915 KAR 1:020 - [Effective until 5/7/2031] Cannabis business licenses
RELATES TO: KRS Chapter 13B, Chapter 218B, 304.39-110, 523.100
NECESSITY, FUNCTION, AND CONFORMITY: KRS 218B.140 requires the Cabinet for Health and Family Services to promulgate administrative regulations establishing procedures for the issuance, renewal, suspension, and revocation of cannabis business licenses. This administrative regulation establishes those procedures.
Section 1. General
Requirements for Cannabis Business Licenses.
(1) The cabinet shall issue a license, by
name and address, to a cannabis business only for the specific location
identified by the cannabis business during the application and issuance
process. A license is only valid for the person or entity named in the license
and only for the activity and location specified in the license.
(2) A licensed cannabis business shall
conspicuously display its license within the premises of the cannabis business
in a manner that is visible to visitors upon initial entry into its
facility.
(3) A license shall not
be issued to a cannabis business for operation within a personal residence or
any other location where the cabinet or its authorized agents or law
enforcement have limited access.
(4) A license shall not be issued to a
cannabis business for a site or facility located on lands owned by the United
States of America or the Commonwealth of Kentucky.
(5) A license is valid for one (1) year from
the date of issuance as shown on the license.
Section 2. License Fees for Cannabis
Businesses.
(1) A cannabis business shall pay
the applicable license fee by credit card or automated clearing house (ACH)
transfer to the cabinet within fifteen (15) calendar days of receipt of the
invoice from the cabinet. The cabinet shall not issue a license to a cannabis
business that fails to timely pay the applicable license fee.
(2) The initial nonrefundable license fees
shall be:
(a) Tier I cultivator:
$12,000;
(b) Tier II cultivator:
$25,000;
(c) Tier III cultivator:
$50,000;
(d) Tier IV cultivator:
$100,000;
(e) Processor:
$25,000;
(f) Producer: $25,000 plus
the applicable cultivator tier initial license fee;
(g) Dispensary: $30,000; and
(h) Safety compliance facility:
$12,000.
(3) The annual
renewal license fees, which are refundable if the renewal application is
denied, shall be:
(a) Tier I cultivator:
$12,000;
(b) Tier II cultivator:
$25,000;
(c) Tier III cultivator:
$50,000;
(d) Tier IV cultivator:
$100,000;
(e) Processor:
$25,000;
(f) Producer: $25,000 plus
the applicable cultivator tier renewal license fee;
(g) Dispensary: $30,000; and
(h) Safety compliance facility:
$12,000.
Section
3. Initial Licensure of Cannabis Businesses and Use of Lottery.
(1) The cabinet shall publish notice of the
number and category of cannabis business licenses available for distribution at
the close of an initial license application period and provide the time frame
during which initial license applications shall be accepted by the cabinet.
This notice shall be published on the Web site of the Kentucky Medical Cannabis
Program, https://kymedcan.ky.gov.
(2) In order to promote patient access to
medicinal cannabis across the commonwealth, the cabinet shall issue dispensary
licenses within designated regions. The cabinet shall publish a map clearly
identifying the medicinal cannabis regions on the Web site of the Kentucky
Medical Cannabis Program. The eleven (11) medicinal cannabis regions in the
commonwealth are:
(a) Region 1 (Bluegrass):
The geographical region comprised of the counties of Anderson, Bourbon, Boyle,
Clark, Fayette, Franklin, Garrard, Harrison, Jessamine, Madison, Mercer, Scott,
and Woodford;
(b) Region 2
(Kentuckiana): The geographical region comprised of the counties of Bullitt,
Henry, Jefferson, Oldham, Shelby, Spencer, and Trimble;
(c) Region 3 (Northeast): The geographical
region comprised of the counties of Bath, Boyd, Carter, Elliott, Fleming,
Greenup, Lewis, Mason, Menifee, Montgomery, Morgan, Nicholas, Robertson, and
Rowan;
(d) Region 4 (South
Central): The geographical region comprised of the counties of Allen, Barren,
Butler, Edmonson, Logan, Metcalfe, Monroe, Simpson, and Warren;
(e) Region 5 (Cumberland): The geographical
region comprised of the counties of Bell, Casey, Clinton, Cumberland, Harlan,
Knox, Laurel, Lincoln, McCreary, Pulaski, Rockcastle, Russell, Wayne, and
Whitley;
(f) Region 6 (Mountain):
The geographical region comprised of the counties of Breathitt, Clay, Estill,
Floyd, Jackson, Johnson, Knott, Lawrence, Lee, Leslie, Letcher, Magoffin,
Martin, Owsley, Perry, Pike, Powell, and Wolfe;
(g) Region 7 (Pennyrile): The geographical
region comprised of the counties of Caldwell, Christian, Hopkins, Lyon,
Muhlenberg, Todd, and Trigg;
(h)
Region 8 (West Kentucky): The geographical region comprised of the counties of
Ballard, Calloway, Carlisle, Crittenden, Fulton, Graves, Hickman, Livingston,
McCracken, and Marshall;
(i) Region
9 (Lincoln Trail): The geographical region comprised of the counties of Adair,
Breckinridge, Grayson, Green, Hardin, Hart, Larue, Marion, Meade, Nelson,
Taylor, and Washington;
(j) Region
10 (Northern Kentucky): The geographical region comprised of the counties of
Boone, Bracken, Campbell, Carroll, Gallatin, Grant, Kenton, Owen, and
Pendleton; and
(k) Region 11 (Green
River): The geographical region comprised of the counties of Daviess, Hancock,
Henderson, McLean, Ohio, Union, and Webster.
