A sanitized vending machine includes product and cup dispensing mechanisms, a cup separation mechanism, and an actuation mechanism. The product dispensing mechanism, holding product items, rotates through a product dispensing cycle to dispense them. The cup dispensing mechanism, holding a stack of cups, rotates through a cup dispensing cycle to dispense an empty cup to an intermediate location in a drop chute spaced above a final discharge location. Dispensing cycles occur in a predetermined sequence enabling the dispensed product items to be received in a dispensed empty cup and the cup dropped to the discharge location. The cup separation mechanism coordinated with operation of a cup stack holder device of the cup dispensing mechanism such that outer and inner cup separator devices of the cup separation mechanism function to separate a lowermost cup from a stack thereof rotated by the cup stack holder over a cup dispensing opening.