New Lawsuit Challenges Lottery Process for Kentucky Medical Cannabis Licenses

LOS ANGELES- A group of Kentucky-based applicants has filed a lawsuit arguing that the state’s lottery system for awarding medical cannabis licenses is unconstitutional and unfairly structured. The suit, filed on June 27 in Jefferson Circuit Court, names the Commonwealth of Kentucky and Sam Flynn, former executive director of the state’s Office of Medical Cannabis (OCM), as defendants.

The plaintiffs contend that the Kentucky General Assembly wrongly delegated its constitutional authority to determine licensing regions and allocations to the Cabinet for Health and Family Services and the OCM—actions they say exceed legislative power. Attorney James Gregory Troutman, representing the applicants, emphasized that such decisions fall within the legislature’s exclusive domain.

The lawsuit seeks not only to halt operations of already licensed cultivation, processing, and dispensary businesses but also to have licenses issued to those applicants who were unsuccessful in the 2024 lottery.

Critics argue that the lottery favored out-of-state participants—some filing multiple entries through various corporate entities—thus disadvantaging local businesses and farmers. This has prompted an audit by Kentucky Auditor Allison Ball, announced in April, into the fairness and transparency of the license award process.

Supporters of the lottery system, including Governor Andy Beshear’s administration, maintain that it provided an impartial method amid high competition and was transparent, even livestreamed. Nevertheless, the legal challenge underscores ongoing concerns from local cannabis entrepreneurs regarding out-of-state dominance in license allocations.

Should the court rule in favor of the plaintiffs, it may lead to suspending current licensees and a complete restructuring of Kentucky’s medical cannabis licensing framework. The case raises significant questions about jurisdiction, administrative authority, and constitutional governance in the oversight of the state’s burgeoning medical cannabis industry.