How to Open a Dispensary in Kentucky

Are you thinking about opening a dispensary in Kentucky? Congratulations!

Kentucky legalized medical cannabis on March 31, 2023 when Governor Andy Beshear signed Senate Bill 47 into law to officially begin on January 1, 2025. Cannabis consumption outside of the medical​​ cannabis program, including adult-use cannabis, remains illegal in Kentucky.

The Bluegrass State is starting small with its foray into legal cannabis, with only 48 dispensary licenses total, but even the smallest markets have plenty of opportunity for growth. The Kentucky Office of Medical Cannabis oversees the program.

This guide will outline how to open a dispensary in Kentucky, including information on licensing, financing, real estate, security, staffing, compliance, inventory, and your tech stack. However, the first step is to understand Kentucky's cannabis laws.

Scroll through for a step-by-step process for opening a dispensary in Kentucky, or use the links on the left to jump directly to your most pressing questions.

Disclaimer: Always consult your lawyer, accountant, realtor, and other trusted consultants to help you navigate the complexities of opening a cannabis dispensary. Flowhub aims to illustrate and educate but is not to be construed as legal or financial advice.

Plan your Kentucky cannabis dispensary

The first step for future medical marijuana dispensary operators in Kentucky is to understand the applicant cycle and how licenses are issued in the state. The program is only issuing 48 dispensary licenses to start—with only one dispensary allowed per county (except for Jefferson and Fayette counties, which may have two).

Potential dispensary owners will first need to understand the cannabis laws, create a formal business entity, write a business plan, find a location, and prepare to submit a license application.

Form a business entity in the state of Kentucky

If you haven’t yet officially formed a business entity, that’s the first task. Work with a lawyer to ensure everything is correct, but at a minimum, you’ll need to decide whether you’re creating an LLC or corporation and file with the state of Kentucky.

When choosing a business name, be sure to choose a name that is not misleading and doesn’t imply that the products are for non-medical use.

Once your business is established, you can get a tax ID number, open a business bank account at a cannabis-friendly bank or credit union, and decide on your business insurance needs, including general liability insurance, property insurance, workers’ compensation insurance, and product liability insurance.

Note: Every city, county, and state is different. You may have additional steps for taxes, licenses, or fees based on your business type and location.

Write a business plan for your Kentucky dispensary

Cannabis is a complicated industry, with more compliance and legal considerations than other types of businesses.

A rock-solid business plan can help ensure you are set up for success, especially in a new market like Kentucky, where dispensary licenses are extremely limited. Your application needs to be competitive and complete without skipping any details.

Although it may be tempting to skip this step, parts of your dispensary business plan must be submitted with your application, so take the time now to fully consider your plan.

A good business plan should include:

• The physical location of your dispensary.

• Funding plan, or where your startup and ongoing capital will come from.

• Sourcing plan for procuring your cannabis products.

• Revenue projections.

• An estimate or the actual number of employees, or who you’ll hire for what roles, and your dispensary org chart.

• Diversity and equity plans.

• Marketing plan (contrary to popular belief, cannabis doesn’t just sell itself!)

• Safety and security plan.

• Technology plan, including which cannabis point-of-sale and compliance software you’ll use to manage your dispensary.

• Any other relevant information you want to document.

Kentucky requires applicants to submit an operational plan detailing the daily operations, a financial plan showing funding sources and financial viability, and a detailed timeline outlining when you plan to be operational.

Find a cannabis dispensary location in Kentucky

Your dispensary location is a critical piece of the puzzle, but it's not easy. You’ll need something in a visible location with ample parking and enough space to achieve your ideal workflow.

Kentucky dispensaries cannot be within 1,000 feet of existing elementary and secondary schools or daycare centers. The distance is measured in a straight line from the nearest property line of the school or daycare center to the closest property line of the proposed cannabis business.

Local governments may impose additional zoning restrictions for cannabis businesses beyond the state’s regulations. However, all local governments, counties, and cities automatically opt to have cannabis business operations in their jurisdictions. Counties and cities must enact ordinances to establish restrictions and fees on cannabis business operations or prohibit all cannabis business operations in their jurisdictions.

Local governments:

• May establish time, place, and manner restrictions (that are not less restrictive than the law).

• May establish and assess reasonable local fees for local administration of medical cannabis businesses.

• May not enact ordinances that impose an undue burden or make cannabis business operations unreasonable.

• ​May prohibit all cannabis business operations within its territory through the passage of an ordinance. A local government must opt out before January 1, 2025, or before a cannabis business attempts to locate within the territory.

Location is part of the equation at this stage because applicants must have a proposed dispensary location before applying for a license. As part of the application process, you must include a distinct physical address where the dispensary is proposed to operate. You must submit proof, such as a lease, deed, or contingent agreement, to demonstrate your control over the location.

Find a local real estate professional who specializes in cannabis real estate to help in your search. Use public resources, such as city zoning and administration offices.

When looking for a location for your dispensary, focus on spaces that:

• Align with your business plan

• Are large enough to meet your needs

• Are in an appropriate location to serve foot traffic

• Have enough parking

• Have opportunities for expansion/growth

• Are within your budget

Don’t just look at monthly costs, but also factor in how much it’ll take to renovate or retrofit the space for your business needs.

Finding the perfect location for your medical dispensary involves many factors. Take the time and invest the necessary resources to secure the best possible space, which is a critical component of your success.

Secure funding for your Kentucky cannabis dispensary

Now that you have a plan for your new medical use dispensary, you can create a more specific budget and plan.

