Throughout the month of September, the Kentucky Medical Cannabis Program (“KMCP”) will continue reviewing applications and preparing for its first round of lottery drawings. Recognizing the need to grow and process cannabis before it can be sold through a dispensary, Governor Beshear indicated in a recent update that the first lottery drawings will be limited to cultivator and processor licenses. This drawing is projected to occur in October 2024.
For those selected to hold cultivator licenses, there are significant regulatory requirements that must be met before the business can commence operations. Applicants should begin thinking now about how they will meet those requirements so they can be best prepared to move forward.
For example, cultivation licensees will need to consider the following:
- Land use approvals. The licensee will need to ensure they have all required land use approvals and permits from their local jurisdiction before commencing construction/buildout of the facility.
- Canopy space and limitations for their cultivation tier, and how best to maximize the limited space for growth. Keep in mind that canopy space does not include areas used for seed storage, seedlings, tissue cultures or clones shorter than eight inches.
- Security controls. In addition to other security requirements and access restrictions, cultivators must maintain strict control over locked limited access areas for seeds, seedlings, tissue cultures, clones and plants, as well as rejected product pending destruction. Further, careful attention must be addressed towards fire prevention and other protections for cannabis plant stocks.
- Contracts/Equipment. The licensee will need to establish vendor relationships and enter into contracts for equipment, supplies, and services; and develop plans to calibrate and maintain equipment.
- Environmental controls. The licensee will need to plan for environmental controls on site that are vital to maximizing growth potential, avoiding pests, fungi and other potential yield destruction, and meeting compliance requirements for chemicals that may be found in herbicides and pesticides. Such controls also include maintaining adequate water supplies and backup power sources, as well as researching and installing appropriate HVAC systems and lighting.
- Pesticide use. The licensee will need to obtain proper certification from the Kentucky Department of Agriculture if the business intends to use pesticides, and will need to comply with all applicable regulations governing the use of pesticides, including, but not limited to, those identified in the medical cannabis regulations.
For initial seedling, tissue and clone stocks, it is not yet clear what sources of cannabis plants will be allowed by the KMCP, and each state that authorizes medical cannabis may institute unique requirements on sourcing. For example, the United States Department of Agriculture, under the terms of the Agriculture Improvement Act of 2018, has previously issued guidance on shipping hemp products across state lines. Seeds, seedlings, and tissue cultures qualifying as hemp can be sources of initial plants for Kentucky. Applicants granted cultivator licenses should closely monitor releases from the KMCP and the Kentucky Legislature for clarity on sourcing. Prior to the first day of cultivation activities, each cultivation licensee will need to establish a specific set of standard operating procedures (SOPs), and, importantly, ensure all employees are sufficiently trained on the SOPs in order to avoid potential compliance issues. Licensees are required to have these SOPs available on site for review by the regulators upon request.
These SOPs must address, at a minimum, the following:
- Employment policies and procedures
- Security, including:
- Staff identification measures, including use of employee identification badges
- Monitoring of attendance of staff and visitors
- Alarm systems
- Video surveillance
- Monitoring and tracking inventory, including use of the Commonwealth’s electronic monitoring system and seed to sale tracking system (Metrc)
- Personnel security
- Transportation of medicinal cannabis and how to properly secure medicinal cannabis in the event of a traffic collision or transport vehicle malfunction
- Cash management and anti-fraud procedures
- Measures to prevent loitering, which shall include signage
- Storage of seeds, seedlings, tissue cultures, clones not taller than eight (8) inches, medicinal cannabis plants, medicinal cannabis, or medicinal cannabis products
- The process for receiving, growing, cultivating, harvesting, handling, packaging, labeling, storing, transporting, and disposing of seeds, seedlings, tissue cultures, clones not taller than eight (8) inches, medicinal cannabis plants, medicinal cannabis, or medicinal cannabis products and a process for handling, tracking, transporting, storing, and disposing of medicinal cannabis waste
- The process for receiving, growing, cultivating, harvesting, handling, packaging, labeling, storing, transporting, and disposing of seeds, seedlings, tissue cultures, clones not taller than eight (8) inches, medicinal cannabis plants, medicinal cannabis, or medicinal cannabis products and a process for handling, tracking, transporting, storing, and disposing of medicinal cannabis waste
- Workplace safety, including conducting safety checks
- Contamination
- Maintenance, cleaning, and sanitation of equipment used to grow and cultivate medicinal cannabis
- Maintenance and sanitation of the cultivator’s facility
- Application of pesticides, fertilizers, and herbicides to medicinal cannabis at any point during the growing, cultivating, and harvesting processes
- Proper handling and storage of any chemical or substance used in growing medicinal cannabis
- Logging the use of all pesticides and chemical applications applied to medicinal cannabis and medicinal cannabis products
- Quality control, including strict regulation of the amount of delta-9 tetrahydrocannabinol content in each medicinal cannabis harvest batch, proper labeling, and minimization of medicinal cannabis contamination
- Recordkeeping and inventory control
- Investigation of complaints and potential adverse events received from other cannabis businesses, cardholders, or medicinal cannabis practitioners regarding the cultivator’s operations
- Preventing unlawful diversion of medicinal cannabis
- A recall plan
Dentons will continue to monitor developments regarding the Kentucky Medical Cannabis Program, and assist new cannabis businesses in Kentucky with the planning, implementation, and ongoing operations of their cannabis businesses. If your business needs assistance preparing required SOPs, including plans for recalls of cannabis/cannabis products and workplace safety plans that comply with applicable state and federal regulations or any of the other required SOPs listed above, please reach out.