(3) The cabinet shall issue at least four (4)
dispensary licenses per medicinal cannabis region. For regions containing an
urban-county government or a consolidated local government, the cabinet shall
issue at least six (6) dispensary licenses, two (2) of which shall be issued to
eligible cannabis businesses that physically locate their dispensary in the
counties with an urban-county government or a consolidated local government.
For all counties without an urban-county government or a consolidated local
government, there shall be no more than one (1) dispensary per
county.
(4) A dispensary licensee
shall not change its retail location to another location within the same region
without prior cabinet approval. A dispensary licensee shall not change its
retail location to outside of the region where it was initially
licensed.
(5) The licenses for
cultivators, processors, producers, and safety compliance facilities are not
subject to regional restrictions within the commonwealth, and those licensees
shall operate at the physical address identified on their respective
licenses.
(6) Applicants for
initial cannabis business licenses who comply with all application requirements
contained in KRS Chapter 218B and
915 KAR 1:010, and whose
applications are deemed complete by the cabinet, shall be eligible to receive
the license requested. If the number of eligible applications does not exceed
the maximum number of licenses available within a cannabis business category
following the close of an initial license application period, the cabinet shall
provide written notice to the eligible applicants that a license shall be
issued to them upon timely payment of the applicable license fee. When an
eligible applicant timely pays the applicable license fee, the cabinet shall
issue a copy of the license to the applicant that contains the cannabis
business's name, license number, physical location, issue date, and expiration
date.
(7) If the number of eligible
applications exceeds the maximum number of licenses available within a cannabis
business category following the close of an initial license application period,
the cabinet shall conduct a lottery to issue the licenses for that cannabis
business category. The cabinet shall notify the eligible applicants of their
entry into the lottery and publicly announce the date, time, and manner of
randomly selecting eligible applicants for the requested license. A lottery to
select the licensees in each cannabis business category, as needed, shall be
held in a manner that can be observed by the public.
(8) The cabinet may consult or contract with
a third-party lottery operator or other public agencies with relevant expertise
in conducting lotteries. The entity selected to conduct the lottery shall
conduct an independent lottery for each cannabis business category where the
number of eligible applicants exceeds the number of available licenses. The
cabinet shall assign a number to each eligible applicant in each license
lottery and maintain the confidentiality of the list(s) containing the eligible
applicants and their assigned numbers until after the random drawings have
occurred.
(9) The cabinet shall
provide written notice to the eligible applicants selected through the lottery
process that a license shall be issued to them upon timely payment of the
applicable license fee. When an eligible applicant timely pays the applicable
license fee, the cabinet shall issue a copy of the license to the applicant
that contains the cannabis business's name, license number, physical location,
issue date, and expiration date.
(10) Prior to license issuance, if an
eligible applicant selected through the lottery process needs to change their
location for cannabis business activities due to a local government prohibiting
all cannabis business operations within its territory as authorized by
KRS 218B.130 or other circumstances, a
provisional license may be issued to the eligible applicant upon timely payment
of the applicable license fee.
(a) If a
provisional license is issued, the provisional licensee shall have a maximum of
120 calendar days from issuance to request a change of location to an allowable
county or city under KRS Chapter 218B and this administrative regulation. If
the new location is approved by the program, a new license shall be issued that
contains the cannabis business's name, license number, physical location, issue
date, and an expiration date which shall be one (1) year from the date of
provisional license issuance.
(b)
If the provisional licensee fails to request a location change within 120
calendar days from issuance or the request is denied, the cabinet shall revoke
their provisional license and the license fee shall not be refunded.
(c) Provisional licenses shall not be sold or
transferred to another individual or entity and shall not authorize a
provisional licensee to begin any cannabis business activities.
(11) The cabinet shall provide
written notice to eligible applicants that were not selected through the
lottery process informing them of the same.
(12) If at the conclusion of the lottery
selection process an eligible applicant declines the license or fails to pay
its license fee within the required timeframe, the cabinet may conduct
supplemental license lotteries as needed until all available cannabis business
licenses have been issued and initial license fees paid. For any supplemental
lottery for a license within a cannabis business category, eligible applicants
who were not previously issued a license through the lottery process for that
cannabis business category shall be entered into the supplemental
lottery.
Section 4.
Requirements for Licensees Prior to First Day of Cannabis Business Activities.
