One of the nation’s largest cannabis companies, Cresco Labs, has secured one of Kentucky’s most sought-after medical marijuana licenses, raising concerns over how out-of-state firms may have influenced the state’s lottery process. With ties to over 20 newly formed LLCs, Cresco collectively submitted 128 applications and spent $740,000 in fees.
A Cresco-backed company, KSKYAPP LLC, won a Tier 3 cultivator license in the state lottery, granting access to operate one of two extensive cultivation facilities. At a ribbon-cutting ceremony in Winchester, Governor Andy Beshear joined Cresco CEO Charlie Bachtell to unveil the new site.
Ownership Questions Surface
At the event, Kentucky Public Radio asked Bachtell and state officials who owned KSKYAPP. Executive Director Sam Flynn replied, “So there’s an LLC that owns this facility, right? There’s this LLC that owns that LLC, and there’s an individual or individuals who own the LLC that owns the LLC that owns this facility.”
Bachtell said he wasn’t sure of the entity’s name. He owns the license. Public records later confirmed that CIBKYAPP LLC, a company owned solely by Bachtell, purchased the facility for $4.8 million on April 1. KSKYAPP was previously owned by the wife of a Cresco board member and the firm’s former COO.
How the Applications Were Stacked
The address listed on the applications of 21 Cresco-connected companies matched that of Blue Equity in Louisville. Its managing director, Jonathan Blue, introduced himself as Cresco’s local partner at the ribbon-cutting. “We brought Cresco in as a partner for the investment in the state of Kentucky,” he said.
The LLC names followed a clear pattern, combining the initials of the listed owner with “KYAPP LLC.” While BSRKYAPP LLC won a dispensary license, its listed owner, Barrington Rutherford, served four years as a Cresco VP.
The number of related applications and the financial muscle behind them have drawn scrutiny from smaller operators.
Complaints and Investigations
Kentucky hemp farmers, who received none of the 16 cultivator licenses, argue that major out-of-state firms flooded the system with costly applications to tilt the odds. State Auditor Allison Ball has launched an investigation into the Office of Medical Cannabis, citing “numerous complaints.”
Beshear defended the lottery system. “Basically, these are Kentucky businesses that say, ‘We have never grown cannabis or processed cannabis before, and we are going to contract with some experts to come in and help run our facility,’” he said.
Asked whether Cresco’s arrangement with KSKYAPP was a loophole, he replied, “I haven’t seen the LLC, but… that owner can contract with other groups that are out there.”
Cresco’s Expansion Plans
Bachtell praised the licensing process, stating that Cresco aimed to efficiently bring its approach to Kentucky. He expects planting by summer and harvesting by year-end. The company plans to scale its operations in phases to meet market demand and regulatory timelines.
“They know what they’re doing, and they’ve got the financial backing,” Beshear said. “If you want a product on the shelf to be safe and there for people… bringing in someone with experience is a good thing.”
Meanwhile, Kentucky farmers like Michael Adair warn of delays. “Six months, a year from now, when there’s nothing on the shelves and people are screaming… It’s gonna look real, real bad,” he said.
Beshear now estimates cannabis availability by late summer or fall of 2025.