A cannabis business can generally expect expenses in these categories:

• Real estate and build-out: Consider your initial costs plus ongoing rent or mortgage. You’ll probably also have renovation expenses to start.

• Licensing/application fees: The cost of getting licensed to run a dispensary in Kentucky. The nonrefundable application fee is $5,000. You’ll also need to plan for your conditional license and renewal fees—$30,000 upon first licensing and $30,000 for the annual renewal fee.

• Operational costs: Your day-to-day business operating expenses, including, but not limited to, utilities, business or professional fees, marketing, etc.

• Hardware, software, security, and other tech: Most technology is a monthly or annual subscription but may include more sizable startup costs.

• Staffing costs: The cost of hiring employees, including salaries, benefits, taxes, etc.

• Inventory costs: The expense of sourcing and purchasing cannabis products. You’ll need enough stock on your shelves for opening day and beyond.

• Taxes: Cannabis businesses are heavily taxed and can’t participate in regular business write-offs like 280E, so plan for your quarterly tax payments.

As a cannabis entrepreneur, remember you don’t have the same funding options as a traditional entrepreneur. Cannabis businesses don’t qualify for SBA loans or similar because of the federal legality, but loan options are still available.

Kentucky has capital requirements of $150,000, which you must prove.

As a hopeful cannabis dispensary operator, you have a few options for cannabis dispensary funding:

• Self-funding: The easiest option is already having access to capital (acquired through legal means).

• Friends and family: Another potentially easy way to meet dispensary capital requirements is through loans or investments from family and friends.

• Partners: Many cannabis businesses are legally set up as partnerships, where each partner contributes something meaningful. Partners can be silent (primarily as the funder) or active; both are great if they serve your needs. Check eligibility requirements to ensure your partnership meets the criteria for applying for a license.

• Loans: Depending on your finances, you may be eligible for a personal loan to cover some (or all) of the upfront costs of opening a dispensary. You may also be able to secure a dispensary business loan, but remember to be honest with your lender about how the funds will be used; not all financial institutions will work with cannabis businesses.

• Private funds: Whether private equity, angel investors, or venture capital, you may have to look to outside investors to fund your cannabis business. This option will decrease your ownership stake in your company. This is a popular option in the cannabis industry and has yielded great results for many entrepreneurs!

• Crowdfunding: This option is less popular, but looking to the general population to support your business venture can be viable for those who can strongly execute this path.

• Brokers: Cannabis-specific brokerage companies can help you find funding for startup expenses, equipment, and more.

Note: Applicants must submit information about their funding sources, documentation of sufficient capital, and proof of financial viability.

Apply for a Kentucky medical dispensary license

To open a dispensary in Kentucky, you’ll need a license from the Kentucky Office of Medical Cannabis to be able to possess, sell, or deliver cannabis. ​

A dispensary license authorizes its holder to sell medical cannabis products from its licensed premises to registered qualified patients, designated caregivers, and visiting qualified patients.

Dispensaries can only sell medical cannabis that has passed all required tests and was acquired from licensed cannabis businesses.

How to get a dispensary license in Kentucky

The initial licensing period is closed, and all licenses have been issued, but here is a breakdown of the steps applicants took to get their Kentucky dispensary license.

• Have the Kentucky Business License Application Guide handy to help with the application process. A checklist is included in the appendix to assist further.

• Register for a new user account on the online portal.

• Create your online account, including name, email address, phone number, and type of application you’re applying for, and create a password.

• Verify your account. You’ll get emailed a link. You can then sign into the portal.

• Add/update all necessary information, such as your tax ID and authorized users.

• Click “+Create New Application” to start the application process. Click “New Business Application,” then click “Create Application.”

• Fill in the required information in each section. Be sure to save your progress as you go. You can make edits/updates until you hit submit. The application doesn’t need to be completed in one session; it saves within the “Applications” tab.
  • General Information: This is information about the proposed business.
    • Legal business name
    • Business type
    • Any trade name or DBAs (“doing business as”)
    • Federal tax identification number
    • Kentucky Secretary of State organization number
    • Website address (if any)
    • Email address
    • Phone number

• License Information: Select the category of cannabis business license being requested. Applicants may submit one (1) or more applications for the license category selected, subject to certain restrictions.

• Location Information: This is information about the proposed business.

  • Physical address

  • Mailing address

  • Global positioning system (GPS) coordinates for the business location

  • Indicate if there is an existing lease or deed for the site and location of the proposed cannabis business or if there will be a Contingent Agreement to lease or purchase the property identified for the cannabis business subject to receiving a license. Upload your lease or agreement in the Documents tab.

• Primary Contact: This is information about the applicant.
  • First and last name
  • Business title
  • Phone number
  • Email address
  • A verified street address
  • Information for any individuals or entities that assisted with the preparation of the application other than the primary contact

• Individuals and Entities of Interest: Identify and provide contact information for all individuals and entities with at least ten percent (10%) equity or similar interest in the proposed cannabis business, as well as any Principal Officers, Board Members, and Financial Sources without an ownership interest. The section also identifies any physician or advanced practice registered nurses (APRNs) with an ownership or investment interest in or a compensation agreement with the proposed cannabis business.
  • Full name
  • Phone number
  • Email address
  • A verified residence and mailing street address
  • Driver’s license number
  • Date of birth
  • Social security number
  • Indicate the role and ownership percentage that the individual holds
  • Entities must provide an entity name and any business names, including DBAs (if applicable), in addition to the entity type, FEIN number, and a primary contact/responsible person.
• Parent Company: If a parent company has ownership or control of the proposed cannabis business, include the following:

  • Legal entity name and any business names, including DBAs (if applicable)

  • Relationship/title

  • Email address

  • Phone number

  • FEIN number

  • Verified physical and mailing address

  • The ownership percentage that the parent company holds

  • Individual owners of the parent company, including the first and last name, relationship/title, verified residential and mailing address, and ownership percentage that the individual owner holds of the parent company.