(1) Prior to its first day of cannabis
business activities in the commonwealth, a licensee shall provide written
confirmation to the cabinet that:
(a) The
licensee has complied and will continue to comply with all applicable
requirements of KRS Chapter 218B, including
KRS 218B.095 and 915 KAR Chapter 1, and shall
make available all records and documentation verifying such compliance upon the
request of the cabinet;
(b) The
licensee has submitted its complete physical address and the global positioning
system (GPS) coordinates for any cannabis business activities to the cabinet
and confirmed its business is not located within 1,000 feet of an existing
elementary or secondary school or a daycare center. For the purpose of this
administrative regulation, 1,000 feet shall be measured in a straight line from
the nearest property line of an existing elementary school, secondary school,
or daycare center to the nearest property line of the licensee's place of
business. The cabinet shall have an opportunity to inspect the location prior
to the first day of cannabis business activities at that location in order to
identify any deficiencies for correction;
(c) The licensee has conducted and shall
continue to conduct criminal background checks of each person seeking to be a
principal officer, board member, agent, volunteer, or employee of the cannabis
business before that person begins work and shall not employ, take on as a
volunteer, or have as a board member, principal officer, or agent any person
who was convicted of a disqualifying felony offense or is younger than
twenty-one (21) years of age. The licensee shall maintain records of these
background checks and provide same to the cabinet during subsequent inspections
or upon request;
(d) The licensee
has obtained and shall maintain workers compensation insurance for all
employees in the commonwealth and shall pay all required employer contributions
to the Kentucky Office of Unemployment Insurance;
(e) The licensee has obtained and shall
maintain, at a minimum, commercial general liability insurance for $1,000,000
per occurrence and $2,000,000 per aggregate and commercial automobile insurance
as required by Kentucky law, specifically
KRS 304.39-110, for any vehicle used to transport
medicinal cannabis or medicinal cannabis products;
(f) The licensee has established written
standard operating procedures required by KRS Chapter 218B and 915 KAR Chapter
1, including those specific to its cannabis business category, and shall
provide written or electronic copies of the procedures to the cabinet during
inspections or upon request. The standard operating procedures that apply to
cannabis businesses include:
1.
Security;
2.
Recordkeeping;
3. Employee
qualifications, supervision, and training;
4. Quality assurance;
5. Adverse event reporting and
recall;
6. Waste disposal and
sanitation;
7. Transportation of
medicinal cannabis;
8. Inventory
management, including storage and labeling of medicinal cannabis;
9. Cash management and anti-fraud
procedures;
10. Odor mitigation and
control;
11. Preventing unlawful
diversion of medicinal cannabis; and
12. Incident reporting procedures to notify
the cabinet;
(g) The
licensee continues to maintain sufficient capital for operations of its
cannabis business for, at a minimum, the term of the license;
(h) The licensee has implemented appropriate
security measures to deter and prevent theft of medicinal cannabis and
unauthorized entrance into areas containing medicinal cannabis;
(i) The licensee has and shall continue to
display its license at all times in a conspicuous location within the premises
of the cannabis business in a manner that is visible to visitors upon initial
entry into its facility;
(j) The
licensee's principals, agents, employees, and volunteers have completed all
trainings required by the cabinet to be completed prior to its first day of
cannabis business activities in the commonwealth;
(k) The licensee understands how to properly
use the commonwealth's designated electronic monitoring system and seed to sale
tracking system for medicinal cannabis and shall use those systems as required
throughout the entirety of its licensure period;
(l) The licensee has implemented appropriate
odor mitigation procedures or technics to ensure the capture of any potential
fugitive odors emitted by the facility;
(m) The licensee consents to reasonable
inspections, examinations, searches, and seizures; and
(n) The licensee swears and affirms that all
information and documentation provided to the cabinet is true and correct and
that any false statement made to the cabinet by the licensee is punishable
under the applicable provisions of
KRS 523.100.
(2) A licensee shall also provide the cabinet
with thirty (30) calendar days advance notice of its intended first day of
cannabis business activities in the commonwealth and allow the cabinet an
opportunity to inspect the licensee's site and facility prior to the first day
of cannabis business activities. The licensee shall promptly correct any
deficiencies identified by the cabinet during this inspection and shall not
commence operations until deficiencies are corrected and approved by the
cabinet. If the licensee fails to provide the notice required under this
section or fails to correct identified deficiencies, the cabinet may take one
(1) or more of the actions described in Section 12 of this administrative
regulation.
(3) Once a cultivator
or producer has received approval from the cabinet to commence operations, the
cultivator or producer shall:
(a) Bring a
start-up inventory of medicinal cannabis seeds, seedlings, tissue cultures,
clones, and plants into its facility;
(b) Submit a written request to the cabinet
via electronic mail to kymedcanreporting@ky.gov requesting that the cabinet
open a window in the state's designated seed to sale tracking system for the
cultivator or producer to enter its start-up inventory of medicinal cannabis
seeds, seedlings, tissue cultures, clones, and plants into the system. This
written request shall include the number and strain of all medicinal cannabis
seeds, seedlings, tissue cultures, clones, and plants brought into the
facility;
(c) Have fourteen (14)
calendar days from receipt of the cabinet's approval of the cultivator or
producer's written request in which to enter its start-up inventory into the
state's designated seed to sale tracking system. A cultivator or producer shall
enter its start-up inventory into the state's designated seed to sale tracking
system as follows:
1. Seeds shall be entered
into the system as a package;
2.
Seedlings, tissue cultures, and clones shall be entered into the system as a
batch; and
(d) Notify
the cabinet in writing via electronic mail to kymedcanreporting@ky.gov when all
its start-up inventory has been fully and accurately entered into the state's
designated seed to sale tracking system and confirm the number and strain of
medicinal cannabis seeds, seedlings, tissue cultures, clones, and plants
brought into the facility.
