1. Understand regulatory and legal requirements. Do market research.

Research the laws and regulations governing adult-use or medical-use cannabis for more information about the regulatory requirements for licensure in the city or town you wish to operate in.

South Dakota Cannabis Legalization

In South Dakota, Measure 26, the Medical Marijuana Initiative of 2020, establishes a system of licenses and regulations administered by the South Dakota Department of Health for medical marijuana business establishments. Initiated Measure 26 became  SDCL 34-20G. Administrative rules for the program can be found at ARSD 44:90.

Medical marijuana became legal in July 2021 under the timeframe established in Initiated Measure 26. South Dakota Cannabis Market kicked off with the first state-licensed medical cannabis dispensary opening in July 2022, 20 months after voters said yes to selling medical cannabis.

South Dakota Cannabis Market

The Marijuana Legalization Initiative will appear on the South Dakota 2024 ballot in November. This measure would legalize the recreational use, possession and distribution of marijuana for individuals 21 years old and over.

2. Decide the type of cannabis business. Choose a location. Check local zoning regulations.

Cannabis Licenses Types Available in South Dakota

Cannabis Delivery in South Dakota

Medical cannabis can be ordered online in South Dakota but delivery of medical cannabis is illegal. Customers must visit the dispensary to pick up the order they made online.

Cannabis Delivery Service by State

3. Develop a solid cannabis business plan. Secure financing.

Application requirements include a business plan showing the expected size of the business; anticipated growth; the methods of record keeping; the knowledge and experience of the applicant and any officer, director, manager, and general partner of the business; and other relevant financial and operational components.

4. Submit an application. Pay fees. Prepare and submit the required documents.

Requirements to applicants:

• None of the principal officers or board members has served as a principal officer or board member for a medical cannabis establishment that has had its registration certificate revoked.
• None of the principal officers or board members is younger than 21.
• At least one principal officer is a resident of the state.

Required documents are not limited to (ARSD 44:90:03:01):

• A completed application form.
• Operating procedures.
• Proof of property owner’s consent to cultivation or manufacturing.
• Certification of compliance from the local municipality or county ensuring applicant’s proposed plans and location meet all local zoning and ordinance requirements.
• Copies of all required registrations, licenses, or permits.
• Photocopies of a valid form of identification issued in South Dakota, or its equivalent issued in another U.S. jurisdiction, for all principal officers and board members.
• Photocopies of organizing documents, operating agreements, management agreements, bylaws, or other legal documents relating to the applicant’s business structure.
• Certification that background checks have been completed for all medical cannabis establishment agents; and
• A nonrefundable application fee of $9,000.

5. Final approval. Final Inspection.

Within 90 days after the submission of the application, the Department of Health will approve or deny the application and issue a registration certificate.

6. Renewal.

The certificate must be renewed every 12 months from the date of its issuance. The renewal application must be submitted no earlier than 60 days and no later than 30 days before the expiration date. It must include all the information required for an initial application and the application renewal fee of $9,000. The full description of operating procedures may be replaced with a detailed description of any changes made to the operating procedures or a certification that no such changes were made.

The renewal registration certificate will be issued by the Department of Health within 45 days of receipt of the renewal application.

7. Keep track of your ongoing compliance requirements.

Physical security measures, good production practices, packaging, labelling, transport and reporting requirements, taxes and more.

South Dakota Cannabis Taxes

Only the state’s 4.5% sales tax is applied to purchases of medical cannabis from a dispensary.

Cannabis Advertising Regulations in South Dakota

(A) Advertisements must be targeted as directly as possible to other establishments, cardholders who are 21 years of age or older, and readers of medical publications.

(B) Any advertising on websites, social media, or mobile applications must include:

• A verification that the recipient is not an age-restricted cardholder; and
• A permanent opt-out feature.

(C) No establishment shall advertise:

• On a sign or billboard, except that a dispensary may advertise on signs on its own premises.
• By distributing handbills in public areas or on publicly owned property.
• Through direct mail, phone, text, or email without verifying the recipient is a cardholder or medical cannabis establishment and offering a permanent opt-out feature.
• On television or radio.
• Through a practitioner or health care facility, including placement of advertising material onsite or targeting their patients through direct mail, phone, text or email.

(D) Any advertisement must contain the following information:

• A statement: “For medical use by qualifying patients only.”; and
• The medical cannabis establishment identification number of the establishment responsible for the advertisement.

Main steps in short

• Understand regulatory and legal requirements. Do market research.
• Decide the type of cannabis business. Choose a location. Check local zoning regulations.
• Develop a solid business plan. Secure financing.
• Submit an application. Pay fees. Prepare and submit the required documents.
• Final approval. Final inspection.
• Renewal.
• Keep track of your ongoing compliance requirements.

Cannabis Cultivation Business Plan Sample, South Dakota