inbox. So if you have any questions, that's like so specifically, give us a shout at drink, collect, so at drink, collect, so at most of our social media drink, collect, so send a message and they will answer you and hopefully be very helpful. Thank you so much, Ken. Enjoy the rest of your Memorial Day, dude. We will talk to you soon.
24:31You too, sir. Cheers. Cheers.