Application deadlines now loom for winners of licenses from the Kentucky lotteries that took place in the fall and winter of 2024. Most pressingly, applicants selected through the lottery had the opportunity to opt for a “provisional license” in the event that they needed 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.
If a selected applicant decided to accept a provisional license, the licensee would then have a maximum of 120 calendar days (four months) under the regulations to request a change of location to an allowable county or city under KRS Chapter 218B and 915 KAR 1:020. Given that the lotteries took place in October, November, and December, deadlines for some provisional licensees are as early as February or March 2025.
If a provisional licensee fails to request a location change within 120 calendar days from issuance, or the request is denied, the regulations state that “the cabinet shall revoke their provisional license and the license fee shall not be refunded.”
Provisional licenses cannot be sold or transferred to another individual or entity. However, after the provisional licensee receives approval for a new location, the licensee can proceed with a change in ownership or sale of the license to an interested buyer. Given the tight timelines, it is critical to ensure that the identified location will meet all applicable regulatory requirements and that supporting documentation submitted with the application (updated site plan, lease, etc.) is compliant.
Time is of the essence, not only for provisional licensees, but for all licensees. During the application process, all licensees were required to provide timelines and, if those timelines are not being met, licensees are required to submit a corrective action plan. A subsequent failure to comply with the corrective action plan could result in penalties and sanctions, including a revocation of the license.
Accordingly, all licensees should move forward with their plans expeditiously, particularly those who are looking to secure a new location, bring on new owners/investors, or sell a license. OMC has demonstrated a commitment to getting the market up and running as quickly as possible. In line with this goal, the office is processing applications for changes in location, changes in ownership, and the sale of licenses at a rapid pace. In the months and years ahead, we expect to see the review and approval process for any changes to a license to take longer, as this is what we have seen in other states that have legalized medical and/or adult use cannabis.
Dentons is available to assist with applications to change location and to advise prospective investors on opportunities and risks in this emerging market, as well as to represent buyers or sellers in transactions to purchase or sell equity in companies that hold a cannabis license or in the purchase or sale of a cannabis business license in Kentucky. Please contact us if you are looking for assistance with any applications to amend or acquire a license.
