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South Dakota recently made American cannabis history. Traditionally Republican South Dakota shocked the country during the 2020 election cycle when the state voted yes to not only legalize medical marijuana, but recreational cannabis as well. It is the first state in U.S. history to do this.

However, the state’s adult-use cannabis amendment—Amendment A—is currently being challenged by Gov. Kristi Noem. The central concern is whether or not the programs, including hemp cultivation, should be concrete in the state’s constitution. Over half (54%) of South Dakota’s voters said yes to cannabis in the state. This would be the first time in South Dakota’s history where the government so boldly dismissed the will of the people, throwing out over 400,000 signatures in support of cannabis. Voters passed Amendment A, the recreational bill, and Measure 26, the medical marijuana bill. The case is still being decided before the Supreme Court.

Interested in learning more about opening a dispensary in South Dakota while we await the Supreme Court’s decision? Here’s what you need to know.

Applications

Due to the court challenge, there’s no word on when recreational license applications will be open. With that being said, the existing language for Amendment A requires South Dakota’s Department of Revenue to meet an April 1st, 2022, deadline outlining licensing and applications.

As far as Measure 26, the medical marijuana program, the legislation says the rules must be established by October 9th, 2021. This is much sooner than the recreational program, so it’s important to keep your eyes on South Dakota’s announcements for the medical marijuana program. 

Keep in mind: there’s no guarantee applications won’t open sooner, so you need to be ready. On the other hand, there’s no guarantee applications will be on time, since the very program itself is currently being challenged in the Supreme Court. Regardless, our advice is the same: keep your eyes on South Dakota’s upcoming announcements.

In the meantime, it’s a good idea to find a consulting group that can help you secure licensure. Applying for a dispensary license isn’t as simple as paying a fee and detailing your business plans. The application can run hundreds of pages. The process is time consuming and complex. There’s also legal and financial jargon that you may not understand. Working with a team with a proven track record in winning cannabis licenses can set you apart from the rest of the competition. Further, the application window might only be open for a certain period of time, so ensure you’re prepared as soon as the time comes. Working with a consulting group ahead of time will help ensure you’re ready.

Securing Capital

Cannabis laws are different in each state, but one thing remains true across borders: cannabis is illegal at the federal level. It’s considered a controlled substance and listed as a Schedule I Substance. This means traditional lending providers like banks are forbidden from working with you. This will remain true until the federal government deschedules cannabis or legalizes it. Hemp was removed from the Schedule I Substances list in 2018 with the passing of The Farm Bill.

So until then, private investors and bootstrapping it are your options! Considering dispensaries cost about $150,000 to run on the low end and $2 million on the high end, not many entrepreneurs bootstrap in the cannabis space. Private investors are more than willing to work with cannabis businesses that have sound business plans.

Staffing Cannabis

As a dispensary owner, appropriately staffing your store is one of the most important vehicles to a good customer experience. Remember, South Dakota is legalizing two cannabis programs at one time. This means you’ll get many customers who have never tried cannabis before. Your employees will need to educate consumers and recommend products for beginners and experienced cannabis users alike. When hiring budtenders, make sure to implement a comprehensive training program.

One way to attract high-quality candidates is by offering a great wage. South Dakota’s minimum wage is $9.30 per hour, so consider offering more than that to draw in great people. Keep in mind it costs approximately $250,000 per year to fully staff a dispensary. Not only do you need budtenders, but you’ll also need managers, security personnel, a bookkeeper, marketers, and more. 

Sourcing Product

What’s a dispensary without cannabis? A retail store with nothing to buy. Therefore, one of the most critical steps to opening a dispensary in South Dakota is to find suppliers. Your products are what will draw your consumers to you; you won’t succeed by offering subpar quality.

Keep in mind, it will take time for the cannabis programs to get up and running in South Dakota. In the meantime, you can still sell CBD products, which are legal nationwide. Although you can still expect restrictions on advertising, and some financial processors don’t want to deal with CBD dispensaries, selling CBD doesn’t require a license and is a safe, legal option to pursue.

Compliance Considerations

South Dakota still needs to release its official language, but most states have some provisions preventing dispensaries from operating within 1,000 feet of a school or daycare. Municipal governments and jurisdictions will need to establish their own zoning laws surrounding dispensaries and cultivation facilities, as well.

Other compliance considerations you’ll need to keep in mind: South Dakota dispensaries will need to invest in high-quality cameras, inventory management, quality control, health and safety protocols, cash controls, and more. 

Marketing Your Cannabis Dispensary

Cannabis marketing is not the same as marketing in other industries, thanks to federal restrictions. Even if cannabis were legal under federal law, there’s enough of a social stigma to make marketing cannabis a truly unique endeavor.

Because cannabis is considered a controlled substance, social media platforms do not allow cannabis companies to utilize (most) sponsored ads, nor do they allow much content showing the cannabis plant itself. They also don’t allow imagery of people smoking, so you really have to rely on creative methods and organic traffic to market your business. You’ll also want to rely heavily on local SEO to bring in local traffic to your storefront. 

Book your free consultation with Mary Jane Marketer if you need help with marketing and advertising in the cannabis space. We are ready to partner with you and begin developing a unique marketing strategy that works, from branding and website development to campaign creation and implementation.

Want to learn more about opening a dispensary in South Dakota? Fill out the form below.



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