(4) Following acquisition of its start-up
inventory, a cultivator or producer may submit a written request to the cabinet
via electronic mail to kymedcanreporting@ky.gov requesting that the cabinet
open a window in the state's designated seed to sale tracking system for the
cultivator or producer to enter new medicinal cannabis seeds, seedlings, tissue
cultures, clones, or plants into the system. This written request shall:
(a) State the proposed date to bring new
inventory into the facility; and
(b) Provide the number and strain of all new
medicinal cannabis seeds, seedlings, tissue cultures, clones, and plants that
the cultivator or producer requests to bring into the facility.
(5) Upon receipt of the cabinet's
approval of a written request made pursuant to subsection (4) of this section,
the cultivator or producer shall have seven (7) calendar days to enter its new
inventory into the state's designated seed to sale tracking system. A
cultivator or producer shall enter its new inventory into the state's
designated seed to sale tracking system as described in subsection (3)(c) of
this section. A cultivator or producer shall notify the cabinet in writing via
electronic mail to kymedcanreporting@ky.gov when all new inventory has been
fully and accurately entered into the state's designated seed to sale tracking
system and confirm the number and strain of medicinal cannabis seeds,
seedlings, tissue cultures, clones, and plants brought into the
facility.
Section 5.
Requirements for Licensees During Licensure Period.
(1) A licensee shall only hold licenses in
one (1) cannabis business category at any given time, except as provided in
Section 10(4) of this administrative regulation. A licensee may hold multiple
licenses in the same cannabis business category as long as each license
contains a separate and distinct physical address where the cannabis business
conducts licensed cannabis activities and the licensee is otherwise in
compliance with the requirements of KRS Chapter 218B and 915 KAR Chapter 1,
including any geographic restrictions contained in this administrative
regulation.
(2) Duty to report.
(a) During the licensure period, a licensee
shall notify the cabinet in writing of any change in facts or circumstances
reflected in the initial license application, supplemental written
confirmations, or any license renewal application submitted to the cabinet, or
any newly discovered fact or circumstance which would have been included in the
application or information provided to the cabinet if known at the time the
information was submitted. This duty to report includes:
1. Notifying the cabinet of any physical
change, alteration, or modification to a licensed facility that materially or
substantially alters the facility or its usage, including an increase or
decrease in the total square footage of the facility;
2. Significant electrical modifications that
require inspection by local authorities; and
3. Sealing off, creation of, or relocation of
a common entryway, doorway, passage, or other means of ingress or egress when
the common entryway, doorway, or passage alters or changes limited access
areas.
(b) During the
licensure period, a licensee shall notify the cabinet following knowledge or
discovery of the following events:
1.
Inventory discrepancies;
2.
Diversion, theft, or loss of any medicinal cannabis or medicinal cannabis
product;
3. Unauthorized
destruction of medicinal cannabis;
4. Any criminal proceeding involving the
licensee's owners, principal officers, board members, employees, volunteers,
financial backers, or agents arising out of actions taken on the licensee's
premises or while using licensee property;
5. Security alarm activation or other event
that requires response by law enforcement or security personnel;
6. Any loss, unauthorized dissemination, or
unauthorized alteration of records related to medicinal cannabis, cardholders,
employees, volunteers, or agents;
7. Accidents involving transport vehicles
that occur while the licensee is transporting or delivering medicinal
cannabis;
8. Any act involving
cultivating, processing, producing, testing, transporting, or dispensing
medicinal cannabis by any person that may create a health or safety risk to
cardholders or the general public;
9. A dispensary declines the sale of
medicinal cannabis to a cardholder; and
10. A dispensary desires to prohibit a
cardholder from entering its premises.
(c) The notifications required under this
subsection shall be:
1. Provided on a form
prescribed by the cabinet and available on the Web site of the Kentucky Medical
Cannabis Program, https://kymedcan.ky.gov, that includes
time and date of the event, individuals involved, and a detailed description of
the event; and
2. Sent via
electronic mail to kymedcanreporting@ky.gov or through the cannabis business
licensing portal within twenty-four (24) hours of discovery or knowledge of the
event.
(d) If the
licensee fails to provide the notice required under this section, the cabinet
may take one (1) or more of the actions described in Section 12 of this
administrative regulation.
(e) In
the event a local government prohibits all cannabis business operations within
its territory in accordance with
KRS 218B.130, a licensee located within the
affected territory shall notify the cabinet in writing via electronic mail to
kymedcanreporting@ky.gov within twenty-four (24) hours of notification or
discovery of this prohibition, including all information known regarding the
prohibition, and may make a written request to the cabinet to change its
cannabis business location in accordance with Section 9 of this administrative
regulation.
(3)
Inspection and investigation.
(a) The cabinet
may conduct announced or unannounced inspections or investigations to determine
the licensee's compliance with KRS Chapter 218B and 915 KAR Chapter 1. These
investigations and inspections may occur during regular working hours and at
other reasonable times in order to inspect the licensee's place of business,
question privately any such principal officer, board member, agent, employee,
or employee's representative, and investigate such facts, conditions,
practices, or other matters deemed appropriate to determine whether the
licensee is operating in compliance with KRS Chapter 218B and 915 KAR Chapter
1. If a licensee refuses such entry onto its premises, the cabinet may apply to
the circuit court in the county in which the licensee is located for an order
to enforce the right of entry.
