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South Dakota Lawmakers Approve Marijuana Legalization And Taxation Bills In Committee



A bill to legalize marijuana in South Dakota was approved in a Senate committee on Thursday, sending it to the floor. And a separate panel advanced legislation earlier in the week to set up a tax scheme for an adult-use cannabis market if legalization is enacted.

These developments come as activists continue to explore ways to end prohibition legislatively or through the ballot. South Dakota voters already approved legalization during the 2020 election, but the reform was struck down by the state Supreme Court following a challenge from the governor’s office.

Now the Senate Commerce and Energy Committee has passed SB 3 in a 5-3 vote. Sponsored by Sen. Michael Rohl (R), the bill as amended would allow adults 21 and older to purchase and possess up to two ounces of cannabis from licensed retailers.

Home cultivation would not be permitted, however, unlike under a ballot measure that activists have been collecting signatures for.

The original bill set a possession limit of four ounces for adults, but the sponsor filed a committee amendment to cut that in half.

The state Department of Revenue would be responsible for regulating the adult-use program and promulgate rules related to issues such as transportation and registration.

Local municipalities would be able to opt out of allowing marijuana businesses within their jurisdiction.

The bill also stipulates that nobody with a felony conviction could hold a cannabis business license—a provision likely to be contested by reform advocates.

A Marijuana Interim Study Committee, headed by legislative leaders, was established last year to explore the issue, and the panel ultimately recommended that the legislature take up legalization this session. This legislation is one of the direct products of that recommendation.

Meanwhile, the South Dakota House Taxation Committee separately approved a bill on Tuesday to establish a tax policy if recreational marijuana becomes legal, setting an overall 15 percent tax on cannabis just as was prescribed under the voter-approved 2020 initiative.

Marijuana Moment is already tracking more than 1,000 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.

Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.

Activists welcome the opportunity to work with the legislature to develop a framework to regulate adult-use marijuana, but they’re also keeping their options open.

South Dakotans for Better Marijuana Laws (SDBML) is actively collecting signatures to place legalization on the state’s 2022 ballot as lawmakers navigate the issue.

“We were pleased to see Senate Bill 3 pass through the Senate Commerce and Energy Committee today,” Matthew Schweich, campaign director of SDBML, told Marijuana Moment. “The voters of South Dakota clearly support an adult-use cannabis legalization law, as evidenced by the passage of Amendment A in 2020.”

“A coalition of advocates, including South Dakotans for Better Marijuana Law, New Approach South Dakota, and the Cannabis Industry Association of South Dakota, are working very hard to pass a legalization bill through the Legislature so that we do not need to run a second ballot initiative this November,” he said. “However, if necessary, we are fully prepared to win another campaign. Our signature drive is active and making steady progress.”

The campaign’s 2020 success at the ballot was overruled by the state Supreme Court as a result of a legal challenge funded by Gov. Kristi Noem’s (R) administration. The court ruled that the measure violated a single-subject rule for ballot initiatives.

Noem’s office also recently suggested that the activists behind that voter-approved initiative should pay the legal fees of the lawsuit that invalidated the will of voters—a proposal that the campaign called “ridiculous.”

On Thursday, Noem told reporters that she’s “never been supportive of recreational marijuana” but it’s a “debate that people in South Dakota are having.”

“There’s recreational bills here in the legislature that could be improved,” she said. “We’re talking about that.”

While a recent poll found that most South Dakota voters approve of Noem’s job performance overall, just 39 percent approve of her handling of marijuana legalization, with 51 percent disapproving. The governor is up for reelection this year.

Noem has consistently faced criticism from advocates and stakeholders over her early opposition to cannabis reform.

She released an ad ahead of last year’s election urging residents to vote against the legalization initiative that ultimately passed, 54-46 percent.

Lately, however, the governor seems committed to associating herself with the implementation of a separate medical cannabis legalization initiative that voters also overwhelmingly approved last year, despite having opposed the proposal in the run-up to the election.

After regulators approved rules for the medical marijuana program in September, Noem said her administration “is fully on board to make certain South Dakota continues to implement the most responsible, patient-focused medical cannabis program in the country.”

Noem tried to get the legislature to approve a bill to delay implementation of the medical cannabis program for an additional year, but while it cleared the House, negotiators were unable to reach an agreement with the Senate in conference, delivering a defeat to the governor.

In response, her office started exploring a compromise last year, with one proposal that came out of her administration to decriminalize possession of up to one ounce of cannabis, limit the number of plants that patients could cultivate to three and prohibit people under 21 from qualifying for medical marijuana.

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Photo courtesy of Mike Latimer.

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