What happens if my application is denied?
Recently, the Kentucky Cabinet for Health and Family Services (the “Cabinet”) announced that the lottery for the cultivator and processor licenses will take place on Monday, October 28, 2024, and that the Cabinet will release final decisions on all cultivator and processor license applications—i.e., whether the application was approved or denied—approximately a week before the lottery. The Cabinet has not announced the date of the lottery for dispensaries, but Gov. Andy Beshear indicated that all licenses should be issued by the end of this year, and the dispensary lottery is likely on track for November based on the current status of the application review process.
All approved applications will be entered into the lottery, and any denied application will not. Pursuant to KRS 218B.090, the Cabinet may deny an application for a cannabis business license “for any reason that the cabinet, in the exercise of sound discretion, deems sufficient.” Those reasons include but are not limited to failing to submit materials required by KRS 218B.085 (after receiving notice of an identified deficiency as part of the mandated deficiency cure period); falsifying information on the application; or having a principal member or board officer who is under 21 years of age, has served as a principal officer or board member of a cannabis business that has had its license revoked, has been convicted of a disqualifying felony offense, is a medical cannabis practitioner, or is a principal officer or board member of a safety compliance facility. If the Cabinet denies an application, the Cabinet must notify the applicant in writing with the reasons for the denial.
So what options does an applicant have if their application is denied? The applicant may, within 30 days of the mailing of the Cabinet’s decision, file a written request for an administrative hearing on the application. The hearing will be conducted under the requirements of KRS Chapter 13B. The Cabinet will issue a final order following the hearing, and the order is appealable to the Circuit Court in the county in which the applicant’s business would be located.
Importantly, because the lottery is scheduled for approximately a week after the Cabinet issues its decisions on applications, the lottery will certainly occur before the administrative hearing can occur, unless there is judicial intervention. We recommend that any business that receives written notice of a denial of its application contact experienced legal counsel as soon as possible to discuss the reasons for the denial, the strength of the applicant’s basis for appeal, or other remedies the applicant might have before the applicant decides to file a written request for an administrative hearing.