(b)
Following completion of an inspection or investigation, the cabinet shall have
the authority to confiscate, possess, transport, and destroy any medicinal
cannabis that has been deemed noncompliant with the standards established by
KRS Chapter 218B and 915 KAR Chapter 1.
(c) The cabinet's authorized representatives
shall also have the authority to:
1.
Administer oaths;
2. Examine
witnesses under oath;
3. Take
depositions;
4. Certify to official
acts;
5. Review records and
accounts;
6. Take
photographs;
7. Secure any other
evidence deemed necessary to evaluate compliance with KRS Chapter 218B and 915
KAR Chapter 1; and
8. Issue
subpoenas to compel the attendance of witnesses and parties and the production
of books, accounts, correspondence, memoranda, and other records considered
necessary and relevant to the matter under investigation by the
cabinet.
(d) When a
witness or party fails to comply with a subpoena issued by the cabinet, the
circuit court in the county in which the witness or party is located may compel
obedience by proceedings for contempt as in the case of disobedience of a
subpoena or order issued from such court or a refusal to testify therein, and
may adjudge such person guilty of contempt of court and punish him or her as
provided by law in other contempt cases. In any proceeding brought under this
paragraph, a circuit court may modify or set aside the subpoena.
(e) An investigation or inspection may
include:
1. Inspection of a licensee's site,
facility, vehicles, equipment, books, records, papers, documents, data, and
other physical or electronic information;
2. Interviews of licensee's principal
officers, board members, agents, employees, volunteers, or employee
representatives;
3. Interviews of
licensee's former principal officers, board members, agents, employees,
volunteers, or employee representatives; and
4. Inspection of equipment, instruments,
tools, machinery, and vehicles that are used to grow, process, package,
transport, and test medicinal cannabis.
(f) The cabinet and its authorized agents
shall have free access to review and, if necessary, make copies of books,
records, papers, documents, data, or other physical or electronic information
that relates to the business of the licensee, including financial data, sales
data, shipping data, pricing data, and employee data.
(g) Failure of a licensee to provide the
cabinet and its authorized agents immediate access to any part of a licensee's
site or facility, requested material, physical or electronic information, or
individual as part of an inspection or investigation may result in the
imposition of a civil monetary fine, suspension, or revocation of its license,
or an immediate cessation of operations pursuant to a cease-and-desist order
issued by the cabinet if continued operations would present a risk to the
health, safety, or welfare of cardholders or the public.
(h) The cabinet and its authorized agents
shall have access to any area within a licensee's site or facility, including
any area being used to store medicinal cannabis, and are authorized to collect
samples and test samples for testing.
(4) Training.
(a) Every principal, agent, employee, and
volunteer of a licensee who has direct contact with cardholders, or physically
handles cannabis seeds, seedlings, tissue cultures, clones, mature cannabis
plants, medicinal cannabis, or medicinal cannabis products, shall complete
applicable training required by the cabinet, which may include trainings for
cultivating, processing, testing, and retail sale of medicinal cannabis and
usage of the commonwealth's designated electronic monitoring system and seed to
sale tracking system required by
KRS 218B.140. The cabinet shall provide written
notice to licensees of the availability of any required training and the
frequency to complete the training.
(b) The cabinet shall publish a Guide to
Worker Safety and Health in the Kentucky Medical Cannabis Industry on the Web
site of the Kentucky Medical Cannabis Program,
https://kymedcan.ky.gov. Licensees
shall maintain a physical copy of the Guide to Worker Safety and Health in the
Kentucky Medical Cannabis Industry in their facility in a manner that is
readily accessible to its employees or agents and ensure that employees receive
annual training on the contents of the guide.
(c) A licensee shall train its principals,
agents, employees, and volunteers on its established standard operating
procedures within thirty (30) days of starting employment and once every
calendar year thereafter.
(d) A
licensee shall retain any training participation records of its principals,
agents, employees, and volunteers and make them available for inspection by the
cabinet upon request for a period of five (5) years.
(5) Insurance requirements.
(a) A licensee shall obtain and maintain
commercial general liability insurance for, at a minimum, $1,000,000 per
occurrence and $2,000,000 per aggregate.
(b) A licensee shall obtain and maintain
commercial automobile insurance as required by Kentucky law, specifically
KRS 304.39-110, for any vehicle used to transport
medicinal cannabis or medicinal cannabis products.
(c) A licensee shall obtain and maintain
workers' compensation insurance coverage for employees in the commonwealth and
shall pay all required employer contributions to the Kentucky Office of
Unemployment Insurance.
(d) The
insurance requirements contained in this section shall begin prior to the
licensee's first day of cannabis business activities in the commonwealth and
continue for as long as the licensee is operating under a license issued by the
cabinet.
(6) Reports.
(a) The cabinet may require ongoing reporting
of operational and financial information from the licensee in a form and manner
prescribed by the cabinet.
(b) The
cabinet shall require any reports necessary to carry out its responsibilities
under KRS Chapter 218B and 915 KAR Chapter 1.
Section 6. Failure to be Operational.
