Kentucky Inspector General Review Finds Medical Marijuana Licensing Process Was Fair and Transparent
- The independent review by Kentucky’s Office of Inspector General found the state's medical marijuana licensing process to be fair, transparent, and free of irregularities.
- The investigation examined the Office of Medical Cannabis’ application review, lottery process, and staff interviews, concluding the program was effective and unbiased.
- Kentucky received 5,002 applications for various licenses, with applications reviewed multiple times using consistent standards and a secure, public lottery drawing process.
- The report made recommendations for formal policy reviews, increased transparency, and greater participation in regulatory forums to improve future licensing rounds.
Kentucky’s Office of Inspector General has released an independent review finding that the state’s medical marijuana licensing process was fair, transparent and free of irregularities.
The review, conducted by the Finance and Administration Cabinet’s Office of Inspector General, examined the Office of Medical Cannabis’ process for reviewing applications and awarding the state’s first medical marijuana business licenses. The investigation was opened in May 2025 after the Office of Medical Cannabis requested an independent review following complaints and a separate inquiry announced by the auditor’s office.
The report concluded that the Office of Medical Cannabis created an “effective program that was fully transparent and fair to all licensure applicants.” Investigators reviewed the licensing rules, application procedures, lottery process, interviews with staff and the applications of every company selected for a license.
Kentucky received 5,002 total applications during its initial licensing phase, including 4,998 during the first application window and four additional applications for safety compliance facility licenses. The first round included licenses for cultivators, processors, dispensaries and safety compliance facilities.
According to the report, applications were reviewed multiple times by trained staff using consistent standards. Processor and cultivator applications returned for correction were reviewed at least four times, while dispensary applications were reviewed at least six times. Applicants with deficiencies were given 10 days to correct them.
The report also found no evidence of bias among reviewers and no conflicts of interest that affected the process.
The state used the Kentucky Lottery Corporation to conduct the drawings for licenses. The lottery process included de-identifying applicants before the drawing, using secured lottery equipment and livestreaming the drawings publicly. Investigators found no anomalies or irregularities in the lottery process.
The review also addressed concerns about management agreements, noting that Kentucky law does not prohibit one manager or management group from overseeing multiple medical marijuana businesses, as long as the businesses have separate owners, locations and capital.
The report did make recommendations, including that the Office of Medical Cannabis formally review the first licensing round before launching a second round and update policies and procedures as needed. It also recommended posting formal policies online and having leadership participate in forums with other state medical marijuana regulators to continue improving the program.
Kentucky legalized medical marijuana in 2023, with the program officially launching in 2025. The state’s first license lotteries were held in late 2024, setting the foundation for the regulated market.