Kentucky took a big step forward in its medical cannabis program on Monday, October 28, as Governor Andy Beshear announced the results of the first medical cannabis license lottery. The lottery, conducted by the Kentucky Lottery Corporation during a livestream on Monday, determined the 26 businesses that could potentially obtain licenses to cultivate or process cannabis for approved medical uses.
These 26 businesses were selected from a pool of 918 applicants, and they will provide the initial product supply for medical cannabis in Kentucky. Not all applicants qualified for the lottery. Most applications—nearly two-thirds—were initially rejected and given the opportunity to cure deficiencies and resubmit. Ultimately, 774 applicants met the qualifications for the random drawing. (That drawing is virtual now—the Kentucky Lottery has moved on from the bouncing ball machines in favor of random number generators.)
Prospective cultivators could apply in different tiers based on their proposed size of operations, ranging from a maximum of 2,500 square feet (Tier I) to 10,000 square feet (Tier II) to 25,000 square feet (Tier III). The qualifying applications in these categories were as follows:
Cultivator Tier I: 173 of 239 qualified
Cultivator Tier II: 174 of 190 qualified
Cultivator Tier III: 137 of 155 qualified
Processor: 290 of 334 qualified
Beshear noted that there may be some challenges from applicants who were not successful in the process, but he expressed confidence in the licensing system chosen by Kentucky. Sam Flynn, executive director of the Kentucky Office of Medical Cannabis, also said that other states had adopted this lottery approach for licenses.
The next step for Kentucky’s medical cannabis program will be the lottery for the dispensary licenses, and Beshear said the date for that drawing would likely be announced on Thursday, October 31, 2024. The dispensary category of licenses drew the most interest—with more than 4,000 applications submitted. As a result, the Office of Medical Cannabis is still working through those applications as applicants are afforded the opportunity to correct deficiencies and resubmit. Only 48 dispensary licenses will be awarded in that next lottery with the licenses distributed among 11 geographic regions in the state. These regions were drawn based on drive time to space the locations appropriately, according to Flynn.
The next few weeks also will see major developments about where these medical cannabis businesses may operate. Under Kentucky’s cannabis laws, localities are automatically opted in to allowing the operations of cannabis businesses. However, counties and cities may opt out through local ordinances, by prohibiting or limiting cannabis business. To date, several counties have chosen to opt out, such as Boone County. (The current map of opt-ins is available here.) Cities and counties may also go in separate directions. That is the case with Simpsonsville, which opted out, while surrounding Shelby County opted in. Localities also may enact resolutions to put that opt in or opt out choice to voters. As a result, 53 counties and 53 cities have ballot resolutions about whether to allow the operation of cannabis businesses. These local resolutions will not impact the rights of individual Kentuckians, if authorized, to use medical cannabis, but they could limit the locations where licensed medical cannabis businesses may operate. A complete list of those proposed resolutions is available here. An example is the resolution placed before Woodford County voters which ends with the question: “Are you in favor of the sale of medicinal cannabis at a licensed dispensary and the operation of other businesses in Woodford County?”
In looking ahead, Beshear believes there will be a “significant economic impact” when the program begins in 2025, but he acknowledges the scale of Kentucky’s program is smaller than other states’ programs. However, he also believes that the program “will only grow with time.” Thus, applicants who were not selected in the initial lottery may have a chance in the future if additional licenses are made available.
As the beginning of Kentucky’s medical cannabis program approaches, SKO is available to assist. SKO attorneys have facilitated the submission of applications to the Kentucky Office of Medical Cannabis, and we look forward to assisting you in the next steps of the licensing process and all other issues pertaining to medical cannabis in the Commonwealth.