Kentucky Dispensary License: How to Start a Dispensary in KY

Are you interested in opening a medical cannabis dispensary in Kentucky? With the state’s new medical cannabis program, now is the perfect time to get involved. This guide will walk you through everything you need to know about obtaining a Kentucky dispensary license and starting your own dispensary.

Approved Activities

Dispensary license holders in Kentucky are authorized to:

• Acquire medical cannabis from licensed cultivators, processors, producers, or other dispensaries.
• Sell and deliver medical cannabis products and accessories to registered qualified patients, designated caregivers, and visiting qualified patients.
• Provide educational materials to medical cardholders and qualified visiting patients.

However, dispensaries are prohibited from:

• Selling products with THC content over the allowable limits or any product containing vitamin E acetate.
• Dispensing cannabis to individuals under 21 or minors, and allowing anyone under 18 on the premises.
• Operating within 1,000 feet of a school or daycare center.

Number of Dispensary Licenses Available

On July 1, 2024, Kentucky will accept applications for the initial forty-eight (48) dispensary licenses. The state will be divided into eleven medicinal cannabis regions, each with a specific number of dispensary licenses available (more on this below).

Thereafter, starting January 1, 2025, the Cabinet will review the need for issuing new licenses on a quarterly basis.

Regulations Relevant to Kentucky Dispensaries

Dispensaries must comply with several regulations to operate legally. Below are the dispensary related regulations:

In short, Kentucky dispensary license applicants must comply with:

• Criminal background checks are required for prospective employees.
• Employees must be at least 21 years old and free of disqualifying felony convictions.
• Dispensaries cannot hold management roles or financial interests in safety compliance facilities.
• Applicants must meet qualifications detailed in 915 KAR 1:010E, 915 KAR 1:020E, and 915 KAR 1:070.

Application Requirements for Kentucky Dispensary License

To apply for a dispensary license in Kentucky, applicants must meet several detailed requirements as outlined by the Cabinet for Health and Family Services. Here is a summary of the key application requirements:

1. Legal and Business Information:
   • Provide the legal name, business type, trade name (if applicable), mailing address, federal tax ID number, website, email, and phone number.
   • Confirm the entity is registered with the Kentucky Secretary of State and in good standing.
2. Ownership and Management Details:
   • List the names, addresses, dates of birth, and resumes of principal officers and board members.
   • Disclose any individual or entity with at least 10% ownership interest in the business.
   • Include details of any parent companies and their ownership percentages.
3. Location and Site Plans:
   • Submit the proposed location’s physical address and GPS coordinates.
   • Provide a contingent agreement for property sale or lease, or an existing deed or lease.
   • Include a detailed site plan for the proposed business.
4. Financial Information:
   • Show proof of capital requirements: $150,000 for dispensaries.
   • Submit a financial plan, including budget, cash flow planning, and debt management.
5. Compliance and Background Checks:
   • Conduct criminal background checks on prospective employees.
   • Ensure no employment of individuals under 21 or those with disqualifying felony convictions.
   • Disclose any felony convictions of principal officers or board members and any past business non-compliance issues.
6. Operational Plans:
   • Provide detailed plans of operation addressing:
     • security,
     • employee training,
     • transportation,
     • storage,
     • labeling,
     • inventory management, and
     • prevention of unlawful diversion of cannabis.
7. Additional Documentation:
   • Include business entity formation documents, such as articles of incorporation or bylaws.
   • Provide a timeline for starting business activities and any management service agreements.
   • Ensure all required attestations and acknowledgments are included and notarized.

For a complete list of requirements and further details, refer to the full administrative regulation documents, or schedule a call with our Kentucky cannabis consultants to have your questions answered.

Fees & Costs for Dispensaries in Kentucky

The costs associated with obtaining and maintaining a dispensary license include:

• Application Fee: $5,000 (nonrefundable)
• Initial Licensing Fee: $30,000
• Annual Licensing Fee: $15,000
• Capital Requirements (aka sufficient capital): $150,000

One key thing to note is that you must show proof of the capital requirement to qualify for a dispensary license. This includes documentation of sufficient capital available to the applicant, either on deposit or through extension of credit from one (1) or more financial institutions.

