Cannabis Legalization and Regulation in South Dakota
South Dakota has not legalized adult-use cannabis. Voters approved recreational legalization in 2020, but the measure was overturned in court. A second attempt to pass adult-use through a 2022 ballot initiative failed. As of now, possession, sale, and cultivation for recreational purposes remain illegal under state law.
Medical cannabis was legalized in 2020 through Initiated Measure 26 and took effect in July 2021. Registered patients with qualifying conditions may purchase and use medical cannabis with a physician’s certification. Patients may legally possess up to 3 ounces of cannabis flower. Home cultivation is allowed for registered patients who receive a cultivation designation from their physician, permitting up to three plants (with the possibility of more if medically justified).
The South Dakota Medical Cannabis Program, overseen by the Department of Health, regulates licensing for dispensaries, cultivation facilities, and testing laboratories. Municipalities may set zoning rules, but they cannot prohibit medical cannabis altogether. Dispensaries are open statewide, and the patient registry continues to expand.
Hemp cultivation and hemp-derived products are legal in South Dakota if they contain no more than 0.3% THC. Hemp-derived cannabinoids such as delta-8 THC remain under scrutiny and may be restricted when intended for intoxicating use. Products must meet state and federal standards for labeling, testing, and packaging.
For cannabis operators, South Dakota offers a limited but stable medical cannabis market. Businesses seeking banking and financial services must provide proper licensing documentation, ownership records, tax IDs, and operating agreements. Financial institutions expect secure cash-handling procedures, armored transport, reconciled deposits, AML/BSA monitoring, and audit-ready compliance systems. Accurate tax collection and reporting are also necessary to maintain banking relationships.
The South Dakota Department of Health regulates the medical cannabis program. For official program information, licensing resources, and compliance updates, visit: https://medcannabis.sd.gov
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