South Dakota Cannabis Consultants

Last Updated in October 2021 | Are you interested in starting a cannabis business in South Dakota? Our South Dakota Cannabis Consultant breaks down everything you need to know for obtaining a license and starting your cannabis business in South Dakota, including:

  • How to apply for a cannabis license in South Dakota; and
  • Advice from our South Dakota cannabis application writers on the best techniques for winning a license.

Cannabis Consulting Firm in South Dakota

Size of South Dakota’s Medical Cannabis Market 

Analysts predict annual sales of Medical Cannabis in South Dakota will reach $20 million in the first year and up to $75 million by the fourth year, as reported in Marijuana Business Daily’s 2021 Factbook. Now let’s discuss the laws and regulations that govern the medical cannabis market in South Dakota.

Laws and Rules Overview

In 2020, South Dakota legislatures approved Measure 26 that legalized medical cannabis. You should read the Act as it will help you understand the program and determine if you qualify as a license holder. Also, be aware that the Department of Health is the governing body that oversees the medical cannabis industry in South Dakota. More recently, in September 2021, South Dakota’s rule review committee approved the proposed administrative rules to establish a medical cannabis program in South Dakota. You’ll find more details about the application process in the proposed rules. However, continue reading for distilled information from the Act and Rules that are applicable to you, the entrepreneur seeking a license. If you find it difficult to understand the laws and rules, feel free to contact our South Dakota cannabis consulting team. You can ask us any clarifying questions and learn the best way to win a marijuana business license.

South Dakota Cannabis Consultant

Timeline for South Dakota Cannabis License Applications

It seems that South Dakota is on the verge of finalizing the rules for medical cannabis businesses, including the application process, instructions, and operating requirements. Once finalized, South Dakota will outline the timeline for when cannabis license applications are accepted and issued. However, as outlined in the regulations, South Dakota will accept applications on a rolling basis. But there is no indication as to when South Dakota will begin accepting applications. Upon receiving your application, the Department will have 90 days to approve or deny your cannabis application for a medical cannabis establishment (reference 34-20G-55). Importantly, municipalities in South Dakota will influence the timing for accepting registration certificate applications. For example, applications to locate an establishment in a city or county that has limited the number of medical cannabis establishments must be submitted:

  1. By November 1, 2021, if the limit was enacted prior to October 1, 2021; or
  2. Within 90 days of the effective date of a limit enacted on or after October 1, 2021 (reference 44:90:03:12).

But what if your municipality hasn’t published an application yet? You must still submit the State application to the Department of Health. The Department will then hold your application pending local certification. Keep in mind, the South Dakota has not released the State application yet. Thus, you are not able to apply at this moment (as of October 22, 2021). Does this make sense to you? If not, please contact our South Dakota Marijuana Consultants for clarification and guidance.

Types of Medical Cannabis Business Licenses

Before we discuss the application process, you should know the types of medical cannabis establishment licenses that are available in South Dakota. As it stands, it seems South Dakota will issue four types of cannabis business licenses, including:

  • Cultivation
  • Product Manufacturing
  • Dispensary
  • Testing

Let’s briefly describe each South Dakota Medical Cannabis Establishment License.

Cultivation Facility License

South Dakkota’s cannabis Cultivation License permits you to cultivate cannabis. Additionally, you are permitted to:

  • Transport your cannabis to other medical cannabis establishments within South Dakota; and
  • It also permits you to package cannabis flowers and sell your flower to cannabis manufacturers or retailers in South Dakota.

On the contrary, the cannabis cultivation license in South Dakota does not allow you to:

  • extract cannabis;
  • create infused products; or
  • sell cannabis to patients.

Does the South Dakota cultivation license sound like a good fit for you?

Product Manufacturing License

Perhaps you are not versed in cannabis cultivation. Instead, you are more interested in creating cannabis concentrates, infused products, and beverages. In that case, you are better suited for South Dakota’s Product Manufacturing License. This license permits you to:

  • Purchase cannabis buds from South Dakota Cultivation Facilities;
  • Perform cannabis extractions;
  • Manufacture cannabis-infused products; and
  • Sell cannabis products to medical cannabis dispensaries in South Dakota.

The cannabis Product Manufacturing license in South Dakota allows you to produce the following types of cannabis-infused products:

  • edibles;
  • beverages;
  • topicals;
  • ointments;
  • oils; and
  • tinctures.

On the other hand, the South Dakota Product Manufacturing Permit does not allow you to sell your products to medical cannabis patients. You can only sell to medical cannabis dispensaries in South Dakota. Are you interested in applying for a Medical Cannabis Manufacturing License in South Dakota? If so, you should speak with our cannabis application writers in South Dakota to learn how we can help you submit a competitive application.

