Kentucky’s medical cannabis license process involves a lottery system to ensure fairness. Business licenses are coming sooner than expected because of 
emergency regulations that moved up the date of the lottery and application process to summer of 2024. In this first round, there won’t be any large (tier IV) cultivators, or producer (grow and processing). The dispensaries, cultivators and processors will be strictly limited in numbers but safety compliance facility licenses face no such limits.
Applying for a license in Kentucky requires careful preparation, substantial fees, and compliance with a strict regulation for their business licenses- including real estate and capital requirements. Navigating this complex process can be daunting but rewarding.
Successful applicants must meet a rigid qualification maze of an application, including background checks, written narrative of plans, and capital requirements. The legislation passed by Kentucky clearly demonstrated its cannabis policy goals of a highly regulated industry with business licenses only going to winning qualified applicants.
Types of Cannabis Licenses
Kentucky offers several types of cannabis licenses, tailored to different business activities within the industry’s supply chain.
The primary types include: cultivator, processor, and dispensary licenses, each with its specific fees, requirements, and allowable activities. Cultivators grow medical cannabis, processors manufacture products, and dispensaries sell to patients.
These licenses ensure a well-regulated, safe market for medical cannabis in Kentucky.
Cultivator License
A cultivator license allows you to grow medical cannabis in a secure, enclosed facility.
Cultivators must not grow cannabis with THC content above 35%, keeping production regulated and safe.
Approved activities include growing, harvesting, and storing cannabis. You can also sell cannabis seeds and plants to other licensed cultivators and transport cannabis to licensed businesses.
Make sure to meet financial commitments, comply with all state regulations, and avoid prohibited activities like operating near schools or daycare centers.
Number of Licenses Available:
- Cultivation (Tiers I-IV)
- Tier I: <2,500 FT/2 – 10 b.
- Tier II: <10,000 FT/2 – 4
- Tier III: <25,000 FT/2 – 2
- Tier IV: <50,000 FT/2 – NO Initial Licenses
Application fees per tier
Cultivation (Tiers I-IV) a.
- Tier I: <2,500 FT/2 – $3,000
- Tier II: <10,000 FT/2 – $10,000
- Tier III: <25,000 FT/2 – $20,000
- Tier IV: <50,000 FT/2 – $30,000
Processor License
A processor license allows you to turn raw cannabis plant material into medical cannabis products.
- Application Fee: $5,000 (nonrefundable)
- Initial Licensing Fee: $25,000
- Annual Licensing Fee: $15,000
- Capital Requirement: $150,000. Processors can acquire raw plant material to process, prepare, and package cannabis products.
Selling directly to medical cardholders or advertising the processing facility is prohibited.
Processors must ensure facilities comply with state regulations and conduct proper background checks on all personnel.
Dispensary License
Obviously, a dispensary sells medical cannabis products.
Dispensaries in Kentucky can only sell to qualified patients and caregivers. They must obtain their cannabis products from licensed cultivators or processors to ensure quality and safety. Approved activities include storing, packaging, and selling cannabis products that comply with state regulations.
Selling to anyone without a medical card is strictly prohibited.
Each dispensary must pay a $5,000 nonrefundable application fee and a $15,000 annual licensing fee. The capital requirement is $100,000, ensuring financial stability and compliance readiness.
Adhering to state laws is essential. Dispensaries must also offer educational materials on dosage amounts, usage directions, and potential impairments caused by product usage to all medical cardholders. For more info, visit the Kentucky Medical Cannabis Program website.
Application Process
Applying for a cannabis license in Kentucky involves several steps, including fee payments, a complete application, and background checks for the winners.
The application requires you to submit detailed documents like business plans, financial statements, and proof of eligibility. You must pay the nonrefundable application fee to proceed.
Upon approval, your application is only complete and added to a lottery. Your complete and eligible application must then also be lucky. ensure ongoing compliance and pay the annual licensing fee promptly.
Pre-Application Steps
Before applying for a cannabis license, several key preparations are required.
- Draft Narrative: Operations Plan that must include: i. Security Plan ii. Transportation Plan iii. Storage and Labeling Plan iv. Inventory Management Plan v. Recordkeeping Plan vi. Plan to Prevent Unlawful Diversion of Cannabis vii. Workforce Development Plan
- Financial Documentation: Prepare detailed financial statements, business plans, and proof of capital requirements.
- Facility Standards: Ensure that your facility meets all state regulations for secure and compliant operations.
- Compliance Review: Familiarize yourself with the Kentucky Medical Cannabis Program regulations and ensure all aspects of your business plan meet these standards.
- One License Rule: Remember, you can only apply for one type of cannabis business license at a time. You must apply in compliance with any regulations regarding your application to get into the lottery.
Gathering these essential documents and ensuring compliance is key to your application’s success.
