FRANKFORT, Ky. — Kentucky's auditor said Thursday that her office will investigate the state's medical cannabis program after receiving complaints about the lottery system used to award highly sought-after licenses to grow, process and sell the medicinal products to eligible patients.
Auditor Allison Ball, R-Ky., said her office will examine the application process and how business licenses were awarded as part of its review of the Office of Medical Cannabis in Democratic Gov. Andy Beshear's administration.
The state received thousands of applications for licenses, and Beshear has said the state-run lotteries last year were a fair way to give applicants a chance to land the limited number of licenses awarded.
The governor's office said Thursday that the licensing regulations underwent legislative reviews and the process to award the licenses was transparent, including the live-streaming of lotteries.
“The individuals who have come forward to express ‘concerns’ went through the full process and did not complain until after not being selected in the lottery,” Beshear spokeswoman Crystal Staley said.
However, reviews by Louisville Public Media found that out-of-state residents dominated the lotteries for licenses, tracing it to a flood of applications from deep-pocketed companies.
“My office has continued to receive complaints about how the Office of Medical Cannabis administered the lottery process for awarding medical cannabis business licenses," Ball said Thursday as she announced the probe. "Kentuckians should have confidence that state offices operate with transparency and integrity, and my office is committed to ensuring those standards.”
Asked for details about who lodged complaints, Ball's office replied: “To avoid disrupting the ongoing investigation, we are not able to provide further comment regarding any specifics at this time.”
Dee Dee Taylor runs 502 Hemp in Louisville and is one of those not selected in the lottery.
She said, “I know they like to say that it’s fair because it was a lottery, but there is a lot of loopholes that some of the out of state people took advantage of and they shouldn’t of, and they shouldn’t gotten away with it.”
Taylor submitted one dispensary application. Spectrum News 1 submitted an open records request and learned large out-of-state companies were able to submit dozens of applications under different LLCs. A practice the Office of Medical Cannabis said in Dec. was above board.
Sam Flynn, executive director of Kentucky Office of Medical Cannabis said in Dec., “Just want to be very clear, they do not own any of these licensees. These are management agreements, just like any kind of professional service agreement that a business may have with a law firm, a consulting firm, or what have you ”
When announcing the lottery system nearly a year ago, Beshear called it a fair process meant to remove any temptation to lobby in an effort to “get a leg up in different ways that we don’t want to see.”
Limiting cultivator, processor and dispensary licenses was meant to avoid flooding the market with medicinal cannabis products that could exceed demand, hurting the fledgling businesses, Beshear said.
The governor has said the program could be expanded with more businesses in the future, depending on demand and whether more qualifying medical conditions are added. Kentucky lawmakers legalized medical cannabis for people suffering from a range of debilitating illnesses, including cancer, multiple sclerosis, chronic pain, epilepsy, chronic nausea and post-traumatic stress disorder.
Kentucky's medical cannabis program launched at the start of 2025. The cultivation and distribution network is ramping up for the start of sales. More than 8,000 Kentuckians so far have received a medical cannabis card, Beshear said, and ground was broken recently for a cultivation operation.
“We are working as fast as we can to get safe, reliable medical cannabis on the shelves for those who qualify for a card,” Beshear said Thursday.
Taylor added, “They need to make sure that this program was on the up and up, and that the process was on the up and up because I truly do not feel like it was. I feel like we in the hemp industry just kind of got bamboozled”
The medical cannabis probe is the latest review of the Democratic governor's administration by the auditor's office. Earlier this year, Ball said a preliminary review found that dozens of foster children in Kentucky spent nights sleeping in social services buildings while awaiting placement by a state agency. Ball said those preliminary findings have spurred a broader investigation.