How to Get a CBD License in Kentucky & Start Your Business

CBD products have continued to grow in popularity in Kentucky since the 2018 Farm Bill legalized hemp-derived cannabidiol on a federal level. Kentucky hemp sales were 3½ times higher in 2018 than the previous year.^[1]Kentucky Department of Agriculture. “Quarles: Kentucky Hemp Industry’s Economic Impact Showed Explosive Growth in 2018“. Accessed on February 06, 2024. However, as with most states, Kentucky has various rules regulating the hemp industry. If you plan to start a CBD business in Kentucky, it’s critical to understand the region’s rules, regulations, and licensing requirements before you begin selling cannabidiol.

This guide explores how to start a CBD business in Kentucky, how to get a CBD license, and other information necessary to selling CBD products and setting up a CBD company in Kentucky. Read ahead if you’re ready to be Kentucky’s next big CBD entrepreneur!

How to Start a CBD Business in Kentucky

Building a new business is an exciting time for an entrepreneur, but getting started on the right foot is critical. As with any business, starting a CBD business requires the owners to choose an ownership structure and register the business with local and state authorities. There are various business structures to choose from, but many CBD businesses opt for LLCs; they help shield the ownership group from business-related liabilities.

Once you choose a business name and structure, it’s time to register the business with Kentucky authorities. Fortunately, Kentucky makes it easy to register and obtain tax numbers. Head to the “Kentucky Business One Stop” website to find all the information you need to set up a business in the state. To register an LLC or any other business structure, you must create an account on the Secretary of State and Department of Revenue website.

Once you register your business, you can use the same Kentucky Business One Stop website to research the local or state tax numbers your business requires. You must also apply for an Employer Identification Number (EIN) from the IRS. An EIN is critical if your business wants to employ staff — and it also serves as a helpful identification number for your business, similar to how a Social Security Number (SSN) works for an individual.

It’s also essential to open a new business bank account to separate your finances from your new CBD business. Once your business has a dedicated bank account, it can begin building business credit. A high business credit score can help your business unlock vendor finance, cheaper loans, and other funding benefits.

Now it’s time to start considering the CBD-related requirements of opening a cannabidiol business in Kentucky!

How to Get a CBD License in Kentucky

Currently, there are no licensing requirements for retail CBD businesses in Kentucky. As long as your CBD products are legal according to federal and state legislation, your business can sell the products without a Kentucky CBD license.

However, if you want to grow or process hemp for CBD products, your business requires a license from the Kentucky hemp program. Head to the Kentucky hemp application portal online to begin the application process. Unfortunately, applications are only open for a short window. For growers, applications are usually due March 15th of each year; for growers, the application deadline is typically December 31st.

Kentucky doesn’t charge applicants any money if they use the online application portal. However, there is a $200 fee for using the paper application. The annual cost of a hemp grower license is $400 per growing location. The yearly license fee for hemp processors varies depending on the type of processing you undertake. For example, processing the fiber component of hemp is $500 per year, and processing the floral material in hemp (this is for CBD) will be $3000 per year.

The hemp program in Kentucky has seen hemp growing and processing become commonplace. In 2022, there were 240 hemp growers and 93 hemp processors in the state.^[2]Kentucky Department of Agriculture. “Hemp Overview“. Accessed on February 06, 2024.

Not only must a business renew its hemp grower or processor licenses annually, but the business’s key participants must undergo background checks annually. Let’s explore some of the primary details required for a hemp program application in Kentucky:

• Personal details of the primary applicant (name, birthdate, etc.)
• Name of business entity
• Complete business street address
• KY Secretary of State Organization Number
• Date of Last Annual Report
• Location/Map of Growing Fields
• Key Participant details
• Background checks on key participants

Laws and Regulations for Selling CBD in Kentucky

Kentucky doesn’t have strict laws and regulations for selling CBD to consumers. The primary restrictions regard the THC concentration of the CBD products your business sells. All CBD products must contain 0.3% THC concentration or less (they must be derived from hemp plants).

Regardless, while current regulations are not extensive, remaining aware of developments in the Kentucky CBD legal landscape is critical. For example, in March 2023, Kentucky passed a law to regulate CBD products with delta-8 THC content further — the new law “establishes a framework to test, label and regulate delta-8 and outlaws sales to those younger than under 21.^[3]MJBizDaily. “Kentucky governor signs law establishing delta-8 guidelines“. Accessed on February 06, 2024.

How to Renew Your CBD License in Kentucky

Fortunately, as there is no retail Kentucky CBD license, your business won’t need to renew any permits to continue selling CBD products to consumers. However, if your business grows or processes hemp, you must renew your hemp program license annually. In addition to submitting an application renewal online, all the key participants in your hemp company must undergo annual background checks. You can use the online application portal to renew your licenses. However, there are strict deadlines for renewal applications — usually March 15th for growers and December 31st for processors.

Start Selling CBD in Kentucky

Now that your business has all the tools it requires to start a CBD enterprise in Kentucky, what are you waiting for? The sooner you set up a new business structure and begin selling legal CBD products to customers, the quicker you will have access to more than three million Kentucky consumers over the age of 18.^[4]Infoplease. “KY Demographic Statistics“. Accessed on February 06, 2024.

Still, while the CBD industry is still in its early stages, some of the nation’s largest retailers are taking a piece of the action. For example, in 2019, Walgreens announced it would begin selling various CBD products in its Kentucky stores.^[5]Courier Journal. “Walgreens will sell CBD products in nearly 1,500 stores“. Accessed on February 06, 2024. So, while the Kentucky CBD industry is simple to enter due to a lack of licensing requirements, your business must be able to compete with large retailers. Providing niche CBD products or experiences may help you stand out.

Once you develop a strategy for attracting customers and marketing your CBD products in Kentucky, it’s time to choose a payment processing partner to accept payments from customers. Unfortunately, while credit card processing is a must-have tool for any modern CBD business, many traditional payment service providers don’t partner with CBD businesses. As CBD is a regulated industry exposed to evolving laws, it’s deemed high-risk by many financial services providers. Fortunately, high-risk merchant account providers offer specialist CBD payment processing solutions in Kentucky. High-risk merchant accounts offer a range of unique benefits, including higher chargeback thresholds, CBD-specific features, dedicated merchant support, and other features.

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