KY’s first medical cannabis businesses will be chosen by lottery. How does that work?

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Kentucky’s first medical cannabis businesses will be selected via lottery after they get a shot at applying for state licenses beginning in July, Gov. Andy Beshear announced Thursday.

Beshear shared fresh details about how the process will work for medical cannabis cultivators and dispensaries at a press conference, where he also announced he’d signed House Bill 829. The legislation makes the accelerated timeline possible so cannabis is available in time for the program’s launch.

Medical cannabis will be available to qualifying Kentucky patients starting in January, but in the meantime, the state has to build the infrastructure that will make its cardholder program work.

“That whole system has to happen within our borders,” Beshear said at his Frankfort news conference Thursday. “Under Senate Bill 47, we were going to have a challenge. The ability to purchase medical cannabis was supposed to begin Jan. 1, 2025, and that’s the first time we could license a business. So there was no way everything was going to be up and running.”

House Bill 829 enables medical cannabis businesses to begin applying for licenses starting in July, and those will be issued by way of a state lottery. So while businesses cannot sell medical cannabis in the state until Jan. 1, 2025, a lucky few will be able to set up their operations ahead of time.

That will give those businesses a leg up on the competition, as they vie to cater to some 70,000 to 90,000 medical cannabis patients. That’s the Beshear administration’s best guess as to how many people will take advantage of the program during its first two years.

Here’s what we know about how the application and lottery system will work beginning this summer.

How do you get a medical marijuana card in KY? Here’s what we know about applying

How many state cannabis business licenses will be available?

For dispensary licenses, the program has created 11 regions across Kentucky where it will grant licenses. This is an effort to ensure medical cannabis patients, such as those with cancer or epilepsy, have the shortest possible travel times to a dispensary, Sam Flynn, the executive director of Kentucky’s medical cannabis program said Thursday.

Flynn said each of the 11 regions will be allowed to have no more than four dispensary licenses, with the exception of the regions encompassing Louisville and Lexington, which can have up to six.

“No county can have more than one dispensary in the initial license allocation with the exception of our two largest counties, Jefferson County and Fayette County, which will have two each,” Flynn said.

In recent months, Lexington has been working to get medical cannabis regulations in place ahead of the launch. The task of determining what types of operations can go where has fallen to the Lexington Urban County Planning Commission.

The city has drafted an initial proposal of zoning rules for such facilities. A public meeting on the draft proposal will be held May 9.

For cultivators, licenses will be made available across several “tiers” based on their size.

For tier 1 cultivators — or those that have smaller, 2,500-square-foot facilities — there will be a total of 10 licenses granted during the first year of the program. Larger facilities will have a much smaller number of licenses to compete for, either two or four licenses for tier 2 and tier 3 cultivators, respectively.

No licenses will be awarded to tier 4 cultivators initially, Flynn said.

“I will note that the program will not be issuing tier 4 (licenses), that’s the 50,000-square-foot cultivator licenses in this round,” Flynn said.

There will be no limit on licenses granted to safety compliance facilities, meaning the laboratories that test the products.

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How will a medical cannabis business apply for a license in Kentucky?

Medical cannabis businesses can begin applying for a license July 1, and the application window will remain open until Aug. 31.

Beshear said applicants will have the opportunity to fix any issues with their application following submission.

The application requests an overview of the business, financial information, the business’ history, its operation plans, business location, guidance for employees and ownership and attestations, along with contact information and a signature.

With the hope of eliminating any favoritism and resulting litigation, Beshear said the state’s medical cannabis program is working with the Kentucky Lottery to develop a fair lottery system for awarding licenses to applicants. The one exception is existing Kentucky hemp businesses will be given priority when it comes to licenses.

“That is only if the number of applicants exceeds the number of initial licenses available,” Flynn said. “So, for example, if there is a dispensary region and four people apply, those four businesses get a license and no lottery is required.”

The lottery will be held in October.

Do you have questions about medical marijuana in Kentucky? Send us an email at ask@herald-leader.com or reach out to us with the Know Your Kentucky form below.