Businesses ready to go on Kentucky medical marijuana. Why can't they proceed?

Major players in the Kentucky hemp business are currently at a crossroads as they weigh the opportunity of entering the medical marijuana space next year.

Despite being less than a year out from the start of the Kentucky Medical Cannabis Program, the state has not yet released regulations regarding the licensing process, how many licenses will be administered, how businesses in each part of the industry can apply for a license, or what it takes to qualify for a license.

"Before Cornbread Hemp can answer yes or no, there's a lot of questions that we need answered first," said Jim Higdon, co-founder of Cornbread Hemp. "We're working very diligently to figure out what's possible and not possible here ... we want to grow our business naturally according to the law."

This current lack of regulations on the business licensing side is presenting a challenge for Higdon and others, as the state agriculture industry is on the brink of expansion.

The federal Farm Bill in 2018 legalized hemp — a cannabis plant with less than 0.3% THC content. In 2022, Kentucky saw more than $43 million in gross sales of hemp-related products, former Kentucky Department of Agriculture Commissioner Dr. Ryan Quarles previously told The Courier Journal.

Now, these businesses stand to benefit from the legalization of medical marijuana in Kentucky, but first they must understand the legal ways they can operate.

Under Senate Bill 47 which was signed into law in March 2023 and creates a medical cannabis industry in Kentucky that goes live Jan. 1, 2025, the state will soon be home to a variety of businesses — cultivators, processors, producers, safety compliance facilities and dispensaries — looking to capitalize on an emerging market.

But before farmers can trade the tobacco crop for a medical marijuana plot, the state must issue licenses to all business players who plan to enter the industry.

In January, the Cabinet for Health and Family Services alongside Gov. Andy Beshear released 10 preliminary regulations governing the medical marijuana industry and providing a framework for how businesses will operate.

More: How will Kentucky's medical marijuana program be regulated? Here's where things stand

CHFS spokesperson Brice Mitchell previously told The Courier Journal "in the coming weeks and months" the cabinet would provide additional regulations on how "businesses can apply for a medical cannabis business license."

As businesses prepare to enter the medical cannabis industry, here's a look at where some of them stand:

Ready to enter, but needing more guidance

Higdon said some of his early concerns deal with tax penalties and the difficulty of banking for a cannabis business operation in the U.S. since marijuana remains a Schedule 1 drug and is illegal at the federal level.

Another concern is the inability under the current regulations for medical marijuana to be grown outdoors. Hemp is allowed to be grown outdoors in the state.

"The purpose of the thinking is to prevent unauthorized access of the cannabis grow room from potential thieves, etc., but the result is it makes cultivation more expensive, it makes cultivation more marginal, and it doesn't allow Kentucky farmers to take advantage of the natural advantages that Kentucky has for growing cannabis," Higdon said.

Regardless of the current uncertainty, Higdon said he sees entry into the medical marijuana space as a "natural progression of our business" and is looking forward to continuing conversations with the state as CHFS irons out the full regulatory measures.

Waiting until all regulations are set

Dee Dee Taylor, another Kentucky hemp advocate and small business owner, has concerns about the program at this point, too.

Taylor said her concerns mostly deal with the fees businesses may face for entry into the industry. So far, the state has not clarified if there will be licensing fees (although it is expected there will be), how much the fees will be and what renewal fees will exist.

Besides fees, Taylor said she hopes the state will be intentional about giving licenses to companies already operating in Kentucky and will not allow the development of monopolies by large businesses.

"My thought is if you are going to give licenses out, they should make sure that those companies are ethical and that they are actually part of the commonwealth, have been in the commonwealth and are already doing business in the commonwealth," Taylor said.

At this point, Taylor has not started trying to acquire property, equipment or other business items necessary to enter the medical marijuana space but has instead opted to wait for a final ruling from the state.

"I see people already making the moves ... and I hope that it works out for them," she said. "But at the same time, I just don't know that I'd be ready to waste or spend that kind of money without actually having the license in my hand."

Ready to go

While some businesses are hesitant, Jeff Stum, the co-founder and chief product officer of Hectare’s Cannabis Innovations, a local business producing cannabis beverages, said his company is ready to go medical.

"The short answer is 'yes,'" Stum said. "You know, we've positioned our two Kentucky based dispensaries specifically to ... be ready, if and when medicinal comes about, and you know, more specifically, hopefully recreational at some point so yes, we have an eye looking forward without a doubt."

Stum said at this point, all he needs is to truly understand how the licensing process works, but his team is determined to work with the state and acquire a license.

"I think we're all confident that we'll be as strongly considered as anybody for licenses, but we simply don't know," Stum said.

And for now, all the businesses wanting to be part of the evolving cannabis scene in Kentucky will continue to wait.

Contact business reporter Olivia Evans at oevans@courier-journal.com or on X, the platform formerly known as Twitter at @oliviamevans_.

This article originally appeared on Louisville Courier Journal: Medical marijuana Kentucky businesses ready to go, but stuck in limbo