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by Hannah King and Arin Aragona, Attorneys at Dentons
On March 31, 2023, Kentucky Governor Andy Beshear signed into law SB47, an act relating to medicinal cannabis (KRS § 218B.010 et seq.), with a goal of first sales of medical cannabis in Kentucky in 2025. On January 4, 2024, the Kentucky Cabinet for Health and Family Services (“CHFS”) released draft regulations in an initial step towards launching Kentucky’s medical cannabis program. While these regulations are comprehensive, they do not include provisions governing important aspects of the program, such as licensing and testing standards. We do expect that CHFS will issue additional draft regulations in the future.
Among other things, the proposed regulations include requirements for the operations of licensed medical cannabis businesses, for medical cannabis and medical cannabis products, and for transport and delivery, packaging and labeling, advertising, and testing of medical cannabis and medical cannabis products.
Regulations Governing Operations
The proposed regulations would require cultivators, processors, producers (which may engage in cultivation and processing activities), and dispensaries, as well as safety compliance facilities that will provide testing services for licensed medical cannabis businesses, to:
- establish standard operating procedures for employment policies, security, transportation
logistics, safety, maintenance, quality control, and other issues; - use the state approved seed-to-sale tracking system (Metrc);
- conduct regular inventory reviews;
- implement specific security measures including, among other things, monitoring systems,
alarms, auxiliary power, lighting, and locks; - follow specific controls for sanitation, inventory storage, waste disposal, complaints, recalls, and
reporting; and - provide access for various state inspection requirements to ensure compliance.
Regulations Governing Product Types and Potency
The proposed regulations would restrict the form and potency of medical cannabis and medical cannabis products. Permitted forms of cannabis products would include edibles, oils, topicals, vaporizers, tinctures, skin patches, suppositories, beverages, and raw plant material. Raw plant material would be limited to 35% delta-9 tetrahydrocannabinol (THC) content. Orally consumed products would be limited to ten (10) milligrams of THC per serving, and other products will be restricted to THC contents of less than 70%.
Regulations Governing Transportation, Advertising, Testing, and Packaging and Labeling
Under the draft regulations, the transportation and delivery of medical cannabis and medical cannabis products would be subject to strict security and tracking requirements. Medical cannabis business advertisements would be limited to business identification signs on property, listings in business directories and medical/trade publications, sponsorships for certain health, charity or advocacy events, and limited forms of online advertising. Packaging and labeling requirements prohibit confusion with non-cannabinoid products, the appearance of endorsements by public officials, or any image or feature that could be attractive to minors. Product packaging would need to be child-resistant and contain tamper-evident seals as well.
Compliance with regulatory and licensing requirements is critical not only for direct medical cannabis businesses but also any ancillary service providers (e.g., accounting, real estate, financial) that may do business with cannabis industry participants. All businesses interested in the emerging cannabis industry of Kentucky should closely monitor the developments in the upcoming legislative session. Members of the Kentucky General Assembly previously stated an intention to review and refine the medical cannabis laws during the current session. Governor Andy Beshear requested the legislature adopt certain amendments, including expanding qualifying conditions for medical cardholders in Kentucky. The regulations released by CHFS are subject to any such changes and remain open for comment through March 31, 2024.
Current law requires CHFS to adopt final regulations by July 1, 2024. However, medical cannabis will not be legal in Kentucky until January 1, 2025. We will continue to monitor developments regarding the potential rescheduling of cannabis and its
impact on the emerging Kentucky market.
About the Authors:
Hannah E. King is a partner in Dentons’ Cannabis Law Practice Group. She advises clients across thecountry in the hemp and cannabis space on complicated licensing and regulatory matters and complex commercial and financial transactions. She may be reached at [email protected]
Arin Aragona is a partner in Dentons’ Corporate, Private Equity and Cannabis practice groups. Prior to joining Dentons, Arin was general counsel and chief operating officer of a boutique private equity firm primarily focused on the US cannabis industry. He may be reached at [email protected]
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