South Dakota Cannabis Consultant

Dispensary License

The Medical Cannabis Dispensary License in South Dakota allows you to buy, store, transport, deliver, and sell:

  • cannabis;
  • cannabis products;
  • paraphernalia;
  • or related supplies and educational materials to cardholders.

Think of the dispensary license as your traditional retail business model. In our experience, the dispensary licenses tend to receive the highest number of applications.

Testing Facility

South Dakota’s Medical Cannabis Testing Facility license allows you to test cannabis and cannabis products. More specifically, the Medical Cannabis Testing Facility license in South Dakota permits you to determine the cannabinoids and terpene content of the cannabis products. It also permits you to test cannabis and products for contaminants, such as residual solvents, pesticides, heavy metals, microbes, and more. Which of the licenses fits your business plans? Refer to the Act and rules for more details on the requirements and qualifications for each cannabis license type. Alternatively, you can contact our cannabis consultants in South Dakota who are experts in cannabis license applications.

Application Process for South Dakota Cannabis License

Cannabis License Application Expert So, you’re probably wondering by now, “How do you apply for a South Dakota Medical Cannabis License?” or better yet “How do you win a South Dakota Cannabis License?” After you read this section, you’ll have an understanding of the process for applying for a cannabis license in South Dakota. We’ll answer the second question in the next section. First, South Dakota is using the terms “initial application” to describe the application for a “registration certificate” (aka a medical cannabis license). Also, a “cannabis establishment” is synonymous with a “cannabis business” in South Dakota. For all types of cannabis establishments (e.g. cultivators, retailers, etc.), you will have to submit in your initial application:

  1. A Completed application form;
  2. Operating procedures;
  3. Proof of property owners consent to use the property for cultivation, manufacturing, dispensing, or testing cannabis, as applicable;
  4. Certification of compliance from the local municipality or county, as applicable, ensuring applicant’s proposed plans and location meet all local zoning and ordinance requirements;
  5. Copies of all required registrations, licenses, or permits;
  6. Photocopies of a valid form of identification issued in South Dakota, or its equivalent issued in another United States jurisdiction, for all principal officers and board members;
  7. Photocopies of organizing documents, operating agreements, management agreements, bylaws, and other legal documents relating to the applicant’s business structure;
  8. Certification that background checks have been completed for all medical cannabis establishment agents; and
  9. The applicable fee pursuant to § 44:90:03:17.

Source: Rule 44:90:03:01

Additionally, as part of your operating procedures, you must submit in your South Dakota Cannabis License Application, the following items:

  • Management plan;
  • Site Plan;
  • Operating days and hours;
  • Workplace Safety Plan;
  • Regulatory Compliance Plan;
  • Security Plan;
  • Community Safety Plan;
  • Diversion Prevention Plan;
  • Waste Management Plan;
  • Wastewater Plan;
  • Pre-employment Screening Procedures; and
  • Process for limiting access by unauthorized individuals. 

*Source: Rule 44:90:03:05. Moreover, each license type requires you to submit additional operating plans and procedures specific to the activities permitted under that license. Are you able to write the plans above? Are you familiar with what needs to be included in your site plan? How about the security plan?

Your application can easily reach hundreds, if not thousands, of pages of technical writing.

If you don’t have dozens of hours to spare or the technical expertise to put together a complete and competitive application, your best bet is to engage a cannabis application writer in South Dakota. Luckily, you can reach out to our South Dakota Cannabis Consulting firm, wielding a 90.12% success rate in winning licenses, to help you with your cannabis license application.

South Dakota Cannabis ConsultantScoring Process

Okay, so what criteria does South Dakota score your cannabis license application on? Is the application competitive or is it a lottery? First, the department will score your South Dakota Cannabis License application based on your:

  • Management Team;
  • Facility design and location;
  • Approval from Municipality;
  • Operating Procedures;
  • Compliance with laws;
  • and more.

In the case in which more medical cannabis establishments apply than are allowed by a local government, the department shall numerically score competitive applications according to the following criteria:

  1. The local government, in response to the department’s inquiry, has endorsed the application as beneficial to the community (1 points);
  2. The local government has not informed the department that the location specified in the application is unsuitable for the proposed use due to zoning regulations or inaccessibility to the public (1 point);
  3. All principal officers and board members have certified that they have not, in the previous ten years, in any United States jurisdiction:
    1. Been convicted of a criminal offense involving fraud or false statements to a unit of government (1 point); or
    2. Served as a principal officer or board member of any business that has had a license or permit suspended or revoked for violations of laws or regulations relating to cannabis, alcohol, tobacco, or gaming (1 point);
  4. The applicant has submitted a floorplan with sufficient detail to enable the department to determine where all activities listed in the operating procedures will take place (1 point); and (5) The applicant has submitted a business plan outlining the details contained in SDCL 34-20G-72(3)(d) (1 point).

