In 2023, the Kentucky General Assembly passed Senate Bill 47, which created the legal framework for medical cannabis in Kentucky. Much of Senate Bill 47 would not take effect until January 1, 2025, when cannabis business operations could legally begin operating. Subsequent efforts to modify the legal framework resulted in the passage of House Bill 829 (Ky 2024), which signed into law by Governor Beshear on April 17, 2024.
One important change under House Bill 829 is the timing of licensure applications and approvals. Under Senate Bill 47, the Cabinet for Health and Family Services (through a new “Office of Medical Cannabis”) could not license a cannabis business until January 1, 2025, the same date that medical cannabis sales could occur. House Bill 829 alters this timing, authorizing business licensing processes to begin on July 1, 2024. The Office of Medical Cannabis has concurrently promulgated emergency and ordinary regulations to implement the business licensing requirements of Senate Bill 47 and House Bill 829. The initial business applications period will close on August 31, 2024, with eligibility determinations occurring in October 2024. Cannabis businesses can begin operating in 2024 following approval of their licenses, although dispensaries would not be permitted to open to the public or sell cannabis products until January 1, 2025. Due to growing season limitations, the new timeframe will not likely allow for medical cannabis products to be in dispensaries on January 1, 2025, without further legislation or regulatory assistance. Regardless, the revised timeframe will help mitigate the delay as opposed to the timing set forth in Senate Bill 47.
A second important change concerns local government actions related to prohibiting cannabis businesses or, if the local government permits cannabis business operations in its jurisdiction, passing local ordinances regulating the time, place and manner of those businesses. Under Senate Bill 47, local governments were permitted to prohibit all cannabis business operations within their jurisdictions, subject to a local petition process to enable those businesses. They were also permitted to regulate the time, place and manner of cannabis business operations, provided those regulations did not impose an undue burden or make cannabis business operations unreasonable or impractical.
House Bill 829 provides additional clarification on these options. For businesses licensed by Cabinet in 2024, they would remain subject to potential prohibition actions by the local governments up until January 1, 2025. Thereafter, if the local government attempts to prohibit cannabis operations, the previously-licensed businesses would be permitted to continue operations. House Bill 829 also clarifies the ability of local governments to assess reasonable local fees for cannabis businesses, holding that the amount of the fees must be in accord with the additional costs caused by the operations of cannabis businesses in their territory. In addition, House Bill 829 provides an express option for local governments to submit the question of cannabis business operations to popular vote through a resolution executed and submitted to the local county clerk on or before the second Tuesday of August preceding the day established for a regular election. Although House Bill 829 provides some limitations on the ability of local governments to restrict cannabis businesses, it is vital that business applicants and local authorities continue to engage one another as well as consultants and experts in the industry.
House Bill 829 also clarifies the scope of the Cabinet’s authority to inspect, investigate and sanction cannabis businesses. House Bill 829 expressly states that the Office of Medical Cannabis is authorized to enter and inspect cannabis businesses without notice to assess whether the business is in compliance Senate Bill 47, House Bill 829 and the related regulations. The Office of Medical Cannabis also has subpoena power (for witnesses and documents) and can fine, suspend, revoke and issue other penalties to cannabis business operations. Businesses may appeal those decisions under KRS Chapter 13B, Kentucky’s statutory requirements for administrative appeals, through which cannabis business owners can demand an evidentiary hearing. Final decisions by the Office of Medical Cannabis may be appealed to the local circuit court. During administrative appeals, cannabis businesses operating under suspensions may continue to utilize preexisting inventories but may not acquire new products. Cannabis businesses should be careful to comply with the statutory and regulatory requirements for their businesses, including consulting with experts and counsel on their compliance.
One notable exclusion from House Bill 829 was any form of consultation with a licensed pharmacist before a cardholder could receive medical cannabis. Earlier versions of the bill contained this requirement, but it was removed in the final version. In lieu of such a requirement, dispensaries will be required to deliver a “Medical Cannabis Advisory Pamphlet” in written or electronic form to all first time users of that dispensary as well as every twelve months thereafter, or if “material” changes occur to the Pamphlet. Further, House Bill 829 did add several specific inclusions for pharmacist participation in the process. One primary addition is the appointment of a pharmacist to the Board of Physicians and Advisors, a state level board charged with several duties including:
- reviewing and making recommendations on the amount of delta-9 THC that constitutes the defined daily, ten day and thirty day supplies set forth in SB 47;
- reviewing scientific data and making recommendations related to delta-9 THC limits on raw plant material, products intended for oral consumption and all other medical cannabis products;
- making recommendations to the Kentucky General Assembly for additions to or removals from the list of qualifying medical conditions; and
- development of the Medical Cannabis Advisory Pamphlet.
House Bill 829 includes additional restrictions, clarifications and changes to Senate Bill 47. The Office of Medical Cannabis has completed promulgation of the relevant regulations, which further expands the requirements that any cannabis business must follow to operate legally in Kentucky. The regulatory requirements remain subject to change through the regulatory process. It is vital to have experienced and knowledgeable counsel during all phases of cannabis business operations, from initial applications and forward.
Dentons will continue to monitor developments regarding the potential rescheduling of cannabis and its impact on the emerging Kentucky market. Dentons is the only firm with a cohesive cross-discipline international Cannabis Group providing sophisticated legal services for all clients’ needs and serving clients globally. We use best-in-class lawyers to provide legal counsel in all substantive areas affecting clients in or impacted by the cannabis industry.
