Kentucky House Approves Unified Regulations for Alcohol and THC-Infused Products

FRANKFORT – The Kentucky House of Representatives has approved House Bill 9, a comprehensive measure that overhauls the state’s taxation and regulatory framework for alcohol, Cannabis-infused beverages, hemp-derived products, and related intoxicating substances. The bill passed the House by a 63-31 vote and now heads to the Senate for consideration.

Sponsored by Rep. Matthew Koch (R), Rep. Jason Petrie (R), and Rep. David Osborne (R), HB 9 restructures the existing alcohol tax system by phasing out certain excise and wholesale taxes effective July 1, 2027, and replacing them with a new structure centered on regulatory license fees. Retailers would pay a 4% state retail regulatory license fee on gross receipts from sales of alcohol drinks and Cannabis-infused beverages to consumers. The measure also introduces wholesale regulatory license fees for those products, along with retail fees for kratom, hemp-derived and cannabinoid items, bringing these categories into a more formalized tax and oversight system for the first time.

Proponents describe the changes as a realignment of collection points that keeps overall alcohol revenue stable while addressing the rapid growth of hemp-derived THC beverages, which have been legal in limited forms (up to 5 mg THC per serving) since last year. The bill includes provisions for laboratory testing standards under the Department for Public Health and directs 0.5% of collected retail fees to the Alcohol Wellness and Responsibility Education (AWARE) Fund.

Industry voices have raised concerns during hearings about potential double taxation on THC products [through both wholesale per-milligram fees and the new retail percentage] and the administrative challenges of milligram-based tracking. Representatives from companies like Cornbread Hemp and the Kentucky Hemp Association have urged adjustments to avoid disproportionate impacts on consumers or the market, like higher prices or reduced local economic benefits. Sponsors have indicated openness to refinements as the bill advances.

This development occurs against a backdrop of ongoing federal uncertainty around hemp-derived cannabinoids, including a pending cap on THC content that could affect product availability nationwide starting later this year. Kentucky’s approach appears to anticipate a continued legal market for low-dose intoxicating beverages by integrating them more closely with established alcohol regulations.

If the Senate approves the bill in its current or amended form, and it reaches the governor’s desk, the changes would mark a significant step in standardizing oversight across these product categories. The outcome will likely influence how Kentucky balances revenue needs, consumer access and public health considerations in a sector that continues to expand.

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