• Attestations: Indicate yes or no to statements regarding any criminal history or offenses, financial investments, location and security assurances, property entrance and data permissions, insurance and liability, training, and standard operating procedures. The applicant will also attest to compliance with the state's applicable laws and administrative regulations regarding medical cannabis businesses. The applicant will provide the name of the individual applying and the completion date.

• Documents:
  • Site plan
  • Existing Lease or Deed or Contingent Agreement
  • Confirmation of sufficient capital available
  • Financial plan
  • Business Entity Formation document
  • If applicable, a summary of experience of operating a business in Kentucky
  • A timeline showing the steps and estimated amount of time the applicant will take to begin cannabis business activities in the state
  • Summary of the intended plan of operation
  • If applicable, a management service agreement
  • Resumes or Curricula Vitae of Principal Officers and Board Members
  • Ownership Organizational Structure Document
  • Description of the duties, responsibilities, and roles of each principal officer, board member, employee, and any other individual or entity with a financial interest in the proposed cannabis business who is not involved in the day-to-day operations of the business
  • Disclosure of Criminal History of Applicant’s Principal Officer and Board Member (if applicable)
  • Instances of Adverse Actions Taken Against Businesses that Prospective Board Member Managed or Served on the Board (if applicable)
  • Notarized Signature Page

• Payment: Select the method of payment to submit the application fee. The fee can be paid using a credit card or ACH/e-check. Applicants will be prompted to provide the method of payment selected here following the final review and submission of the completed application.

• Review: This tab shows you what fields are completed or missing. A red X indicates missing information.

• After completing each section with all of the required information and documentation and thoroughly reviewing your final application on the review tab, you can select “Pay and Submit.”

• This will prompt the payment screen for your selected business license application fee, where you will again choose the form of payment you would like to use and provide your payment information. Once you have done so, you can hit next and submit payment.

• If the payment is successfully processed, you will be returned to your account to a page indicating that your transaction has been approved and your application is being processed. This will also provide a token if you need to reference the transaction. You will also receive a confirmation email.

• The Program will notify you of application receipt within fifteen (15) calendar days, and then the review process begins.

• The Program will review each application to determine whether it is complete. The Program will provide applicants with written notice of any deficiencies, errors, or missing information identified during the application review. The Program will also alert applicants when it has determined an application submission is complete.

• After receiving a notice of application deficiencies, the applicant has ten (10) calendar days from the date of notification to resolve the identified issues and provide any missing information or documentation requested. Additional or corrected materials should be submitted through the same application saved on the licensing portal.

• The Program will notify applicants whether their application has been approved or denied within forty-five (45) days of receiving an application and determining its completion. Application denials will include written notice to the applicant that they may file a written request for an administrative hearing within thirty (30) calendar days after the mailing date of the notice.

• Applications deemed complete by the Program will be entered into the business licensing lottery if the number of complete applications exceeds the maximum number of licenses available within the requested category.

• Business license applicants selected by the lottery process will be notified on the day of the lottery and will be required to pay the licensing fee within fifteen (15) calendar days. Eligible applicants who applied for a license in a category that did not require a lottery will also be notified by the office of pending license issuance and must pay the initial license fee within fifteen (15) calendar days of notification.

Design your Kentucky dispensary

Dispensary design isn’t just about where your dispensary is or what it looks like. It’s how consumers experience and interact with your brand. That’s what makes you memorable!

Here’s a short list of your considerations for in-store design and layout:

• How customers will move throughout the store

• Whether they will pay at a terminal, handheld device, or kiosk

• Whether there are different pathways for in-store vs. online orders

• How your products will be displayed/showcased

• Your brand elements and design

• Use of entry or waiting room space

• Security concerns about doorways

• Where secure inventory is stored (both on the floor, if applicable, and in a vault)

• Where staff will stand and work

• Breakroom or safe staff area

• Bathrooms

Kentucky also has several specific requirements that may impact how your dispensary looks and functions:

• A dispensary shall only dispense medicinal cannabis to a cardholder in an indoor, enclosed, secure facility between the hours of 8 a.m. and 8 p.m.

• A dispensary shall not be located at the same site and location used for growing, cultivating, or processing medicinal cannabis, in the same office space as a medicinal cannabis practitioner or other physician, or the same location as a hemp business.

• A dispensary shall post a sign in a conspicuous location at each facility entrance that reads: "THESE PREMISES ARE UNDER CONSTANT VIDEO SURVEILLANCE. NO ONE UNDER THE AGE OF 18 IS PERMITTED TO ENTER." The letters on the signs required by this subsection shall be at a minimum of one-half (1/2) inch in height.

• A dispensary shall clearly mark all limited access areas on its premises with proper signage. All areas of ingress and egress to a limited access area shall be identified by the posting of a sign which shall be not less than twelve (12) inches wide and twelve (12) inches long, composed of letters not less than one-half (1/2) inch in height, which shall state: "Do Not Enter. Limited Access Area. Access Limited to Authorized Personnel and Escorted Visitors."

• A dispensary may operate a delivery service for registered qualified patients and designated caregivers in accordance with the delivery service requirements.

