LOUISVILLE, Ky. — Almost 50 licenses for medical marijuana dispensaries are up for grabs in Kentucky.
As of Monday, the Cabinet for Health & Family Services (CHFS) says there were already 45 applications.
By the time the application portal closes Aug. 31, it's likely there will be many more dispensary applications submitted.
That means the winners of the licenses will be picked in a lottery.
"The lottery is the best way to ensure that everybody has a fair shake and a fair shot," Sam Flynn, the executive director of the Kentucky Medical Cannabis Program, said on April 18.
But some small business owners interested in setting up shop to sell medical marijuana are skeptical that everyone will have the same odds in the lottery.
"One of my partners has a property, and he was actually contacted by one of the larger businesses and asked if they could purchase or conditionally lease it and stack a bunch of applications on it," Jason Smith of the Bluegrass Buyers Club, LLC said. "They didn't know that we were also submitting applications in the process as well."
Smith and several college buddies started the small company, planning to submit an application for a dispensary in Lexington, and possibly more in other designated regions.
"Oh, it's definitely not an even playing field," Smith said.
He said he and his partners are certain outsiders are working together to create separate LLC's and then applying for a license on the exact same property.
"They're saying, oh, well, I have one retail location, but I'm going to submit 20 different applications on the same address," Smith said. That would improve their chances in the lottery. "The app stacking allows you to put 20 or 30 eggs in a basket to my one egg for a region, so it definitely makes it not fair."
Smith emailed the Kentucky Medical Cannabis Program with these questions:We have been approached by several out-of-state companies using 1 retail property location and submitting 10 or more dispensary license applications on the single property location with conditional leases. They are doing this in every region. Is this allowed? They have approached us and would like to stack our application on these properties for a fee. It seems like it will get us disqualified. Can you help me understand if this is permitted?
He said this was the program's response: There is nothing in the regulation that would disqualify an applicant if they submit a cannabis business application with the same address another cannabis business applicant submitted.
Meanwhile CHFS, which oversees the program, told FOCUS that applicants must disclose if they fall under a parent company.
The cabinet also stated it wasn't aware of LLC's being created under a parent company in order to stack applications on the same location, saying "It is prohibited."
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The Bluegrass Buyers Club isn't buying that all those applying outside of Kentucky are playing by the rules.
The group hopes the state will be transparent about who applied, so they and the public can really follow the paper trail.
They complained they're already at a disadvantage with the deep pockets of out-of-state big business.
Every dispensary application carries a non-refundable $5,000 fee and every application must separately prove access $150,000 in capital.
That's a much bigger burden on small business.
"We don't know how many out-of-state companies are submitting, and how many applications they're going to drop on one location, and how much money they're going to spend," Smith said. "But we do know that we're up against that."
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