Kentucky auditor to investigate license lottery system
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Kentucky Auditor Allison Ball announced an investigation into the state’s Office of Medical Cannabis and its execution of the new 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 said. “Kentuckians should have confidence that state offices operate with transparency and integrity, and my office is committed to ensuring those standards.”
Green Market Report wrote in December that Kentucky’s Gov. Andy Beshear defended the process against criticism that out-of-state companies dominated the new program. The state selected 12 dispensary operators out of 1,200 applications for the Louisville and Lexington regions during a televised lottery at the Kentucky Lottery Corp. headquarters.
Concerns were also raised about application “stacking” by well-funded operators. One Arkansas-based company, Dark Horse Cannabis, organized approximately 350 businesses that submitted more than 100 applications at costs ranging from $3,000 to $30,000 each. That resulted in Dark Horse winning several licenses across different categories, according to Kentucky Public Radio.
The auditor’s office said it will begin its investigation by examining OMC’s business license application and award processes.
Kentucky’s medical cannabis program hauled in $27.5 million in application fees during its two-month application window, according to state officials. The Cabinet for Health and Family Services, which oversees the program, received 4,998 applications between July 1 and Aug. 31, 2024, the agency said in an email to local station WBKO-TV.
The state said it plans to use the funds to hire staff and develop IT systems necessary to implement the program, which launched about a month ago.
The awarded licenses have also created the rise of a secondary market, as some of those that received licenses are already selling them. For example, 420property listed four active Kentucky licenses for sale, ranging in price from $250,000 to $4.9 million. CannDev advertised that it had exclusive access to more than a dozen medical retail and cultivation licenses in the state that are available for acquisition.