Concerns grow over transparency, legality of Kentucky's medical marijuana rollout

LOUISVILLE, Ky. (WDRB) -- Three Louisville-area business owners are suing the state over how Kentucky awarded its first round of medical marijuana business licenses, claiming the selection process lacked transparency and may not have been legal.

Two of the plaintiffs applied for dispensary licenses and one applied for a processing license, but none of them were selected. The lawsuit, filed last month by Louisville attorney Greg Troutman, targets the state’s use of a lottery to award licenses—a method Troutman says was never authorized by lawmakers.

"One of the bigger problems that I believe you've got here is the legislature did not delegate to the agency the authority to third-party this draw," Troutman said. "They didn't give the authority to let the lottery company do these draws."

The Kentucky Lottery conducted the random drawing in April to determine which applicants would receive one of the limited number of licenses to grow, process, or sell medical cannabis.

A system that favors outsiders?

The lawsuit is just the latest criticism of Kentucky’s rollout of its new medical marijuana program. A January WDRB investigation into Kentucky's medical cannabis rollout exposed potential lottery loopholes and introduced viewers to Michael Adair, who co-founded Kentucky Farmed and applied to grow medical marijuana on his farm in Paris, Kentucky. His application was also denied.

“It hasn't been fair and equitable like they say it has,” Adair told WDRB at the time. He is not part of the lawsuit, but like many Kentucky hemp farmers, he says he was led to believe the state would give them priority in the licensing process.

Instead, public records reveal that nearly 90% of the winners in the medical marijuana lottery were out-of-state entities. One Arkansas-based company is linked to at least six licenses—including cultivation, processing, and four dispensaries.

Some of those licenses are now up for sale—at eye-popping prices.

“One of the tier two or tier three cultivator licenses was $10 million,” said Troutman.

Calls for action in Frankfort

Troutman and his clients are asking Kentucky lawmakers to return to Frankfort to revisit how licenses are awarded and consider changes to the system.

“To benefit Kentucky farmers, to benefit Kentucky patients—and Kentucky patients will benefit from it,” Troutman said. “If the process works the way it’s supposed to work, win or lose, we can accept that.”

Meanwhile, Kentucky Auditor Allison Ball’s office has launched an investigation into the licensing process following a wave of complaints from applicants and lawmakers.

Previous Coverage:

New lawsuit challenges lottery process for Kentucky medical marijuana licenses

Medical cannabis access 'very close' as Kentucky awaits dispensary openings

Kentucky breaks ground on state's first medical cannabis safety compliance facility

Auditor investigating Kentucky's lottery process awarding medical cannabis business licenses

Bill banning some Kentucky THC drinks heads to governor

Take a rare look inside cannabis cultivation facility as patients wait for product in Kentucky

Kentucky Gov. Andy Beshear advocates for gun rights of medical marijuana users

How long will patients have to wait for medical marijuana in Kentucky?

Bipartisan Kentucky resolution seeks federal protection of gun rights for medical marijuana users

Medical marijuana brings hope to Kentuckians, but challenges remain

Medical marijuana is now legal in Kentucky, but here's why it isn't available just yet