(1) If a licensee has not met the timeline
estimates provided in its initial license application to begin cannabis
business activities in the commonwealth, the licensee shall notify the cabinet
via electronic mail to kymedcanreporting@ky.gov within two (2) calendar days of
determining a need to adjust its timeline. In its written notice to the
cabinet, the licensee shall identify any operational deficiencies and provide
an explanation for failing to adhere to its timeline estimates.
(2) Within seven (7) calendar days of
providing the written notice required under this section, the licensee shall
submit a corrective action plan to the cabinet that sets forth the licensee's
updated timeline and a date certain for correcting the identified operational
deficiencies.
(3) If the licensee
fails to comply with its corrective action plan, the cabinet may impose
penalties or sanctions as outlined in Section 12 of this administrative
regulation.
Section 7.
Closure of a Licensed Cannabis Business Location.
(1) A licensee shall notify the cabinet via
electronic mail to kymedcanreporting@ky.gov immediately, but in no event fewer
than thirty (30) calendar days prior to the projected date of closure, upon
making a determination that it intends to close a cannabis business
location.
(2) A licensee shall not
accept or purchase seeds, seedlings, tissue cultures, clones, medicinal
cannabis plants, medicinal cannabis, medicinal cannabis products, medicinal
cannabis accessories, equipment, or medicinal devices or instruments for the
closing location as of the date of closure notice submitted to the
cabinet.
(3) The notice shall be
accompanied by the licensee's written plan for closing its cannabis business
location that includes:
(a) The projected date
of closure;
(b) How the licensee
intends to notify, prior to the projected date for closure, any person or
entity to which the licensee provides medicinal cannabis or medicinal cannabis
services from the closing location;
(c) How the licensee intends to dispose of
seeds, seedlings, tissue cultures, clones, medicinal cannabis plants, medicinal
cannabis, medicinal cannabis products, or other plant matter projected to still
be at the closing location at the time of the projected closure; and
(d) How the licensee intends to dispose of
equipment, devices, instruments, or medicinal cannabis accessories at the
closing location.
(4) A
licensee shall not remove or destroy any seeds, seedlings, tissue cultures,
clones, medicinal cannabis plants, medicinal cannabis, other plant matter,
medicinal cannabis products, equipment, medicinal cannabis accessories, or
medicinal devices or instruments until the cabinet has approved its plan for
closing the location and shall comply with all applicable requirements
regarding disposal of medicinal cannabis contained in 915 KAR Chapter
1.
(5) The cabinet may enter and
inspect the cannabis business location and facilities following receipt of the
licensee's closure plan to determine whether to approve the closure plan. If
the cabinet denies the closure plan, it shall notify the licensee in writing
and require the licensee to submit a revised closure plan within seven (7)
calendar days of the date of the denial notice. The cabinet shall review and
consider the revised closing plan and issue a determination within seven (7)
calendar days of receipt.
(6) If
the cabinet approves the licensee's closure plan, the licensee shall surrender
its license for the closing location to the cabinet on or before the date for
closure provided in the plan.
Section
8. Request for Approval of a Change in Cannabis Business
Ownership.
(1) If there is an impending change
in ownership of a licensee from the ownership listed in the initial license
application, the licensee shall submit a written request for approval of a
change in ownership to the cabinet via electronic mail to
kymedcanreporting@ky.gov. The cabinet shall consider the requirements for
ownership of a cannabis business contained in KRS Chapter 218B and 915 KAR
Chapter 1 as well as any other factors that the cabinet deems relevant in
making its determination on the request. The cabinet shall review the request
and notify the licensee in writing whether the request is approved or
denied.
(2) For each new individual
or entity that is part of the proposed change in ownership, the licensee shall
include in its request the information required of owners in the initial
license application. The licensee shall also provide the cabinet with the names
of all outgoing individuals or entities previously listed as owners.
(3) If the cabinet determines that a request
for approval of a change in ownership is lacking sufficient information upon
which to make a determination, the cabinet shall notify the licensee in writing
of the areas that require additional information and documentation. The
licensee shall have fifteen (15) calendar days from the mailing date of the
notice to provide the requested information and documentation to the cabinet. A
licensee's failure to provide the required information and documentation to the
cabinet by the deadline shall be grounds for the denial of the requested change
in ownership.
Section 9.
Request for Approval of a Change in Cannabis Business Location.
(1) A licensee desiring to change the
location of a site or facility shall submit a written request for approval of a
change in location to the cabinet via electronic mail to
kymedcanreporting@ky.gov. A change in location of a site or facility shall not
occur unless the cabinet approves the change in writing. The cabinet shall
consider the location requirements for a cannabis business contained in KRS
Chapter 218B and 915 KAR Chapter 1 in making its determination on the request,
and any other factors that the cabinet deems relevant. The cabinet shall review
the request and notify the licensee in writing whether the request is approved
or denied.
(2) A written request
for approval of a change in location shall include the reason(s) for requesting
the change and other information about the proposed new location, including:
(a) The proposed new physical address of the
cannabis business and the GPS coordinates for any proposed cultivation,
processing, producing, testing, or dispensing activities;
(b) Evidence that the licensee has the
authority to use the proposed site as a cannabis business;
(c) Confirmation that the proposed location
is not within 1,000 feet of an existing elementary or secondary school or a
daycare center at the time the request is made; and
(d) A site plan for the cannabis
business.