• A dispensary may dispense medicinal cannabis to cardholders using a drive-thru window or curbside pickup service if:

  • The dispensary electronically emailed the office at kymedcanreporting@ky.gov to notify it of its intent to dispense medicinal cannabis using a drive-thru window or curbside pickup service.

  • The dispensary provides the office with detailed written plans and procedures for drive-thru and curbside pickup operations, including operating hours, payment methods, medicinal cannabis products provided to cardholders, and safety and security measures to ensure safe operations.

  • The office approves the dispensary's proposed written plans and procedures.

  • The dispensary complies with the dispensing requirements established in Sections 2 and 3 of this administrative regulation.

• A dispensary may display product examples that have been designated by the dispensary for product education for cardholders if:

  • A sign or label conspicuously displayed on or near the product example clearly states, in bold capital letters, "PRODUCT EXAMPLE FOR DISPLAY PURPOSES ONLY. NOT FOR SALE OR CONSUMPTION."

  • The product example is packaged in a secure jar protected by a plastic, glass, or metal mesh screen so that cardholders can see the medicinal cannabis or medicinal cannabis product.

  • The product example is recorded in the Commonwealth's electronic monitoring system and seed-to-sale tracking system as a product example.

  • When a product example has noticeably degraded to where it is no longer representative of a new product, the dispensary shall destroy the product example per Section 14 of this administrative regulation.

• Dispensaries may utilize inducements to assist cardholders. Inducements shall not persuade or influence the use of medicinal cannabis outside of medicinal cannabis practitioner recommendations or limitations or the amounts allowed by law. Authorized inducements may include:

  • The use of coupons, loyalty programs, and discounts.

  • The giving away of educational materials and branded merchandise.

• A dispensary may sell branded merchandise, including t-shirts, mugs, water bottles, and hats.

• A dispensary shall not sell any medicinal cannabis accessory that is used solely for the purpose of smoking medicinal cannabis, including rolling papers and lighters.

• When dispensing medicinal cannabis, a dispensary shall disseminate evidence-based educational materials and product information regarding dosage, effects, directions for use, storage directions, contraindications, and risk of cannabis abuse to cardholders who purchase medicinal cannabis as follows:

  • A dispensary may provide education through a quick response (QR) code. The QR code shall be labeled as "Educational Materials" directly above or below the code and be large enough to be smartphone-readable. The QR code may appear on the receipt provided to the cardholder or on a separate sheet of paper provided to the cardholder.

  • Upon request of the cardholder purchasing the medicinal cannabis, a dispensary shall provide hard copies of any materials required under this section.

  • Upon the office's request, a dispensary shall provide copies of the educational material required under this section within five (5) business days of receiving the request.

🤔🏬 Take the Store Layouts Quiz to find the perfect layout for your dispensary.

Create a safe and secure Kentucky dispensary

Safety and security must always be top-of-mind for dispensaries. The following security measures shall be implemented to prevent unauthorized entry, protect products and currency, and safeguard employees:

• A dispensary shall have security and surveillance systems utilizing commercial-grade equipment to prevent unauthorized entry and detect adverse loss. The security and surveillance systems shall include the following:
  • A professionally monitored security alarm system that includes:

    • Coverage of all facility entrances and exits; rooms with exterior windows, exterior walls, roof hatches, or skylights; storage rooms, including those that contain medicinal cannabis and safes; and the facility's perimeter.

    • An audible security alarm system signal, known as a panic alarm, generated by the manual activation of a device intended to signal a life-threatening emergency requiring law enforcement response.

    • A silent alarm signal, known as a holdup alarm, generated by the manual activation of a device intended to signal a robbery in progress.

    • A failure notification system that provides an audible, text, or visual notification of any failure in the system. The failure notification system shall alert a designated security person within the facility within five (5) minutes of the failure by telephone, e-mail, or text message.

    • Smoke and fire alarms.

    • Auxiliary power sufficient to maintain operation for at least twenty-four (24) hours following a power outage.

    • The ability to ensure all access doors are not solely controlled by an electronic access panel to prevent locks from becoming released during a power outage.

    • Motion detectors for exterior lighting.

  • A professionally monitored security surveillance system that is operational twenty-four (24) hours a day, seven (7) days a week, and records all activity in images capable of clearly revealing facial details. The security and surveillance system shall include the following:
    • Fixed camera placement that allows for a clear image of all individuals and activities in and around:

      • All limited access areas.

      • A room or area containing a security alarm and surveillance system storage device or equipment.

      • Entrances to and exits from the facility. Entrances and exits shall be recorded from both indoor and outdoor vantage points.

      • Rooms with exterior windows, exterior walls, roof hatches, skylights, and storage rooms, including those that may contain medicinal cannabis and safes (excluding restrooms).

      • Twenty (20) feet from the exterior of the facility's perimeter.

• Auxiliary power sufficient to maintain operation for at least twenty-four (24) hours following a power outage.

• The ability to operate under the normal lighting conditions of each area under surveillance.

• The ability to immediately produce clear, color still photographs in an easily accessible digital format.

• The ability to clearly and accurately display the date and time. The date and time shall be synchronized and set correctly and may not significantly obscure the picture.

• The ability to record all images captured by each surveillance camera in a format that may be easily accessed for at least sixty (60) days unless otherwise required for investigative or litigation purposes. The recordings shall be kept:
  • At the dispensary:

    • In a locked cabinet, closet, or other secure place to protect it from tampering or theft.

    • In a limited access area or other room with entry available only to authorized individuals.

  • At a secure location other than the dispensary's location if approved by the office.