*Source: Rule 44:90:03:15

Awarding of Cannabis Licenses in South Dakota

You’ve applied and are now awaiting the results. But, how exactly is South Dakota going to decide which applicants receive a license? Will South Dakota choose the highest score? What if there is a tie? You will find the answers to these questions here. First, South Dakota will award medical cannabis certifications (aka licenses) as follows:

  1. If more establishments apply than are allowed by a local government, the department shall award the establishment with the highest score pursuant to § 44:90:03:15 a registration certificate;
  2. If the local government has enacted an overall limit on the number of establishments, the department shall award registration certificates, in order of final score beginning with the highest score attained pursuant to § 44:90:03:15, until the limit is reached;
  3. If the local government has enacted a limit on establishments by establishment type, the department shall award registration certificates, in order of final score beginning with the highest score attained pursuant to § 44:90:03:15, until the limit is reached for each establishment type;

*Source: Rule 44:90:03:16. Okay, but what if you receive the same score on your cannabis permit application as another applicant? For example, what if you and another medical cannabis license applicant in South Dakota both receive perfect scores?

Tiebreaking Procedures

If applicants are tied for one or more openings in a locality, the applicants will be ranked via a lottery system to establish the order and establish a waiting list. Fortunately,  the public shall have the opportunity to view, in person or via videoconference, a random drawing to determine the successful applicants. These events can be pretty exciting for applicants! *Source: Rule 44:90:03:16.

As you read above, the application process is complex and time-consuming.

Plus, your costs incurred during the South Dakota cannabis license application process can easily range from $400,000 – $800,000. This is at-risk capital. Do you feel comfortable writing your South Dakota Cannabis License Application yourself? Are you willing to risk all that capital? If you’d like to decrease your risk, contact our South Dakota cannabis consulting agency for assistance in your application. We’ll take the work off your hands and help you put together an extremely competitive application.

South Dakota Cannabis ConsultantFees

Yes, you must pay fees to South Dakota for starting a cannabis business. You will, more specifically, pay a non-refundable application fee of $5,000 for each submission (reference rule 44:90:03:17). Also, if awarded a license, you must pay a license fee. Each license type will have its own fee associated with it. Once South Dakota publishes the fees for each license, our South Dakota Marijuana Consultants will update this section. Additionally, each municipality can also impose an application and license fee of its own. So you’ll want to read the ordinance of the municipality you intend to submit in.

Step-by-step guide on How to Win a South Dakota Medical Cannabis License

You, at this point, know the application process, timeline, and fees for a South Dakota Cannabis Establishment license (aka medical cannabis business license). Now, you can follow this step-by-step guide created by our South Dakota Cannabis License Consultants to increase your chances of winning a license. If you follow each step, you will have a competitive advantage over other applicants.

Step 1: Read the Laws and Regulations

First and foremost, you should begin by reading the laws (Measure 26) and rules (latest draft here) that govern the Medical Cannabis Market in South Dakota. Focus on the regulations surrounding the application process. In particular, read the regulations for the various types of cannabis licenses and the qualifications for each. Check if you are a qualified applicant. For instance, do you have a criminal conviction that is a disqualifying offense? The laws and regulations are lengthy and complex. Do you understand them? If you’d like some guidance on navigating the regulations, feel free to contact our marijuana business consultants in South Dakota.

Step 2: Choose a cannabis license

Once you’ve read the regulations, now you should choose the type of cannabis license you will apply for. Refer to the section above for a description of the types of medical cannabis licenses in South Dakota and what each permits you to do. After you’ve chosen a license (aka permit), you’ll have a clearer direction moving forward, since you can start to focus on the application requirements for that particular cannabis license.

Step 3: Engage a South Dakota Cannabis Consultant

You now have an understanding of the cannabis regulations. You’ve also chosen the type of South Dakota cannabis license you want to apply for. We suggest, at this point, that you engage a cannabis consultant in South Dakota to coach you through the rest of the process and help you craft your application. Our South Dakota Cannabis Consultants are experts at winning licenses and starting cannabis businesses. Not only will we complete the hundreds (sometimes thousands) of pages of technical writing typically required in an application, we’ll also help you with:

  • garnering local support;
  • building a team;
  • developing standard operating procedures;
  • raising capital;
  • brand development;
  • facility design;
  • and more.

Work with our South Dakota Cannabis Consultants to help you win a cannabis license and start your business. You’ll save time and money by letting our cannabis consulting team in South Dakota complete your application for you.

