Kentucky Medical Cannabis Licensing Update: New Bill and Regulations

By Yolanda Clarke, Colleen Mitchell

Apr 19, 2024

In an exciting week for the nascent Kentucky medical cannabis program, interested stakeholders were provided abundant new information to inform their business goals.

New Kentucky Medical Cannabis Bill and Regulations

First, on April 17, 2024, Governor Andy Beshear signed House Bill 829, which establishes a clear timeline for new medical cannabis licensing and moves up the application process from January 1, 2025 to July 2024.

Then, just the next day on April 18, 2024, the Cabinet for Health and Family Services published several sets of new regulations. Two sets of emergency regulations were filed that detail the rules for cannabis business licenses and the licensing application process. These emergency regulations go into effect immediately and are valid for the next 270 days.

Concurrently, an identical set of regulations were published as ordinary regulations, kicking off a public comment period that will last until July 31, 2024. A public hearing may be held on July 22, 2024 if requested in writing no later than July 15, 2024. Interested stakeholders are encouraged to submit comments to the Cabinet, either at the hearing or via written comments, to best inform Kentucky’s medical cannabis program. Based on the public comment period, the regulations now in effect may see some changes before being adopted as full ordinary regulations.

Kentucky Medical Cannabis Licensing Details

Important takeaways from this dual update to the program include the addition of license caps based on license types, as well as instituting a lottery system for qualified applicants to determine license awardees. Applications will be accepted starting on July 1, 2024 through August 31, 2024. In this initial application period, the following licenses will be available:

  • 10 Tier I Cultivator
  • 4 Tier II Cultivator
  • 2 Tier III Cultivator
  • 10 Processor
  • 48 Dispensary
  • Unlimited Safety Compliance Facilities

Dispensary licenses will be limited by region, with 11 designated regions. The Cabinet must issue at least four dispensary licenses per region, and at least six licenses in regions with an urban-county government or consolidated goal government—two of which must be physically located in the counties with an urban-county or consolidated local government. There may be no more than one dispensary per county in all counties without an urban county government or consolidated local government. No Tier IV Cultivator or Producer licenses will be available in the initial licensing round, but may become available in subsequent rounds.

Vertical integration appears to be prohibited during the initial licensing period, however, businesses can hold multiple licenses of the same category, at different locations. During the initial application period, applicants can only apply for one license type being offered at that time but can submit multiple applications, so long as the applicant has separate addresses for each facility and sufficient capital, without reusing the same financing sources on both applications. Cultivation applicants may only submit one application per tier, and dispensaries can only submit one application per region.

Application Requirements for Kentucky Medical Cannabis Licenses

At a high level, applicants will be required to provide general information regarding their business entity and ownership structure, including disclosures for those holding 10% equity or similar interest. Also required:

  • Demonstration of site control with proposed floor plans
  • Financial plan with proof of sufficient capital based on license type
  • Timeline to become operational
  • Comprehensive Business Plan detailing key aspects of the proposed business

Standard operating procedures will be required prior to opening a business, but are not required for the license application. An Application Guide is available which outlines all of the required application components.

Applications will be submitted electronically on an online application portal. Submissions will be reviewed for completeness, with applicants notified of any deficiencies, errors, or missing information and provided ten days to resolve the issues. Applicants will be notified within 45 days whether their application was accepted or denied. For those license categories with more applicants than available licenses, a lottery will be held to determine the selected applicants for licensure. The lottery itself is tentatively slated for October 2024.

Local Government Restrictions

Applicants should be aware of a few pertinent features of this accelerated timeline. First, local governments have until January 1, 2025 to pass local measures which can restrict or prohibit the operation of cannabis businesses in their jurisdictions. Applicants in this first round should be aware they may be required to move locations, including out of the jurisdiction entirely, if a local measure is enacted prior to 2025.

Kentucky Medical Cannabis Dispensaries May Not Open to Patients Until January 1, 2025

While dispensary applicants may take steps to become operational, including acquiring and possessing medical cannabis products, they may not open to qualified purchasers or dispense any medical cannabis products until January 1, 2025.

Looking Ahead

This week’s developments are a huge step forward for Kentucky’s medical cannabis program, and should significantly move up the timeline for when qualified patients can access medical cannabis in the Commonwealth. With application requirements such as financial plans and a comprehensive business plan, interested parties should get started now. Attend this upcoming webinar to get more details on the licensing process and learn best practices for getting started.

If you are interested in applying for licensure, please reach out to Vicente’s Kentucky licensing team. From forming your corporate entity, developing your financial and operational business plans and timelines, and finding suitable real estate, to assisting with other aspects of the licensing process, Vicente LLP is here to help you achieve your goals in this new market. Contact us today!

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