Challenges Emerge Over Kentucky’s Medical Cannabis License Lottery

LOS ANGELES- A coalition of Kentucky-based businesses has filed legal proceedings challenging the fairness and constitutionality of the state’s April 2024 medical cannabis license lottery. The lawsuit, lodged in Jefferson Circuit Court on June 27, argues that the Kentucky General Assembly improperly delegated authority to the Cabinet for Health and Family Services and its Office of Medical Cannabis (OCM), rather than enacting legislation directly governing regional divisions and license allocations.

The plaintiffs—applicants who were not selected in the lottery—are requesting that all current licenses awarded through the 2024 process be suspended and that the court grant licenses to those excluded. Attorneys contend that procedural irregularities arose because multiple entries were submitted by the same companies using different corporate entities, and that out-of-state applicants were disproportionately advantaged.

Additionally, the lawsuit names former OCM director Sam Flynn, who led the office from 2023 until his departure earlier this year, as a defendant, along with the commonwealth. While plaintiffs have not alleged personal misconduct, they argue that the structure established under Flynn’s leadership deviated from constitutional legislative requirements.

Local cannabis cultivators and dispensary hopefuls have voiced concerns since the program’s launch that the lottery system undermined the local economic focus intended by the legislation. Kentucky Auditor Allison Ball announced in April that her office would investigate the application process following community complaints.

This legal challenge poses risks of immediate disruption. If granted, the suspension of active licenses could force operational halt among existing medical cannabis businesses and hinder patient access. It could also prompt a revision of Kentucky’s licensing model, with potential implications for other states relying on executive-led processes rather than legislative authority to establish medical cannabis regulations.