Lottery system will determine who gets 48 licenses for retailers and 10 for processors of medical cannabis in 11 Kentucky regions

By Melissa Patrick
Kentucky Health News

Gov. Andy Beshear gave an update on the medical cannabis licensing program Thursday, after signing this year's medical cannabis bill into law the day before.

"We have worked hard to create a safe system that limits or eliminates abuse while still providing relief to that veteran suffering from PTSD or individual suffering from unbearable epileptic seizure after epileptic seizure," Beshear said during his weekly news conference.

Rep. Jason Nemes presents Senate changes to HB 829
on the House floor Monday, April 15. (Legislative photo)

House Bill 829, sponsored by Rep. Jason Nemes, R-Middletown, has been described as a "clean-up" bill for Senate Bill 47, the measure that legalized medical cannabis during the 2023 session under the sponsorship of Sen. Stephen West, R-Paris. 

"In essence, all 829 does is set up the Office of Medical Cannabis and carries out the provisions of SB 47 as was passed last year," West said while presenting the bill on the Senate floor.

The final version of HB 829 will allow Kentucky to start issuing medical cannabis licenses to businesses in July in hopes that the product will be available to dispensaries in January 2025, when the program is set to go into effect. 

“It does allow these businesses — the growers especially — to get up and running, start growing product so there's actually something there to sell January 1,” West explained at the April 12 meeting of the Senate State and Local Government Committee.

It also allows cities to opt out of the medical cannabis program before Jan. 1, 2025, even if a licensee has been approved before that date. 

"Cities and counties have the opportunity to take a local vote. They can also pass ordinances that prohibit implementation," West said while presenting the bill on the Senate floor. "If someone is licensed before that time, it's buyer beware; they will have to take that into account as they apply for the license."

On Thursday, April 18, Beshear and Sam Flynn, executive director of the Kentucky Medical Cannabis Program in the state health cabinet described how the licensing would work under a regulation filed that day.

The new regulation will allow businesses to apply for a cannabis business license from July 1 through Aug. 31. Beshear said 10 licenses will be available across the state for processors, and 48 for dispensaries, the retail outlets. All their cannabis must be cultivated, processed and produced in Kentucky.

Flynn said the program has created 11 licensing regions to ensure Kentuckians with qualifying conditions have access to the product.

Beshear also announced that the state, in partnership with the Kentucky Lottery Corp., will issue the medical cannabis licenses using a lottery system. The first lottery will be held in October.

"This is what states are moving towards," said Beshear. "It reduces or eliminates litigation and it creates a more fair process, not one where people bid against each other and only then the big companies can be a part of it, but one that provides at least a chance for everyone who can meet the criteria." 

Flynn said the licensing process is designed to ensure that the industry is "stable and sustainable" with a focus on "small business" and meeting demand from people who have cards enabling them to buy medical cannabis.  

And, he said, each region will have at least four dispensary licenses available per region, with no more than one dispensary located in each county, with the exception of the state's two largest counties - Jefferson and Fayette - which are allowed two each. 

HB 829 also allows public and private schools to opt out of the program and requires public school boards to establish medical-cannabis policies by Dec. 1. The policies must prohibit the use of medicinal cannabis on school property, or allow use with several options for administration.

The legislature did not expand the list of conditions that would make Kentucky residents eligible for medical cannabis beyond what was allowed in HB 47. In January, Beshear asked lawmakers to add 15 more medical conditions to the list, and West filed a bill to increase the list from seven to 21 conditions. West's SB 337 died in its assigned Senate committee, having never been called up for a hearing. 

The eligible conditions in the current law, passed by the legislature in 2023, are cancer, multiple sclerosis, muscle spasms or spasticity, chronic pain, epilepsy, chronic nausea and post-traumatic stress disorder.