• The ability to easily export video recordings and still photographs requested by the office, law enforcement, and other federal or state government officials and provide the same in a standard file format that is easily accessible.

• The following requirements apply to the inspection, servicing, or alteration of and any upgrade to the security alarm and surveillance systems:

  • A qualified alarm system vendor and a qualified surveillance system vendor shall inspect the systems and test all devices once every year.

  • The dispensary shall conduct maintenance inspections once every month to ensure that any repairs, alterations, or upgrades to the security alarm and surveillance systems are made to ensure their proper operation. No more than thirty (30) calendar days shall lapse between the inspections required under this paragraph.

  • The dispensary shall retain records of all inspections, servicing, alterations, and upgrades performed on the security alarm and surveillance systems at the facility for at least five (5) years and shall make the records available to the office and its authorized agents within two (2) business days following a request.

  • If a dispensary anticipates a mechanical malfunction of the security alarm or surveillance system that will exceed an eight (8) hour period, it shall notify the office immediately by electronic mail to kymedcanreporting@ky.gov and, with office approval, provide alternative security measures that may include closing the facility.

• Regarding records retention, a dispensary shall:

  • Have a secure electronic backup system for all electronic records.

  • Within three (3) business days following a request for records under this paragraph, provide up to four (4) screen captures of an unaltered copy of a video surveillance recording to the office or its authorized agents, law enforcement, or other federal, state, or local government officials if necessary to perform the governmental officials' functions and duties.

  • If it has been notified in writing by the office or its authorized agents, law enforcement, or other federal, state, or local government officials of a pending criminal or administrative investigation for which a recording may contain relevant information, retain an unaltered copy of the recording for two (2) years or until the investigation or proceeding is closed or the entity conducting the investigation or proceeding notifies the dispensary that it is not necessary to retain the recording, whichever is later.

• A dispensary shall install commercial-grade, nonresidential doors and door locks on each external door of the facility. Keys or key codes for all doors shall remain in the possession of designated authorized individuals.

• During all non-working hours, all entrances to and exits from the dispensary shall be securely locked.

• A dispensary shall limit access to a room containing the equipment operating the security alarm and surveillance monitoring systems to:

  • Persons who are essential to maintaining security and surveillance operations.

  • Federal, state, and local law enforcement.

  • Security alarm and surveillance system service employees.

  • The office or its authorized agents.

  • Other persons with the prior written approval of the office.

• A dispensary shall make available to the office or its authorized agents, upon request, a current list of authorized employees and service employees or contractors who have access to areas containing the equipment operating the security alarm and surveillance monitoring systems and place a copy of this list on or next to the doors that access those areas.

• A dispensary shall keep rooms housing the equipment operating the security alarm and surveillance monitoring systems locked at all times and shall not use these rooms for any other purpose or function.

• A dispensary shall routinely inspect its point of sale systems to confirm no malicious software, programs, or applications have been downloaded that affect cardholder or sales information and shall document each inspection in writing. The documentation required under this subsection shall be retained by the dispensary for at least two (2) years from the inspection date.

Hire and retain qualified dispensary staff

Now that you’re getting closer to opening day, it’s time to think about hiring and training your dispensary employees. This team is vital to the success of your dispensary.

You’ll need budtenders or cannabis sales associates to serve customers and fulfill orders, someone to greet your shoppers (and secure the entryway), security, and someone to manage inventory and compliance. Based on the size and complexity of your business, you might need more or fewer people on your team.

It’s important to create a dispensary org chart. Based on your business plan, location, store design, and vision, what role will you play in day-to-day operations, and what additional staff do you need? What is the hierarchy? What benefits will you offer? Do you have the funds to pay your staff appropriately?

Be sure to understand the local ordinances around hiring and staffing and follow all requirements specific to cannabis brands and general hiring/staffing rules. These could include procuring cannabis employment IDs, processing fingerprints and background checks, age requirements, mandating certification training attendance, payroll taxes, and at-will parameters.

Understand compliance

Understanding Kentucky cannabis laws and how to stay compliant is critical to opening a dispensary. If you don’t maintain compliance, you can be charged fees or forced to shut down.

Dispensaries cannot sell or give away cannabis or cannabis products to anyone under the age of twenty-one. Valid identification and proof of age is required.

As a reminder, here are the purchase limits for Kentucky:

• In-state qualified patients (or their designated caregiver) are permitted to purchase the amount of medical cannabis specified by the patient’s medical cannabis practitioner, up to a thirty (30) day supply during a twenty-five (25) day period.

• Visiting qualified patients are permitted to purchase an amount of medical cannabis up to a ten (10) day supply as specified by the program supply limits during an eight (8) day period.

Smoking is not permitted, though patients may purchase raw flower for other non-combustible uses, such as making homemade edibles or tinctures.

Dispensaries may not acquire, possess, dispense, sell, offer for sale, transfer, or transport:

• Raw plant material with a delta-9 tetrahydrocannabinol (THC) content of more than thirty-five (35) percent.

• Medicinal cannabis products intended for oral consumption as an edible, oil, or tincture with more than ten (10) milligrams of THC per serving.

• Any medicinal cannabis product not otherwise described in this subsection with a THC content of more than seventy (70) percent.

The seed-to-sale tracking program chosen by the state is Metrc.

Cannabis stores in Kentucky are required to track all medical cannabis and cannabis products at every stage of their lifecycle using Metrc. This includes all transportation to the store until the point of being sold to a customer, delivered to a testing facility, or disposed of.

