The clock has started on market launches in Delaware and Kentucky after both states held lotteries for dozens of coveted licenses. Delaware announced 115 new adult-use licenses on Oct. 24, while Kentucky awarded 26 new medical licenses on Oct. 28.
“We are on track to provide medical cannabis as quickly as possible,” said Kentucky Gov. Andy Beshear in a live stream before the lottery started. “This administration did not wait. We moved forward and began receiving applications from prospective medical cannabis businesses in July. The interest was overwhelming.”
Kentucky plans to launch its medical market in early 2025, starting with 48 licensed dispensaries, 16 cultivators and 10 processors. After a slow start in the application phase, thousands of bids poured in days before the deadline. In total, there were 4,998 applications with about 80% of them for dispensaries.
There were 918 applications for a cultivation or processor license, and 774 of those were approved for the lottery. Beshear noted that 604 of the approved applications needed a second chance to cure deficiencies or clarify information.
The Kentucky state lottery selected 10 applicants for a processor license, 10 for a tier 1 license, four for tier 2 and two for tier 3. Kentucky requires all cultivation to take place indoors. Tier 1 cultivation allows for 2,500 square feet of canopy, tier 2 allows 10,000 square feet, while tier 3 allows 25,000 square feet.
The state has to finish vetting 4,080 applications for 48 retail licenses. Beshear said that he would announce the date for the retail lottery on Oct. 31 during his weekly livestream address.
Thus far, the Kentucky commission has officially issued three licenses for a trio of testing labs that were not required to go through the lottery process: KCA Laboratories, Carbon Labs and FB Thompson.
Winners of the lottery become “approved” cannabis operators. They have 15 days to pay their respective licensing fee or risk forfeiting that approval.
Kentucky borders Tennessee, Missouri, Illinois, Indiana, Ohio, West Virginia and Virginia, of which four states have legalized adult-use cannabis. West Virginia has a legal medical program, and Tennessee legalized low-THC cannabis oil for medical patients. Indiana is the only neighbor without legal cannabis.
Delaware holds its own competitive lottery
Delaware moved closer to the launch of its own adult-use market when it held its license lottery on Oct. 24, announcing winners for 115 licenses that include all cultivation, processing and social equity retail licenses. An additional lottery will be held in December to award the remaining 15 open retail licenses from a pool of 519 applicants.
Similar to Kentucky, Delaware also likely feels pressure from its neighbors to launch its own adult-use market. With the exception of 12-miles that border Pennsylvania, Delaware is almost entirely enclosed by Maryland and New Jersey, which already allow legal cannabis.
Delaware’s Office of the Marijuana Commissioner livestreamed its adult-use lotteries on the commission’s Facebook page. The lottery was conducted by Smartplay International and overseen by State Marijuana Commissioner Rob Coupe.
Applicants paid a fee of $5,000 to enter the lottery for the open license types, $3,000 for micro-business and $1,000 for social equity. In total, the 1,269 applications generated over $4 million. Of that total, $2.6 million were for the open retail licenses that have yet to be drawn.
Those who failed to receive a license can request the commission retain their applications for up to one year, during which they will be automatically submitted into any subsequent lotteries among their own peers, which means that social equity applicants will not be included with open license lotteries, such as the upcoming retail one.
Lottery winners must still go through additional vetting from the state before they can go on to seek municipal approval. Following the lottery, the winners have 18 months to secure a location and become operational.
Lotteries were not necessary for micro-cultivation and social equity micro-cultivation in New Castle County. In both cases, the total number of eligible applications matched the available number of licenses. The same happened for the three available micro-manufacturing licenses in Sussex County.
The state plans to formally issue cultivation licenses on Nov. 1, and manufacturing licenses on Dec. 1. This will allow the adult-use businesses to start working on growing a supply before retail licenses are issued by the March 1, 2025, deadline.
The state’s medical market has six vertically integrated companies that control 13 medical licenses. The Cannabist Company Holdings, Inc. (CBSTF), which appears to be the state’s sole multi-state operator, holds three licenses under its old Columbia Care corporate name. Despite being left out of the original adult-use legislation, a subsequent bill signed in July, HB 408, created a pathway for them to convert to hybrid models that can also sell to non-patients.
Conversion applicants must show how they plan to continue serving the medical population, how they plan to support the state’s social equity program, and a signed labor peace agreement with a bona fide labor organization. All conversion licenses must be issued by Nov. 1.
