The wait is almost over. With the passage of Senate Bill 47, the Cabinet of Health for Family Services will start receiving applications for cannabis business licenses in Kentucky from July 1, 2024, until August 1, 2024. The bill will allow cannabis businesses to begin operations in the Bluegrass state from January 1, 2025.
Until then, prospective business owners are offered ample time and opportunity to organize their applications. This blog will highlight the prerequisites necessary to open a cannabis dispensary in the state of Kentucky.
Brief Overview of the Cannabis Scene in Kentucky
The Senate Bill 47, also known as the Kentucky Medical Cannabis Act, will allow the use of medical marijuana by adults to treat conditions such as cancer, chronic pain, epilepsy, multiple sclerosis, and HIV/AIDS.
The different types of cannabis licenses that will be made available to be applied for include – dispensary, cultivator (tiers 1, 2, 3 and 4), processor, producer and safety compliance facility.
The state of Kentucky is divided into 11 medical cannabis dispensary licensing regions, which are further divided into counties. The regions are – Bluegrass, Kentuckiana, Northeast, South Central, Cumberland, Mountain, Pennyrile, West Kentucky, Lincoln Trail, Northern Kentucky and Green River.
Starting in 2025, patients with a medical marijuana card can purchase products from licensed dispensaries. The card will be issued by the state to adults diagnosed with a qualifying condition by a licensed physician.
A 6% tax on the sale of medical marijuana will be imposed, which aims to fund drug treatment programs and related services. Therefore, business owners need to consider the tax implications while outlining their financial plan.
The bill also provides to limit the amount of advertising and marketing for medical cannabis businesses, to ensure responsible adult usage.
Important points during licensing process
Prospective cannabis dispensary license applicants should make a note of the following points to increase their chances of getting their license applications approved.
- They will have to submit a detailed application which will include a thorough business plan identifying important points like security measures and the financial stability of the prospective business owner.
- Documentation of relevant experience or expertise in the industry will also need to be provided, which can include any of the following:
- Experience in establishing and operating a for-profit or nonprofit business or organization.
- Any past instance where the applicant received a similar license, including a provisional license.
- History of receipt of suspensions, revocations, fines, or disciplinary actions.
- Each Kentucky cannabis licensing application is tied to a single physical address for the proposed business operation, which must comply with all zoning regulations.
- Applicants are also restricted to one application per medicinal cannabis region.
- A total of 48 dispensary licenses will be granted after the first round of applications, with 4 per rural region, and 6 each in Louisville & Lexington regions.
Requirements for Kentucky Cannabis License Applications
- Applicants should be 21 years of age or older.
- They should not possess any disqualifying criminal convictions.
- Each applicant must secure a unique location for the business, as license applications are tied to a single specific location. Individuals planning to establish businesses at multiple sites must submit separate applications for each location.
Financial Requirements for dispensaries
Application Fee: $5,000
Licensing Fee: $30,000
Annual Renewal Fee: $15,000
Proof of Sufficient Capital: $150,000
Types of products allowed to be sold in a dispensary
Cannabis dispensary license holders in Kentucky will be able to purchase cannabis and cannabis products from other licensed facilities within the state and sell products to medical card holders.
According to regulations, only the following types of products will be allowed to be sold in dispensaries:
- Flower having less than 35% THC content.
- Maximum of 10 milligrams per serving, for orally consumable products.
- Only cannabis products with less than 70% THC content.
- Products that do not contain vitamin E acetate.
- Along with the above, smoking accessories will not be available for purchase in dispensaries.
Structural Requirements
Since the cannabis business deals in products of a psychoactive nature, business owners are to strictly adhere to regulations regarding the proposed location or site where the business will be established and operated. The structure must be secure and comply with the state and local building codes. Some of the most important necessary features that the building needs to have are as follows:
- The building should have an enclosed roof and the connecting walls made of solid and robust materials should extend from the floor to the roof. The floor must also have a foundation or base securely attached to it.
- Security measures to control access of only authorized personnel are of extreme importance, and the external doors should always remain closed with commercial-grade and state-of-the-art locks. Areas also need to be marked and entry and exit logs maintained with precision.
- To prevent contamination of products, the plumbing system needs to be of appropriate quality to help with water supply and suitable waste disposal. Cleaning and sanitizing agents, which are generally toxic in nature, should also be stored properly and be adhered to local, state and federal regulations. Pest control is also an area that requires specific attention.
- The structure must be fitted with ample indoor and outdoor lighting facilities to ensure continuous video surveillance.
- Dispensaries can additionally feature a delivery service, a drive-thru window or a curbside pickup service, pending approved from the cabinet.
- The location of the dispensary should be different from that of an office space of a medicinal cannabis practitioner or physician. Along with that, the location must be at least 1,000 feet away from any existing elementary or secondary school, or daycare center.
Operational Requirements
A complete set of standard operating procedures to be implemented is of utmost importance for a cannabis dispensary. These are necessary processes to be followed when the dispensary starts operating after being granted its license. They should include the following:
- Policies and processes for employment covering job descriptions, with a focus on training and supervision of the employees.
- Security plans and procedures to prevent entry of any unauthorized personnel to restricted areas and to prevent theft and damage. A strict operating time of 8 am to 8 pm is to be maintained by cannabis dispensaries, and only adults who are 18 years of age and above, would be permitted to enter.
- Recordkeeping of all transactions taking place in the dispensary and proper inventory checks.
- Processes from receiving cannabis to dispensing cannabis, proper waste disposal, maintenance, cleaning and sanitation of the facility to maintain hygiene standards, and methods to prevent or control contamination.
- Workplace safety of employees and investigation of any complaints.
- Preventing unlawful diversion of cannabis and recall plans.
- Maintenance of confidentiality as per regulations.
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