Licensees must use Metrc to the fullest extent possible and integrate it with their POS and inventory management software to ensure compliance. Dispensary owners are recommended to take advantage of Metrc's training and education. Flowhub integrates with Metrc and meets Kentucky’s product intake and control requirements.

Source and intake cannabis products

Now is when things start getting fun: ordering and receiving your product!

In Kentucky, you are allowed to sell:

• Cannabis raw material

• Edibles

• Concentrates

• Beverages

• Topicals

• Tinctures

• Oils

• Capsules

• Suppositories

• Cannabis paraphernalia, though a dispensary is not permitted to sell any medicinal cannabis accessory that is used solely for the purpose of smoking medicinal cannabis, including rolling papers and lighters

• Non-cannabis items, such as branded merchandise, including t-shirts, mugs, water bottles, and hats

As you look for suppliers in Kentucky, there are several things to keep in mind:

• What products they carry (think about your product mix)

• The taste and quality of the products

• Prices (including the ability to negotiate bulk discounts)

• Fulfillment (how they get products to you and when)

• Testing processes and results

• Reliability (will they run out suddenly, stop communicating, etc.)

• Process for placing orders and overall organization

You must also ensure your suppliers are licensed facilities, as you cannot order supplies from unlicensed distributors. All products must comply with packaging and label requirements and pass testing at state-approved laboratories for potency, contaminants, and safety.

Intake and store inventory

Once your cannabis products arrive, you must “intake” them into your store in a specific way to remain compliant with Metrc. On Flowhub, dispensaries can bulk import from Metrc’s manifest into Flowhub and fix discrepancies with ease.

Before you can bring physical inventory into your store, you must receive and review a manifest and confirm that the product's name, strain name, weight, and identification number on the manifest match the information on the cannabis product label and package.

You must review the manifest and accept it if everything is correct. When the package arrives, you'll physically inspect it to ensure it’s precisely as ordered.

You then accept it in Metrc, which tells the state track-and-trace system that you legally possess this inventory. Now you can stock your shelves and sell the product. But you’ll also need to develop SOPs to take and audit your inventory.

Pro tip: Use this 📝 Inventory Intake SOP to document your processes!

Packaging and label requirements

All marijuana products shall be produced, packaged, and labeled in a manner that protects public health and is not attractive to children.

Here are the basic regulations for marijuana product packaging and labeling:

General requirements for packaging and labeling of medicinal cannabis

• Packaging and labeling of any medicinal cannabis or medicinal cannabis product shall not bear the following:

  • Any resemblance to the trademarked, characteristic, or product-specialized packaging of any commercially available food or beverage product or be visually reminiscent of major brands of edible non-cannabis products.

  • Any statement, artwork, or design that could reasonably lead an individual to believe that the package contains anything other than medicinal cannabis.

  • The logo of the office or any seal, flag, crest, coat of arms, or other insignia that could reasonably mislead an individual to believe that the product has been endorsed, manufactured, or approved for use by any state, county, municipality, or other agency.

  • Any cartoon, image, graphic, or feature that may make the package attractive to minors.

• Medicinal cannabis shall be prepared, packaged, and labeled by a cannabis business at its licensed locations. The original seal of a package may not be broken except for the following:

  • For testing at a safety compliance facility.

  • By a dispensary to display product examples for the benefit of cardholders.

  • As needed by the office or its authorized agents for an inspection or investigation.

Packaging of medicinal cannabis for sale to cardholders

• When packaging medicinal cannabis and medicinal cannabis products for sale to cardholders, a cannabis business shall ensure each product package:

  • Is child-resistant and requires at least a two (2) step initial opening process.

  • Has a tamper-evident seal.

  • Minimizes exposure to oxygen.

  • Contains the following warnings:

    • The typical length of time for the medicinal cannabis to take effect.

    • The statements in bold "For medicinal use by cardholders only. KEEP OUT OF REACH OF CHILDREN."

    • For raw plant material packaged for sale to a cardholder, the statement "NOT INTENDED FOR CONSUMPTION BY SMOKING.”

  • Discloses the strain of medicinal cannabis, including whether it is a Sativa, Indica, or hybrid form of medicinal cannabis, and standard amount of delta-9 tetrahydrocannabinol (THC), terpenes, and cannabidiol (CBD) in the medicinal cannabis, including:

    • If the medicinal cannabis product is intended for oral consumption as an edible, oil, or tincture, potency shall be stated as milligrams per serving for total THC and total CBD, as applicable, and milligrams per package for total THC and total CBD, as applicable.

    • For concentrates and raw plant material, total THC, total terpenes, and total CBD, as applicable, shall be stated in percentages.

  • Discloses the amount of medicinal cannabis the product is considered the equivalent to, if applicable.

  • Discloses any possible allergens.

  • Is light-resistant and opaque.

  • Clearly and conspicuously displays the standardized symbol in navy blue provided by the office.

  • Is resealable, if applicable.

  • Contains the name and license number of the cannabis business packaging the medicinal cannabis.

  • Protects the medicinal cannabis from contamination.

  • Does not impart any toxic or harmful substance to the medicinal cannabis.

  • Provides the telephone number for the National Poison Control Center.

Labeling of medicinal cannabis for sale to cardholders

• Medicinal cannabis and medicinal cannabis products prepared for sale to cardholders shall include a label, with writing no smaller than one-sixteenth of an inch in height, that is firmly affixed to the packaging holding medicinal cannabis or firmly affixed to any outer packaging if used.

• The label required by this section shall:

  • Be made of weather-resistant and tamper-resistant materials.

