Cannabis Business in South Dakota

South Dakota presents several opportunities for entrepreneurs seeking to enter the cannabis industry. The state has a regulated medical cannabis program and allows for the production and sale of hemp-derived products.

Medical Cannabis Businesses

The South Dakota Department of Health (DOH) is responsible for overseeing the state's medical cannabis program. Individuals interested in starting a cannabis business for sale related to medical marijuana must obtain a registration certificate from the DOH.

The following types of medical cannabis business licenses are available:

• Cultivation Facility License: Authorizes the licensee to cultivate, process, and sell cannabis to other licensed medical cannabis establishments.
• Manufacturing Facility License: Authorizes the licensee to manufacture cannabis products, such as extracts, concentrates, and edibles, and sell those products to licensed dispensaries.
• Dispensary License: Authorizes the licensee to sell cannabis, cannabis products, paraphernalia, and related educational materials to registered patients.
• Testing Facility License: Authorizes the licensee to test cannabis and cannabis products for compliance with state standards.

Key Requirements for Medical Cannabis Business Licenses

• Applicants must be at least 21 years old.
• At least one principal officer of the business must be a South Dakota resident.
• Applicants must submit a detailed operating plan.
• Applicants must undergo background checks.
• The proposed business location must be at least 1,000 feet from any existing school.
• Applicants must obtain all necessary local permits and approvals.

The application fee for a medical cannabis business license is $5,000, and the fee is the same for license renewals. The fees for these licenses can change every year. Licensed cultivators can apply for and obtain other cannabis business licenses, except for testing facility licenses.

Hemp-Derived CBD Businesses in SD

Hemp-derived CBD products, containing less than 0.3% THC, are legal to sell, buy, and possess in South Dakota. Unlike medical marijuana businesses, individuals selling hemp-derived CBD products do not need to obtain licenses from the state. However, they should comply with labeling guidelines that are established by the South Dakota Department of Agriculture and Natural Resources (DANR).

Industrial Hemp Businesses in South Dakota

The DANR regulates industrial hemp production in South Dakota and issues licenses for hemp cultivation and processing.

Licensing Requirements for Hemp Growers and Processors

• Applicants must submit an application to the DANR.
• Applicants must undergo state and federal background checks.
• Applicants must provide a legal description and GPS coordinates of the land where the hemp will be grown.
• Applicants must obtain approval from the local municipality if the proposed location is within an unincorporated area.
• Applicants must pay a non-refundable application fee of $50.
• Upon approval of the application, licensees must pay a license fee:
  • Hemp Grower License: $500
  • Hemp Processor License: $2,000

Licenses are valid for 15 months and must be renewed. The DANR can deny, suspend, or revoke a license if the licensee does not meet the requirements. Growers are required to have at least 0.5 acres of cultivation space and grow a minimum of 300 plants outdoors or 50 plants in a greenhouse.

Hemp Business Considerations

• The sale or use of smokable hemp products in South Dakota is illegal.
• Hemp growers can purchase seeds from any state or country, as long as the seeds are from a variety that does not contain more than 0.3% THC.
• Individuals selling hemp seeds in South Dakota must obtain a seed permit from the DANR.

Compliance and Testing

Both medical cannabis and industrial hemp businesses are subject to inspections and testing requirements. The DOH regulates testing for medical marijuana, while the DANR oversees testing for industrial hemp. Independent testing laboratories are licensed to test cannabis products to ensure public safety. Testing is required for things like THC levels, residual pesticides and solvents, heavy metals, and the presence of bacteria and fungus. Non-compliant products must be remediated or disposed of in accordance with state and federal guidelines.

Testing Facility Requirements

• Testing facilities must obtain ISO/IEC 17025 accreditation within 18 months of being licensed.
• Testing facilities must demonstrate compliance with organizational standards, such as having procedures for representative sampling, protocols for investigating unsatisfactory test results, and participation in proficiency testing.

Reporting Requirements

Cannabis businesses in South Dakota are subject to various reporting requirements, which may include:

• Reporting acreage planted and harvested
• Reporting the disposal of non-compliant plants
• Submitting test results to regulatory agencies
• Providing updates on license status

Monthly and annual reports may be required.