(3) If the
cabinet in its discretion approves the request, the cabinet shall issue an
amended license to the licensee reflecting the new physical address of the
cannabis business. The expiration date of the amended license shall be the same
as the expiration date of the previous license.
(4) Within ninety (90) calendar days of the
issuance by the cabinet of an amended license under this section, the licensee
shall change the location of its operation to the new location designated in
the new license. Simultaneously, the licensee shall cease to operate at the
former location and surrender its existing license to the cabinet. The
following conditions shall apply:
(a) At no
time may a licensee operate or exercise any of the privileges granted under the
license in both locations;
(b) The
cabinet may extend the ninety (90) day deadline for relocation for up to an
additional ninety (90) calendar days;
(c) The licensee shall notify the cabinet via
electronic mail to kymedcanreporting@ky.gov at least fifteen (15) calendar days
prior to beginning cannabis business activities at the new location;
and
(d) The cabinet may conduct an
inspection to determine the appropriateness of the new location, and upon
notification from the cabinet, the licensee shall immediately correct any
deficiencies identified by the cabinet during this inspection and shall not
commence operations at the new location until the deficiencies have been
corrected and approved by the cabinet.
(5) For dispensary licenses, the cabinet
shall not approve a change of location that is outside the boundaries of the
medicinal cannabis region for which the license was issued or that otherwise is
not in compliance with the location restrictions contained in Section 3(3) of
this administrative regulation.
Section 10. Request to Sell Cannabis Business
License.
(1) A licensee desiring to sell its
cannabis business license shall submit a written request for approval of the
sale to the cabinet via electronic mail to kymedcanreporting@ky.gov. The sale
of a cannabis business license shall not occur unless the cabinet approves the
sale in writing. The cabinet shall review the request and notify the licensee
in writing whether the proposed sale is approved or denied. The cabinet shall
consider the initial license application requirements for a cannabis business
contained in KRS Chapter 218B and
915 KAR 1:010, and any other
factors that the cabinet deems relevant in making its determination on the
request.
(2) A written request to
approve a license sale shall include the sale price, the reason(s) for
requesting the sale, and information about the proposed purchaser, including:
(a) All information and documentation
required to be submitted by a cannabis business as part of the initial license
application process in order to show the proposed purchaser would be eligible
for entry into a license lottery conducted according to this administrative
regulation;
(b) Signed attestations
from the proposed purchaser that are required as part of the initial license
application process;
(c) A
transition plan for transferring the license from the licensee to the proposed
purchaser; and
(d) A notarized
affidavit from the proposed purchaser swearing and affirming that all
information and documentation provided to the cabinet along with the request is
true and correct, and an acknowledgement that any false statement made to the
cabinet as part of the proposed sale process is punishable under the applicable
provisions of KRS 523.100.
(3) The cabinet shall approve a licensee's
sale of a license if the proposed purchaser and any new location or facilities
meet the requirements of KRS Chapter 218B and 915 KAR Chapter 1.
(4) The cabinet shall deny a licensee's sale
of a license to any proposed purchaser who currently holds a license in a
different cannabis business category than the one offered for sale (such as the
proposed purchaser seeks to purchase a dispensary license while currently
licensed as a tier I cultivator), except that a cultivator may sell its license
to another licensed cultivator in the same or different cultivator tier (such
as the proposed purchaser may purchase a tier II cultivator license while
currently licensed as a tier I cultivator). Cultivators may hold licenses in
more than one (1) cultivator tier at any given time as long as each license
contains a separate and distinct physical address where cultivator conducts
licensed cannabis activities and the licensee is otherwise in compliance with
the requirements of KRS Chapter 218B and 915 KAR Chapter 1.
Section 11. Issuance of Additional
Cannabis Business Licenses.
(1) Beginning
January 1, 2025, the cabinet shall, on a quarterly basis, review the need for
issuance of new licenses in each cannabis business category.
(2) In making its determination whether to
issue new licenses, the cabinet may consider:
(a) The population of the
commonwealth;
(b) The number of
active cardholders;
(c) Changes to
the list of qualifying medical conditions for medicinal cannabis;
(d) Market supply and demand;
(e) Geographic distribution of dispensaries
and other cannabis businesses;
(f)
Workforce development opportunities; and
(g) Any other factors that the cabinet deems
relevant to its analysis.
(3) If the cabinet determines there exists a
need for additional cannabis business licenses in the commonwealth, the cabinet
shall issue a notice documenting the basis for this determination, including a
list of the factors it considered to arrive at that determination.
(4) The cabinet shall publish on the Web site
of the Kentucky Medical Cannabis Program, https://kymedcan.ky.gov, the notice
required by this Section as well as a notice of initial license application
availability. This notice shall provide the timeframe during which initial
license applications shall be accepted by the cabinet and the category and
number of cannabis business licenses available for distribution at the close of
the application period. Applicants for new cannabis business licenses shall
adhere to the requirements of
915 KAR 1:010 regarding initial
license applications and follow the initial license application instructions.
The process for issuing new licenses shall comply with the requirements of this
administrative regulation.