  • Be legible.

  • List the strain and net weight of the medicinal cannabis included in the package.

  • List any ingredients.

  • List the specific amount of THC and CBD in the medicinal cannabis included in the package as stated on the certificate of analysis for the medicinal cannabis's harvest batch or production batch. For concentrates, the specific amount of THC and CBD shall be expressed in milligrams and by percentage, as applicable.

  • List the percentage of total terpenes, and the most prevalent terpenes expressed in the medicinal cannabis, as applicable. For concentrates, the specific amount of terpenes shall be expressed in milligrams and by percentage, as appropriate.

  • Provide the name and license number of the cannabis business that cultivated the medicinal cannabis.

  • Provide the name and license number of the cannabis business that processed the medicinal cannabis, if applicable.

  • Provide the identifier unique to the particular harvest or production batch of medicinal cannabis in the package.

  • List the date the medicinal cannabis was harvested or processed, as applicable.

  • List the date the medicinal cannabis was packaged.

  • List the name and license number of the safety compliance facility that tested the medicinal cannabis and the date the medicinal cannabis was tested.

  • List the expiration date of the medicinal cannabis.

  • List the method of extraction, if applicable.

  • If the product contains multiple servings, include the statement in bold, "MULTIPLE SERVINGS."

  • Include directions for use for concentrates and THC-infused medicinal cannabis products.

  • If the medicinal cannabis product is intended for oral consumption as an edible, oil, or tincture, provide a nutritional fact panel, the number of individual servings contained within the package, and the amount of THC per serving, which shall not exceed ten (10) milligrams per serving.

• Quick response (QR) codes. The label required by this section may contain a QR code that links to information required under this section.
  • The QR code shall be:

    • Labeled as "Specific Product Information" directly above or below the QR code.

    • Large enough to be smartphone-readable.

  • The information available through use of a QR code may include:

    • The name and license number of the cannabis business that cultivated the medicinal cannabis.

    • The name and license number of the cannabis business that processed the medicinal cannabis, if applicable.

    • The name and license number of the cannabis business that packaged the medicinal cannabis.

    • The method of extraction, if applicable.

    • The date the medicinal cannabis was packaged.

• A dispensary shall affix a sticker to each package of medicinal cannabis sold at its licensed location that contains the dispensary's name, license number, and telephone number.

Packaging and labeling requirements for sale or transfer between cannabis businesses

• All medicinal cannabis sold or otherwise transferred between cannabis businesses for processing or packaging and labeling for retail sale to cardholders shall:

  • Fully enclose the medicinal cannabis so that it cannot be seen from outside the packaging.

  • Protect the medicinal cannabis from contamination.

  • Not impart any toxic or harmful substance to the medicinal cannabis.

  • Be accompanied by all tracking tags required by the state's designated seed-to-sale tracking system for the medicinal cannabis contained in the transfer. The tracking tag required by the state's designated seed-to-sale tracking system shall be firmly affixed to the outermost packaging of the respective package containing the medicinal cannabis identified by the tag. A transport manifest shall also accompany transfers of medicinal cannabis between cannabis businesses.

• Any sale or transfer of medicinal cannabis between cannabis businesses shall be documented in the Commonwealth's designated electronic monitoring system and seed-to-sale tracking system.

Cannabis businesses may submit proposed packaging and labels for medicinal cannabis and medicinal cannabis products intended for sale to cardholders to the office for a voluntary compliance review. The nonrefundable fee for the voluntary compliance review is $200 per product submission.

Market your dispensary

Ok, your store is ready, the team is trained, and you have inventory. Now, you need to know that your dispensary is opening soon.

Cannabis businesses notoriously have more challenges with marketing than traditional brands because of stigma, regulations, and the federal illegality of cannabis. However, you can still use many marketing tactics to promote your new dispensary:

• Develop a beautiful, functional dispensary website. Enabling online ordering through your website is a great way to appeal to digital-friendly shoppers.

• Fine-tune your social media presence (though be careful with your posts and keep terms of service in mind!).

• Consider events to attract new customers to your store.

If you're opening a dispensary in Kentucky, you need to understand the restrictions on advertising, marketing, and signage for cannabis businesses:

• A cannabis business shall not make deceptive, false, or misleading assertions or statements on any advertising, advertising device, sign, listing, or informational material.

• Cultivators, processors, and producers shall not display any signage, logos, products, or other identifying characteristics outside their respective facilities to alert the public that medicinal cannabis is grown, processed, produced, or stored at the facility.

• Cannabis businesses shall not advertise medicinal cannabis sales in print, broadcast, online, by paid in-person solicitation of customers, or by any other advertising device, except that cannabis businesses may:

  • Place appropriate signs on its property that identify the business.

  • Place listings in business directories.

  • Place listings in trade or medical publications.

  • Sponsor health or not-for-profit charity or advocacy events.

  • A cannabis business may maintain an informational website and social media presence that provides:

    • A description of the business and services offered.

    • A listing of medicinal cannabis or medicinal cannabis products cultivated, processed, produced, or sold by the cannabis business, as well as a listing of the respective product prices and inducements.

• The website and social media presence may also provide contact information for the cannabis business and a listing of the dispensaries where its medicinal or medicinal cannabis products are sold, if applicable.

• A cannabis business shall provide the office with a list of all informational websites and social media accounts maintained by the cannabis business, including links to the respective web pages. It shall not block the office from accessing those informational sites and social media postings. A cannabis business shall continually update the list required under this subsection and notify the office of any changes within two (2) business days of activating or deactivating any informational website or social media account.

