KY auditor announces probe into lottery process for marijuana business licenses
Kentucky’s auditor is probing the launch of the state’s medical marijuana program, which included several lotteries held last fall for coveted licenses to open growing operations, dispensaries and other lucrative marijuana businesses.
In a release Thursday, April 17, Allison Ball announced an investigation into the state’s Office of Medical Cannabis and “its execution of the Kentucky Medical Cannabis Program.”
“My office has continued to receive complaints about how the Office of Medical Cannabis administered the lottery process for awarding medical cannabis business licenses,” Ball states in the release. “Kentuckians should have confidence that state offices operate with transparency and integrity, and my office is committed to ensuring those standards.”
So what elements of the process for awarding licenses might Ball focus on?
What’s the controversy around how Kentucky has awarded medical marijuana business licenses?
In the months leading up to the January launch of Kentucky’s medical marijuana program, businesses were allowed to apply for licenses beginning in July 2024. A series of lotteries was held in the fall to distribute them to cultivators, processors and dispensaries.
For dispensaries, the state awarded an initial batch of 48 licenses for 11 licensing regions throughout Kentucky. The office received more than 4,000 applications from businesses interested in opening dispensaries, however.
Partnering with the Kentucky Lottery, the state’s Office of Medical Cannabis held its first lottery for cultivators and processors in late October.
Those were followed by dispensary lotteries held in November and December.
In explaining the decision to distribute marijuana business licenses via state-run lotteries, Gov. Andy Beshear has consistently described it as the fairest approach and one that can hopefully avoid years of lawsuits from applicants, which would slow the program’s launch indefinitely.
However, a series of reviews by Louisville Public Media found out-of-state residents dominated the lotteries for business licenses, tracing it back to a flood of applications from deep-pocketed companies.
For example, the co-founder and CFO of an Arkansas-based marijuana company, Dark Horse Cannabis, was found to have ties to 350 of the new businesses created in the month leading up to the application deadline.
To date, medical marijuana sales have not begun in Kentucky and industry insiders anticipate it may be months still before they can begin. Kentucky resident can apply and become a medical cannabis cardholder, however.
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This story was originally published April 17, 2025 at 1:32 PM.