Kentucky Cannabis Lottery Overview and Perspective

Kentucky was the 38th state to legalize marijuana; now comes the decision of who gets to do what. Kentucky sits between the Southeast US, which has been slow to legalize cannabis, and the Midwest US, which is transitioning from medical programs to adult-use programs. Many expect the state’s noted history of bourbon and hemp expertise to translate into cannabis business success. However, starting with a strict medical program, businesses should definitely prepare for a long-play financially and should explore reasons that patients should shop in Kentucky and not nearby Illinois or Missouri (it is illegal to transport across state lines).

Less than a year after Governor Andy Beshear first announced Senate Bill 47, votes from the Senate (March 16^th: 33-11) and House (March 30: 66-33) were positively received in favor of a medical cannabis program.

On March 31, 2024, Gov. Beshear signed Senate Bill 47 into law; Kentucky is now the 38^th state to legalize medicinal cannabis. However, official sales cannot begin until January 1, 2025.

Local governments (city, county) still have the ability to deny cannabis operations within their boundaries. The state law has until Dec 31, 2024 to pass an ordinance opting out.

Patients

Individuals who meet qualifying medical conditions are now eligible to receive a patient registry ID card from a registered medical cannabis practitioner.

There are four types of registry ID cards qualifying patients can be categorized in:

In-state qualified patient, in-state minor qualified patient, designated caregiver, and visiting qualified patient. Medical cannabis practitioners can prescribe written certification to individuals 18 years and older for an in-state medical ID card. Individuals 18 years of age and under are required to have a custodial parent or legal guardian of at least 21 years of age or older.

Applications to obtain a registry ID card begin January 1, 2025.

Cannabis use without a valid registry ID card remains illegal.

Application

The Kentucky Medical Cannabis Program is housed within the Cabinet for Health and Family Services (the “Cabinet” or “CHFS”), which will provide oversight for the medical cannabis program. Sam Flynn, as of June 1, 2023, is the Executive Director of the Program. The Cabinet is responsible for providing specific regulations for the medical cannabis program. View them here.

A total of 16 cultivator (broken up by total sq. feet of the cultivated space), 10 processor, and 48 dispensary licenses are up for grabs. Only the 48 dispensary licenses will be divided by region. Each of the 11 regions will offer four dispensary licenses. Somewhat separately, Louisville (Bluegrass region, Jefferson County) and Lexington (Kentuckiana region, Fayette County) will receive two additional dispensary licenses based on their population index.

Tier IV Cultivator licenses, with indoor growth areas between 25,001 and 50,000 sq. ft., and Producer licenses (grow + processor) are not being dispersed at this time.

Pursuant to the application guide, individuals cannot apply for more than one type of license. Individuals have the option to apply multiple times for the same type as long as certain conditions are met.

Timeline

The Cabinet will accept applications between July 1 – August 31. Within 15 days of submission, individuals will receive confirmation of their application. Between September 15- September 25, applicants will receive notification of any deficiencies, if applicable. They have exactly 10 days to solve this issue. One does not have to live in Kentucky to apply, but does need to secure property in a specified manner (standard fare for cannabis applications).

The lottery to announce the winners is expected to be held in October 2024. The lottery is designed to create a fair process and eliminate lawsuits.

What Documents Do I Need?

At minimum, applicants should prepare documents pertaining to a Site Plan, Financial Plan, Business Entity Documents, an Operational Plan, and Floor Plan.

Specifically, the Operational Plan includes:

1. Security

2. Employee qualifications, supervision, and training

3. Transportation

4. Storage and labeling

5. Inventory management

6. Recordkeeping

7. Preventing unlawful diversion

8. Workforce development and job creation

How Can Sapphire Risk Help?

Tony Gallo and the team of experts and consultants at Sapphire Risk Advisory Group have worked to secure medical and recreational cannabis businesses in 37 states. The process of applying for a license in Kentucky requires a robust presentation that includes, among other things, a thorough operational plan that encompasses employee supervision, inventory management, security and record keeping. If you need a professional, Sapphire specializes in delivering quality consulting for our clients. Contact us for assistance with licensing direction and business advice, and follow us on social media to stay up to date with more security best practices and cannabis industry updates. And stay tuned for a webinar announcement about Kentucky!

How Can Sapphire Risk Help?

Tony Gallo and the team of experts and consultants at Sapphire Risk Advisory Group have worked to secure medical marijuana and recreational cannabis businesses in 37 states. Follow us on social media to stay up to date with more security best practices and cannabis industry updates!