• An informational website or social media presence for a cannabis business shall not:

  • Contain statements that are deceptive, false, or misleading.

  • Contain any content that can reasonably be considered to target individuals under the age of eighteen (18), including images of minors, cartoons, toys, or similar images and items typically marketed towards minors or references to products commonly associated with minors or marketed by minors.

  • Encourage the transportation of medicinal cannabis products across state lines or otherwise encourage illegal activity.

  • Display consumption of medicinal cannabis in a manner that does not provide an educational benefit.

• An informational website or social media presence for a cannabis business shall conspicuously display the following statements:

  • "Medicinal cannabis is for use by cardholders only."

  • "Keep out of reach of children."

• A cannabis business that maintains an informational website or social media presence shall utilize appropriate measures to ensure that individuals attempting to access the allowable content are eighteen (18) years of age or older.

• A cannabis business shall remove any advertising, advertising device, sign, listing, sponsorship, or online material that the office determines to violate this administrative regulation.

• The office shall provide written notice to a cannabis business of any violation of this administrative regulation and specify a reasonable time period for the cannabis business to remove any advertising, advertising device, sign, listing, sponsorship, or online material that the office finds objectionable.

• Cultivators, processors, producers, or dispensaries may directly promote their business, services, medicinal cannabis, medicinal cannabis products, accessories, educational materials, and product information to other cultivators, processors, producers, or dispensaries.

• A safety compliance facility shall only promote its medicinal cannabis testing services and other activities allowed by KRS 218B.125 to other cannabis businesses.

Choose your network, hardware, and cannabis tech stack

Your technology stack is crucial to success as a cannabis business owner. Some are must-haves for compliance, like your security system and cannabis point-of-sale, while others are important to differentiate your store and create a great customer experience.

Here are some of the technology solutions you may want for your dispensary:

• Network

• Hardware

• Printers (both letter-sized and receipts)

• TVs

• Cash drawers

• Computers (for staff work, like inventory)

• Tablets or terminals

• Barcode scanners

• Software

  • POS

  • Ecommerce

  • Compliant payment provider for non-cash transactions

  • Digital menus

  • Kiosks

  • Loyalty programs

  • CRM

  • HR/Payroll tools

  • Accounting software

  • Analytics software

  • Social media management and monitoring

  • Website

  • Mobile app

• You don’t need to invest in every possible cannabis-specific technology solution. But be sure to invest in tools to help you achieve your sales goals, stay compliant, and satisfy modern shoppers.

📖 See the complete list of top cannabis companies for your dispensary tech stack.

How to choose a cannabis retail POS system

Your cannabis point-of-sale system is the single most important tool in your stack. It is the central driver for compliance, inventory management, and customer satisfaction.

Every POS option is a little bit different—and not all work in every state—so be sure to do your homework before signing that dotted line.

Here are 10 tips for choosing marijuana retail software.

What to look for in a cannabis POS

1. State compliance tracking: Software is important because it facilitates state reporting (in Kentucky’s case, Metrc). Look for an API integration that manages this seamlessly to save you time and provide peace of mind.

2. Hardware compatibility: As mentioned above, your chosen software and hardware must be compatible. Pick a cloud-based software that doesn’t restrict hardware options so that you don’t incur additional hardware costs or change hardware if you change point-of-sale systems later.

3. Customer support: Your ability to get up and running quickly is essential, but getting your questions answered long-term is just as vital. As you look at different software, ask about the level of support you’ll receive.

4. Ease of use: Software that fuels your medical cannabis or adult-use retail stores must be accessible and intuitive, and staff must learn it quickly. Pay attention to how the system functions and whether you think it’ll make your staff more productive.

5. Inventory management: As mentioned earlier, you need to manage your inventory. Ensure the POS you choose has all the capabilities you need (and then some).

6. Built-in compliance: Software isn’t just important for compliance related to state reporting (like BioTrack or Metrc); it should also help you stay compliant with state marijuana laws, such as purchase limits. Ensure the software you choose has built-in safeguards that address your market-specific needs.

7. Discrepancy reporting: Your Metrc, physical, and point-of-sale inventory must always be aligned. If there is a discrepancy, you need to know about it and how to resolve it. Your software should include built-in tools to help you identify and resolve inventory discrepancies.

8. Activity tracking: In an industry with more loss and theft than others, it’s essential to see which employees took what actions and when, such as making a sale, opening a drawer, moving inventory, etc.

9. Open API and integrations: Is the software compatible with other vendors? Integrations are important to consider, especially if you’re interested in online menus, delivery, loyalty programs, or other technology offered by partners.

10. Specialization: Consider the best software for each part of your business. If you have marijuana cultivation facilities, manufacturing facilities, and cannabis retail operations, it’ll be tempting to pick one software for it all. You can’t deny that better visibility is tempting, but all software is best at one thing. If you choose one for all, you’ll disadvantage the other two parts of your business. Instead, look for vendors who integrate seamlessly.

Need help opening your dispensary?

Opening a dispensary in Kentucky is an accomplishment. The market is brand new and has a minimal number of available licenses. This means competition will be intense, and only some will receive their desired license.

The final point of sale is one of the most critical elements in opening a dispensary in Kentucky. In such a competitive market, new dispensaries need best-in-class technology to stand out among cannabis retailers who have already built a loyal customer base.

Since cannabis businesses don’t have the same options as traditional retailers, companies like Flowhub fill the gap.

Book a call with our team to explore a POS demo and learn how Flowhub saves dispensaries money on operational costs and increases profit.