South Dakota Cannabis Consultant

Step 4: Form a Business Entity

You’ll now want to focus on forming a business entity that you’ll use to apply for your proposed medical cannabis establishment in South Dakota. There are many different types of business entity structures that you can choose. But we most commonly find applicants forming a Limited Liability Company (LLC) or an S-Corporation (S-Corp) for their application. Contact your attorney to help you choose the right business entity for you. The process can be done online and takes anywhere between 1 – 3 weeks. Best to get started on this as soon as possible so that you can begin entering into contracts and building awareness of your company.

Step 5: Build team

Next, you’ll want to build a team for your South Dakota cannabis license application. The team you build should complement the type of medical cannabis license you are applying for. For instance, if you’re applying for a cannabis manufacturing license, you’ll want to make sure your team consists of individuals with extraction and commercial kitchen experience. Do you have a team with significant cannabis experience? If not, our South Dakota cannabis consulting firm can help you recruit a team of experts.

Step 6: Develop a Business Plan

Once you’ve formed a company and built a team, you can now organize your venture idea into a business plan. Think of the business plan as a tool. It will help you thoroughly think through your business strategy. But more importantly, you can use your cannabis business plan to present to investors and other interested parties. A well-thought-through business plan can help you raise millions. You’ll also be able to use the business plan toward the actual license application in South Dakota. You’ll want to include:

  • Executive Summary of Venture
  • Cannabis Industry Analysis
  • Market Analysis
  • Operating Plans
  • Branding
  • Pro-Forma Financial Statements
  • Overview of Team
  • Estimated ROI
  • and more

Have you written a business plan for a cannabis business before? You’ll have to ensure that you comply with South Dakota Medical Cannabis Laws. You can work with our South Dakota cannabis consulting firm that can help you build a business plan. A solid business plan can result in investments that will fund the entirety of your company’s start-up costs.

South Dakota Cannabis Consultant

Step 7: Raise Capital

With your business plan in hand, you can now present and pitch your South Dakota Cannabis Business venture to investors. Are you aware of the costs to start a South Dakota cannabis retail store? How about a cultivation facility? In our experience, we normally witness the start-up costs of dispensaries ranging from $1.2 million to $2 million. Have you pitched an investment to investors before? If not, we can help pitch your venture to investors. We’ve successfully helped clients raise millions to fund dozens of cannabis companies.

Step 8: Secure Real Estate or Choose municipalities you intend to apply in

Now is a good time to begin identifying locations for your cannabis business. Keep in mind that municipalities can place restrictions on the number of South Dakota cannabis businesses allowed and in what areas you can locate. Additionally, a municipality can have a separate application process that can be competitive. So, once you’ve identified a promising location for your cannabis company, then you should read the ordinances of that municipality. Verify that your chosen location is appropriately zoned and complies with the State and Municipal regulations. You can contact our South Dakota marijuana consultants for assistance in gaining municipal approval for your location.

Step 9: Garner Local Support

It’s never too early to begin garnering local support. For instance, begin building a strong relationship with your local city planning department, governing officials, and community organizations. Let these organizations know your intention to bring a responsible cannabis establishment to their community. You should, diligently, ensure to emphasize the economic impact your business will have on their community. For example, you’ll create jobs and contribute high tax revenue. Start laying the groundwork for a lasting relationship with these organizations. Their support can help you win a license.

Step 10: Write and Submit Your Cannabis License Application

Lastly, you can now write and submit your South Dakota Cannabis Business Application. This is the time-consuming part that requires technical expertise in managing a compliant cannabis business. The Application Process, as outlined above, will require you to write hundreds of pages of technical writing to describe how you will operate your company. You must make sure to comply with each rule and regulation and clearly address them in your narratives. Cannabis application writing is not for everyone. You’ll need the equivalent of a full-time job to create a competitive application. Lucky for you, Quantum 9 is an expert at writing cannabis license applications and starting cannabis businesses. Reach out today to learn how we can make your life easier and help you win a cannabis license!

South Dakota Cannabis Consultant

Conclusions

By now, you are familiar with what it takes to win a South Dakota Medical Cannabis License. The process is intricate and requires you to manage many simultaneously moving parts. Unless you have the full focus to dedicate toward writing a cannabis license application in South Dakota, the chances of you winning a license are low,. You can reduce your risk of losing by working with a cannabis consulting firm in South Dakota that will manage your application from start to finish. Thus, take a few minutes to reach out and learn how our South Dakota cannabis consultants can help you win a license medical cannabis license and start a cannabis business in South Dakota

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Julio Soriagalvarro

Author Julio Soriagalvarro

As the Managing Director at Quantum 9, I help entrepreneurs and investors win licenses and start cannabis businesses in medical and adult-use markets. I manage teams that continuously produce cannabis business license applications that outcompete the best attorneys and largest multi-state operators in the world. We’ve helped clients become cannabis business owners in 27 US States and 6 countries.

More posts by Julio Soriagalvarro

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