PIERRE, S.D. (KELO) — A change that nearly doubles South Dakota’s annual licensing fee for medical-marijuana businesses to $9,000 has cleared the Legislature’s Rules Review Committee, but with less than unanimous support.
Committee members voted 4-1 on Tuesday in support of the change. The ‘no’ came from Democratic Sen. Red Dawn Foster, who questioned how the state Department of Health arrived at the $9,000 figure.
Emily Kerr, administrator for the state’s medical-marijuana program, said the $9,000 amount was based on the budget needs. The program is funded by fees charged for businesses licenses and from fees paid for registration cards that the department issues to patients. The increase however affects only businesses.
Foster, who was participating remotely, didn’t explain why she voted no. She had voted against an early version of the 2024 legislation that sought a $14,000 fee for 2025 but then voted for the final version authorizing the $9,000 fee for 2025.
A fiscal note that the department submitted with the proposed rule change estimated that 94 establishments would be affected by the $9,000 fee between October 1, 2024, and June 30, 2024, with the department receiving an estimated $846,000, a $346,860 increase. For the following budget year starting July 1, 2025, the fiscal note estimated that 133 establishments would be affected, totaling $1,197,000, an increase of $490,770.
Kerr acknowledged those numbers were “a big jump” but said the department didn’t want to have to go back to the Legislature and ask for another increase in the next few years.
The maximum fee in the original law that voters passed in 2020 was $5,000. That law authorized an annual inflationary adjustment, putting the fee currently at $5,310. The increase to $9,000 results from legislation passed during the 2024 session. SB43, as proposed by the department, originally called for a maximum license fee of $28,000. The Senate committee voted 6-1 along straight Republican-Democratic lines to recommend that the full Senate pass it.
But on the Senate floor, the increase was reduced to a maximum of $20,000, with the fee for 2025 to be $14,000. “And that amendment is from the department,” Republican Sen. Erin Tobin noted. No one spoke against the amendment, and no one could be heard saying ‘no’ during the voice vote on accepting the change.
Tobin, who chairs the Legislature’s Medical Marijuana Oversight Committee, then explained the medical-marijuana program was facing a shortfall of $119,000 in the current year. The department was requesting increases for lab expenditures and two additional staff members. Even without the additional spending on the lab, Tobin said that the budget would run a negative $331,000 in the new fiscal year that started July 1. The increase, she said, would put the program back in the black by $456,000.
After Tobin finished speaking, no one else rose, as a supporter or as an opponent. During the roll call vote, Foster was one of nearly a dozen Republican and Democratic senators who said no to the Senate-amended version. Nonetheless, it was sent to the House for further action 22-11.
The House committee that took it up next adopted a second amendment that further reduced the 2025 fee amount down to $10,000. That came out 10-2 straight along Republican-Democrat lines. The full House then amended the 2025 amount for a third time, taking it down to $9,000 and passed that version 59-10, with nine of the no votes coming from Republicans.
The Senate ultimately agreed to the final House version at $9,000, sending it to the governor on a 28-6 vote. On final passage, Foster voted yes. On March 14, Governor Kristi Noem signed the legislation into law.
Kerr met with the Medical Marijuana Oversight Committee on Monday. The July 19 figures on the state website for the medical-cannabis program showed 13,257 approved patient cards and 286 approved medical practitioners who verify whether patients have a debilitating condition that qualifies them for the program.
Republican Sen. Jim Mehlhaff, who also serves on the Medical Marijuana Oversight Committee, said at the rules meeting on Tuesday that a portion of the increase will cover three additional staff that the Legislature authorized for the program. Inspections can now be conducted on a regular basis throughout South Dakota, with an inspector assigned to each end of the state.
The Cannabis Industry Association of South Dakota had supported the legislation at both legislative committee hearings. Mehlhaff asked the rules committee on Tuesday to give the increase the green light. He noted that the industry was “not necessarily loving it, but understanding it and not resisting it.”
Copyright 2024 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
For the latest news, weather, sports, and streaming video, head to KELOLAND.com.
PIERRE, S.D. (KELO) — A change that nearly doubles South Dakota’s annual licensing fee for medical-marijuana businesses to $9,000 has cleared the Legislature’s Rules Review Committee, but with less than unanimous support. Committee members voted 4-1 on Tuesday in support of the change. The ‘no’ came from Democratic Sen. Red Dawn Foster, who questioned how Read More