Kentucky sellers would pay fees on alcohol, hemp, and kratom

Covered sellers would pay state fees on alcohol, cannabis drinks, hemp products, and kratom. The fees would cover sales for Kentucky use, including direct shipments. Covered suppliers would include wholesalers, distributors, and producers selling directly. Beverages shipped permanently outside Kentucky for sale and use there would be exempt. Alcohol and cannabis drink retailers would owe 4% of sales receipts and could charge customers that fee separately. Standard supplier fees would be $0.004 per milliliter of alcohol and $0.016 per milliliter or milligram of THC, the intoxicating ingredient in cannabis. Hemp retailers would owe $0.016 per labeled milligram of THC. Kratom fees per milligram of mitragynine, a kratom ingredient, would be $0.04 for products and $0.40 for extracts at concentrations of 2% or less; higher concentrations would carry rates of $4 and $8, respectively. Microbreweries selling directly would have a lower rate for their first 15,000 taxable barrels. Certain breweries would receive exemptions tied to 1,000 barrels, but crossing that threshold would trigger fees in that year and all later years. The rule for exactly 1,000 barrels in 2026 is unclear. The fees would begin July 1, 2027. The listed alcohol per-case, per-gallon, and wholesale sales tax provisions would expire that day.

The Kentucky Department for Public Health would approve independent hemp testing labs and publish a list of those that qualify. These rules would cover independent labs testing hemp-derived products for registration and sale in Kentucky. Labs would need recognized accreditation, validated testing methods, and accuracy test results within the department's accepted range. Businesses registering hemp products would have to use an approved lab. Previously registered products would need testing through approved labs and registration again to remain on sale. Fees for that registration would be waived. The product requirements would start when the approved lab list exists. The Department for Public Health would set the time allowed for retesting and registration.

Cities and counties could charge local fees on lawful alcohol and cannabis drink sales, within rate and spending limits. Fees would cover establishments where sales are lawful and direct shippers. City and county overlap rules and credits for certain local license fees would apply. Previously authorized governments could not exceed their January 1, 2026, rates. They would face a 5% cap for expenses tied to regulating these sales, or a 3% cap if they also fund local emergency services. Governments first charging the fee on or after July 1, 2027, would face a 1% cap and could fund local emergency services and expenses tied to regulating these sales. Money would stay in a separate account. A second failure to substantially follow the rules would end the government's authority to charge the fee. Missing an annual report by more than 15 days would require forfeiting the previous year's fee receipts to the Auditor of Public Accounts. Section 13 would take effect July 1, 2027. Existing fees would need to meet the caps that day. Audits would be required by January 1, 2028, and every three years thereafter.

Kentucky's Department of Alcoholic Beverage Control would post covered license applications online for 14 days. The notice rules would cover new licenses and temporary licenses used while a business transfer is processed, with the listed exemptions. Applications for the same license at the same premises and listed license types, including direct shipper licenses, would be exempt from website notice. Anyone could object in writing within 14 days of submission. Later objections would not count as valid legal protests. Licenses generally could not be approved before that period ends. Conditional approval could occur sooner if the premises operated under the same license type within the previous 12 months. These notice rules would take effect upon the governor's approval or the measure otherwise becoming law. The notice and objection periods would start on the submission date.

Alcohol business rules would govern conference licenses, sales to minors, and dealings between brewers and distributors. Conference permissions would cover state or national gatherings in Kentucky. The license ban would cover alcohol and cannabis drink retailers; distributor safeguards would cover brewers and microbreweries. A conference would need at least 300 attendees and could not be a political campaign fundraiser. Its organizer would need a special temporary license, lasting no more than 30 days, for the permitted alcohol activities. The permanent license ban would apply after at least three sales-to-minors violations under the same retail license at the same premises within 24 months. Brewers could not require distributors to accept unrequested products unless they were included in agreed sales projections. Brewers also could not tie their prices to distributor resale prices or recover part of a distributor's price increase. Conference license provisions would take effect upon the governor's approval or the measure otherwise becoming law. Sections 28 and 29 do not state a separate effective date.