Section
12. Penalties and Sanctions.
(1)
In addition to any other penalty imposed by law for violations of KRS Chapter
218B and 915 KAR Chapter 1, the cabinet may take one (1) or more of the
following actions:
(a) Suspend or revoke a
license if any of the following occur:
1. The
licensee or any of its agents commit multiple violations or a serious violation
of the requirements of KRS Chapter 218B and 915 KAR Chapter 1;
2. The licensee or any of its agents fail to
maintain effective control against diversion of medicinal cannabis from its
facility or under its control;
3.
The licensee or any of its agents violate a provision of other state or local
laws regarding the operation of its cannabis business;
4. The licensee or any of its agents engage
in conduct, or an event occurs, that would have disqualified the cannabis
business from being issued a license or having its license renewed;
or
5. The licensee submitted false
or misleading information on any application submitted to the
cabinet.
(b) Impose a
civil fine of not more than $10,000 for each violation and an additional fine
of not more than $1,000 for each day of the continuing violation. In
determining the amount of each fine, the cabinet shall take the following into
consideration:
1. The seriousness of the
violation;
2. The potential harm
resulting from the violation to cardholders or the general public;
3. The willfulness of the
violation;
4. Previous violations,
if any, by the licensee being assessed;
5. The economic benefit to the licensee being
assessed for failing to comply with the requirements of KRS Chapter 218B, 915
KAR Chapter 1, or an order issued by the cabinet; and
6. The economic determent to the
licensee.
(c) Issue a
cease-and-desist order to immediately stop or restrict the operations of a
licensee to protect the public's health, safety, and welfare. The following
applies to issuing a cease-and-desist order:
1. An order may include a requirement that a
licensee cease or restrict some or all of its operations. In addition, the
order may prohibit the use of some or all of the medicinal cannabis grown,
processed, or to be sold by the licensee;
2. An order may be issued by an authorized
agent of the cabinet immediately upon the completion of an inspection or
investigation if the agent observes or suspects an operational failure or
determines that the conditions will likely create a diversion of medicinal
cannabis, contamination of medicinal cannabis, or a risk to cardholders or the
general public;
3. An order may be
issued by an authorized agent of the cabinet in circumstances where a licensee
fails to provide timely notice of closure of a cannabis business location in
accordance with Section 7 of this administrative regulation and the cabinet
suspects the imminent closure of the cannabis business shall likely create a
diversion of medicinal cannabis or a risk to cardholders or the general
public;
4. An order may include:
a. An immediate evacuation of the site and
facility, and the sealing of the entrances to the facility;
b. A quarantine of some or all of the
medicinal cannabis found at the facility; and
c. The suspension of the sale or shipment of
some or all of the medicinal cannabis found at the facility.
(d) Issue a written
warning if the cabinet determines that either:
1. The public interest shall be adequately
served under the circumstances by the issuance of the warning; or
2. The violation does not threaten the safety
or health of cardholders or the general public, and the licensee shall take
immediate action to remedy the violation.
(e) Require a licensee develop and adhere to
a corrective action plan approved by the cabinet. The cabinet shall monitor
compliance with the corrective action plan. Failure to comply with the
corrective action plan may result in the cabinet taking additional action under
the applicable provisions of this section as it deems appropriate.
(2) A person who aids, abets,
counsels, induces, procures, or causes another person to violate KRS Chapter
218B or 915 KAR Chapter 1, or an order issued by cabinet, shall be subject to
the civil penalties provided for under this section.
(3) Before the cabinet may revoke or suspend
a license, the cabinet shall provide the licensee with written notice
specifying the nature of the alleged violation(s) and allow the licensee an
opportunity to appear and be heard pursuant to KRS Chapter 13B. Any resulting
hearing shall be conducted in compliance with the requirements of KRS Chapter
13B.
(4) The cabinet shall provide
a licensee with written notice of imposition of a civil fine, order of
restitution, cease-and-desist order, written warning, or corrective action plan
via certified mail to the address on the license. The licensee may, within
thirty (30) calendar days after the date of the mailing of the cabinet's
notice, file a written request for an administrative hearing regarding the
action taken. The hearing shall be conducted in compliance with the
requirements of KRS Chapter 13B.
Section 13. Technical Advisories.
(1) The cabinet may issue technical
advisories by memorandum to assist licensees in complying with the KRS Chapter
218B and 915 KAR Chapter 1.
(2)
Technical advisories shall not have the force of law or regulation, but shall
provide guidance on the cabinet's interpretation of, and how a licensee may
maintain compliance with, KRS Chapter 218B and 915 KAR Chapter 1.
(3) Notice of the availability of a technical
advisory shall be published on the Web site of the Kentucky Medical Cannabis
Program, https://kymedcan.ky.gov.
Section 14. Minimal Performance
Standards for Biennial Accreditation.
(1) As
part of the license renewal process, licensees shall meet the minimum
performance standards established in
915 KAR 1:010, Section 6 in order
to be approved for a renewal license.
(2) If a licensee successfully meets the
minimum performance standards established in
915 KAR 1:010, Section 6 over a
two (2) year period, the cabinet shall recognize the licensee as an accredited
cannabis business in the commonwealth.
(3) The recognition provided under this
section shall expire two (2) years after the date of issuance, and shall be
renewed if the licensee continues to:
(a)
Operate in the commonwealth as of the expiration date; and
(b) Meet the minimum performance standards
established in
915 KAR 1:010, Section
6.
Notes
STATUTORY AUTHORITY: KRS 218B.140
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