Proper preparation is critical for success in obtaining a Kentucky cannabis license.
Submission Requirements
Kentucky has a detailed publication that demonstrates the application portal and all the steps to ensure your application is complete so that it can gain access to the lottery. Consult the requirements and review the application portal on Kentucky’s Business Licensing Application Guide for 2024.
Review and Vetting
Once applications are submitted, they undergo a thorough review by the Office of Cannabis Management (OCM).
The review process ensures that each application is complete and meets all the eligibility requirements. This involves checking for thoroughness in business plans, financial stability, and compliance with local and state regulations. Applications that are incomplete or fail to meet basic criteria will be rejected at this stage.
Applicants who pass the vetting process and demonstrate robust plans and financial readiness will be entered into the lottery. This multi-layered approach ensures that only the most prepared and compliant businesses enter Kentucky’s medical cannabis industry.
Financial Commitments
Obtaining a cannabis license in Kentucky requires a range of financial commitments, varying by license type and tier. Applicants need to understand these costs to effectively plan their business strategy and secure sufficient funding.
For cultivator licenses, costs increase with the grow area’s size, from $3,000 for Tier I to $30,000 for Tier IV in application fees. Processor and dispensary licenses also have significant financial obligations, including nonrefundable application fees of $5,000 and varying annual licensing fees. These financial commitments ensure applicants are serious and capable of maintaining regulatory compliance.
Fees Overview
Understanding the fee structure is essential.
Each type of cannabis license in Kentucky comes with its own set of fees, both nonrefundable application fees and annual licensing fees. It’s critical for applicants to familiarize themselves with these costs to ensure they have sufficient capital. Fees are also intended to ensure that applicants are committed to complying with all regulatory requirements.
Application fees are substantial.
Nonrefundable Application Fee
- Tier I Cultivator $3,000
- Tier II Cultivator $10,000
- Tier III Cultivator $20,000
- *Tier IV Cultivator $30,000 Processor $5,000
- Dispensary $5,000
- Safety Compliance Facility $3,000
For more detailed information, visit the Kentucky Medical Cannabis Program website.
Capital Requirements
Capital requirements are crucial in Kentucky’s medical cannabis licensing process. Applicants must demonstrate financial stability.
Each license type has specific capital requirements to ensure financial viability.
Sufficient Capital Requirements
- Tier I Cultivator $50,000
- Tier II Cultivator $200,000
- Tier III Cultivator $500,000
- Tier IV Cultivator $1,000,000 (*none issued in 2024).
- Processor $150,000
- Dispensary $150,000
- Safety Compliance Facility $150,000
These requirements are designed not only to confirm financial health but also as a commitment to compliance. It reassures the state that licensed businesses can sustainably operate, adhere to regulations, and contribute to a secure medical cannabis market. Applicants should carefully review these figures and ensure adequate capital to meet these demands.
Regulatory Compliance
Regulatory compliance is paramount for cannabis businesses. Kentucky mandates strict adherence to all state regulations.
Applicants must undergo thorough background checks to exclude disqualifying felony offenses or individuals under 21 years of age. Businesses also need to comply with location restrictions, maintaining distance from schools or daycare centers.
Compliance ensures the integrity and safety of the market. Following guidelines fully is non-negotiable to obtain and retain licenses.
Background Checks
Background checks are essential to screen out disqualifying felony offenses and ensure all individuals are 21 or older.
- Principal officers
- Board members
- Agents
- Volunteers
- Employees
These checks help maintain the safety and integrity of the cannabis industry.
These will probably occur if the applicant wins the lottery to reduce administrative burden.
Location Restrictions
Kentucky imposes strict location restrictions on cannabis businesses to ensure community safety.
These regulations require that cannabis facilities maintain a distance of at least 1,000 feet from schools and daycare centers. This provision is aimed at preventing youth exposure to cannabis operations.
Furthermore, businesses are not allowed to display any signage or identifying logos that indicate the presence of cannabis on the premises. This helps minimize visibility and potential undue attention.
Additionally, cannabis businesses must ensure that their operations are enclosed and secure. This includes growing, processing, and selling facilities, which must be housed within locked indoor areas.
Failure to adhere to these location restrictions can result in severe penalties and potential loss of licensure.
Conclusion
Navigating the Kentucky medical cannabis license application lottery in 2024 can be a complex process, but understanding the different types of licenses, their requirements, and the application steps can help you prepare effectively. Whether you’re interested in becoming a cultivator, processor, or dispensary owner, it’s crucial to meet all qualifications, adhere to state regulations, and ensure your business plans are thorough and compliant. By following the guidelines and leveraging available resources, you can increase your chances of securing a license and contributing to Kentucky’s growing medical cannabis industry. For more detailed information and updates, be sure to visit the Kentucky Medical Cannabis Program website.