Dispensary Licensing Regions in Kentucky

To ensure patient access to medicinal cannabis across Kentucky, the Cabinet for Health and Family Services issues dispensary licenses within designated regions. The state is divided into eleven medicinal cannabis regions, each with specific counties.

This regional approach helps to evenly distribute Kentucky dispensaries and ensure that patients in all areas have access to medical cannabis.

Here are the designated regions:

1. Region 1 (Bluegrass): Anderson, Bourbon, Boyle, Clark, Fayette, Franklin, Garrard, Harrison, Jessamine, Madison, Mercer, Scott, and Woodford counties.
2. Region 2 (Kentuckiana): Bullitt, Henry, Jefferson, Oldham, Shelby, Spencer, and Trimble counties.
3. Region 3 (Northeast): Bath, Boyd, Carter, Elliott, Fleming, Greenup, Lewis, Mason, Menifee, Montgomery, Morgan, Nicholas, Robertson, and Rowan counties.
4. Region 4 (South Central): Allen, Barren, Butler, Edmonson, Logan, Metcalfe, Monroe, Simpson, and Warren counties.
5. Region 5 (Cumberland): Bell, Casey, Clinton, Cumberland, Harlan, Knox, Laurel, Lincoln, McCreary, Pulaski, Rockcastle, Russell, Wayne, and Whitley counties.
6. Region 6 (Mountain): Breathitt, Clay, Estill, Floyd, Jackson, Johnson, Knott, Lawrence, Lee, Leslie, Letcher, Magoffin, Martin, Owsley, Perry, Pike, Powell, and Wolfe counties.
7. Region 7 (Pennyrile): Caldwell, Christian, Hopkins, Lyon, Muhlenberg, Todd, and Trigg counties.
8. Region 8 (West Kentucky): Ballard, Calloway, Carlisle, Crittenden, Fulton, Graves, Hickman, Livingston, McCracken, and Marshall counties.
9. Region 9 (Lincoln Trail): Adair, Breckinridge, Grayson, Green, Hardin, Hart, Larue, Marion, Meade, Nelson, Taylor, and Washington counties.
10. Region 10 (Northern Kentucky): Boone, Bracken, Campbell, Carroll, Gallatin, Grant, Kenton, Owen, and Pendleton counties.
11. Region 11 (Green River): Daviess, Hancock, Henderson, McLean, Ohio, Union, and Webster counties.

For a visual representation, you can refer to the map below which clearly identifies each medicinal cannabis region in Kentucky.

Dispensary License Allocation:

• Minimum Licenses per Region: Each of the eleven regions will have at least four dispensary licenses available.
• Urban Areas: Regions containing an urban-county government or a consolidated local government will have at least six dispensary licenses. Out of these, two licenses must be issued to eligible businesses that physically locate their dispensary in the counties with an urban-county government or a consolidated local government.
• Rural Areas: For all counties without an urban-county government or a consolidated local government, there shall be no more than one dispensary per county.

By understanding the regional distribution, potential dispensary owners can better plan their applications and ensure they are targeting the appropriate areas for their business.

How to Apply for a Kentucky Dispensary license

1. Prepare Your Application: Gather all necessary documents, including operating plans, financial statements, formation documents, proof of capital, etc (see above for full list).
2. Submit Your Application: Apply through the online portal, which opens on July 1, 2024. Ensure all information is accurate and complete to avoid delays.
3. Await Review: The application review process is expedited, but thorough. Ensure your application meets all state requirements.
4. Participate in the Lottery: If the number of applications exceeds the available licenses, your application will enter a lottery.

Closing on How to Start a Kentucky Dispensary

Starting a medical cannabis dispensary in Kentucky involves navigating a complex regulatory landscape. However, with careful preparation and adherence to state guidelines, you can successfully obtain a dispensary license and contribute to the growing medical cannabis industry in Kentucky. For expert assistance and guidance, contact our Kentucky cannabis consultants today and take the first step towards your dispensary business.