Twenty months after passing legalization bills, Delaware and Kentucky completed the inaugural round of cannabis retail licensing in their respective markets last week with two sets of livestreamed lotteries.
The Kentucky lottery selected the final 12 retail license winners in the two most populated regions of the state on Monday, Dec. 16.
“I signed Senate Bill 47 into law which legalizes medical cannabis in the Commonwealth beginning Jan. 1, really just a couple weeks away,” said Gov. Andy Beshear just before the final drawings began. “All the medical cannabis in our program will be cultivated, processed, tested and dispensed by licensed businesses right here in Kentucky.”
Almost one fifth of the total applications, or 1,235, were submitted for the last two regions. Of those, 1,001 were approved to be in this lottery.
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.
Kentucky selected the first batch of retail license holders in a series of lotteries held in November that covered nine of the 11 regions in the state, excluding the two most-populated.
Prior to that, the Kentucky state lottery selected 10 applicants for a processor license, 10 for a tier 1 cultivation license, four for tier 2 and two for tier 3. 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. Kentucky requires all cultivation to take place indoors.
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 selects 15 prospective retailers
Delaware also finished up its first round of adult-use license lotteries when 15 retail license winners were selected from 519 applicants on Dec. 19. The state previously announced 115 license winners on Oct. 24 that included all cultivation, processing and social equity retail licenses.
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 adult use.
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 were drawn last week.
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.
The state officially awarded the supply-side licenses on Dec. 1. This allows the adult-use businesses to start working on growing a supply before retail licenses are issued by the March 1, 2025, deadline.
The Delaware Marijuana Control Act (HB 2), which establishes a legal framework for the cultivation and distribution of marijuana, was passed by the state legislature and became law in April 2023 without the governor’s signature.
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 so they can also sell to non-patients.
