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South Dakota Prepares for Medical and Recreational Marijuana Legalization

by Sarah Cawthon April 09, 2020

South Dakota has made impressive strides forward in regards to marijuana reform and voters will now decide on both medical and recreational marijuana legalization on the November ballot. The state will be the first to vote on both medical and recreational marijuana measures during the same election.  

On December 19, 2019, Initiated Measure 26, a measure to legalize medical marijuana in South Dakota officially qualified for the state’s 2020 ballot. The measure would legalize medical marijuana for use by patients with chronic and debilitating medical conditions.

New Approach South Dakota had made prior attempts to place the issue on the ballot, but had failed to garner the support needed to do so until now. In order to get the issue on the ballot, the group needed 16,961 signatures and were able to obtain 25,524. If voters approve the ballot initiative, South Dakota will join neighboring states North Dakota, Montana and Minnesota in legalizing medical marijuana for patients in need.shutterstock_1199336296-1

Patients would be required to obtain a registration card from the state’s Department of Health and would be allowed to possess up to three ounces of marijuana. They would also be permitted to grow a minimum of three plants with the maximum number of plants to be later determined by the state.

The bill lists the types of licenses that will be available, which will include a cannabis testing facility license, cultivation facility license, medical cannabis dispensary license and a medical cannabis product manufacturing license. According to the bill, the application and license fees will be determined for all license types if the initiative is passed into law with application fees not exceeding $5,000.

On January 6, 2020, another campaign group known as South Dakotans for Better Marijuana Laws successfully campaigned for a recreational marijuana ballot initiative that will now appear on the state’s November ballot. The group needed to meet a higher signature threshold of 33,921 signatures and was able to collect 36,707 valid signatures.

The initiative is a proposed constitutional amendment, Constitutional Amendment A, that would legalize and regulate marijuana for adults 21 and older. Individuals would be allowed to possess or distribute up to one ounce of marijuana and cultivate up to three cannabis plants. The initiative was filed by Brendan Johnson, former U.S. Attorney for the District of South Dakota.

The amendment would also require the South Dakota State Legislature to pass laws providing for medical marijuana and the sale of hemp by April 1, 2022. However, if Initiated Measure 26 is also approved, the medical marijuana provision would not be necessary.

Under the amendment, marijuana sales would be taxed at 15% with 50% of the revenue appropriated to fund state public schools and 50% would be deposited in the state’s general fund.

The following business license types would be established under Constitutional Amendment A:

  • Licenses permitting commercial cultivators and manufacturers of marijuana to cultivate, process, manufacture, transport, and sell marijuana to marijuana wholesalers;
  • Licenses permitting independent marijuana testing facilities to analyze and certify the safety and potency of marijuana;
  • Licenses permitting marijuana wholesalers to package, process, and prepare marijuana for transport and sale to retail sales outlets; and
  • Licenses permitting retail sales outlets to sell and deliver marijuana to consumers.

The Department of Revenue would have exclusive power to license and regulate the cultivation, manufacture, testing, transport, delivery and sale of marijuana in the state.

Additionally, members of the Oglala Sioux Tribe passed a referendum to legalize medical and recreational marijuana on the Pine Ridge Reservation in South Dakota on March 11, 2020. Both the medical and recreational marijuana measures passed by wide margins, with 82% of voters approving medical marijuana and 74% approving marijuana for recreational use. 

The Oglala Sioux will become the first Native American tribe to pass into law and establish a cannabis market in a state where marijuana is currently illegal. The tribal council will now enact laws regarding the legalization and regulation of marijuana.

According to tribal leaders, the tribe does not intend to take ownership of cannabis production or retail, but rather license individuals and place a tax on retail marijuana. They believe cannabis has the potential to bring in millions of dollars to one of the most impoverished communities in the country. If South Dakota voters decide to legalize marijuana in the state, it could mean a boom for the tribe’s market who would already have a system in place, making tribal members the only retailers in the state for a period.

If South Dakota does not legalize marijuana, tribal leaders are planning to launch a cannabis resort at the tribe’s casino.

As it stands now, marijuana remains illegal in South Dakota outside the Pine Ridge Reservation, so the tribe will attempt to keep people from taking marijuana off tribal lands through limiting the amount people can purchase and tracking purchases.

Prepare for South Dakota Marijuana Business OpportunitiesDT South Dakota Guide

If you want to begin preparing for future marijuana business opportunities in South Dakota, our South Dakota Application Guide and Checklist includes a step-by-step guide detailing all the actions items needed to complete and establish a marijuana business. The guide is specific to the initiatives being considered, Initiated Measure 26 and Constitutional Amendment A, so you can be ready for the state's licensing opportunities once it is passed into law. 

The guide provides a step-by-step checklist of over 100 action items to complete prior to submitting your application for a marijuana business license. It covers topics from real estate and financial planning to staffing and team building activities.