With more than three dozen states and cities having legalized the cannabis plant in some form, it is safe to say that cannabis is quickly gaining acceptance in the country. According to a poll conducted by the Pew Research Center, at least 91% of Americans support legal medical or recreational use of cannabis. Let’s read the blog to know How To Open A Dispensary In South Dakota.
In 2021, South Dakota became the first state to legalize both medical and recreational marijuana simultaneously in a voter-passed amendment. However, recreational legalization was soon nullified by both the lower court and Supreme court judgments.
For now, medical cannabis business license applications are being accepted and approved, and medical marijuana dispensaries will eventually open in accordance with the Medical Marijuana Initiative. As for recreational marijuana, it will take some time to get legalized by lawmakers in South Dakota.
Let us walk through South Dakota cannabis laws, license types and how to acquire them, tax rates, and much more in this blog post.
Can I Open A Dispensary in South Dakota Right Now?
Individuals who wish to open a dispensary in South Dakota are submitting permit applications to municipalities all around the state. Cannabis grown in the state must only be sold in dispensaries. And, because cultivation facilities are yet to receive licenses in South Dakota, dispensaries will have nothing to sell for the time being.
South Dakota’s Department of Health has issued the first three dispensary licenses as of January 2022 and is in the process of authorizing additional. You can submit an application for a dispensary license and wait for it to be approved within 90-days from the date of submission.
How Much Can You Buy?
Qualifying and registered patients can possess up to 3 ounces of cannabis and six plants. Only three out of the six plants must be mature at any given point.
Current Cannabis laws in South Dakota
- Qualified patients may possess up to three ounces of cannabis including other allowable products.
- Registered patients may cultivate up to three plants, while they can possess up to six plants at a time. However, in certain circumstances, a physician may authorize patients to cultivate greater quantities.
- State regulations allow local governments to set their own licensing policies. As a result, decisions differ from city to city.
- It is illegal to import cannabis products across state lines.
How Much Cannabis Can an Adult in South Dakota Possess?
Initiated Measure 26 was also passed by South Dakota voters, allowing for the medical use of marijuana for individuals suffering from debilitating diseases. Patients can have up to 3 ounces of cannabis and six plants if they are registered.
Tax Rates in South Dakota
Cannabis sales are subject to a statewide 4.5 percent sales tax, as well as municipal taxes and a 15% excise tax, according to the South Dakota Department of Revenue.
Current Cannabis Market in South Dakota
Medical dispensaries in South Dakota began selling cannabis on July 1, 2021. Medical marijuana sales are estimated to reach $1.5 million to $2.0 million in their first year, with the market reaching $10 million to $12 million by 2024.
Cannabis Dispensary Start-Up Costs in South Dakota
All of these costs will differ from one state to the next. Licensing fees for dispensaries are projected to be around $5000 per year on average.
The average cost of running a dispensary on a yearly basis, according to most sources, is between $500,000 and $2 million. These costs, however, vary dramatically depending on the location, local labor expenses, regulatory and licensing fees, and other considerations.
Types of Cannabis Licenses in South Dakota
Following are the types of medical cannabis licenses processed in South Dakota:
Medical Growers License
An entity that, in compliance with the Act’s requirements, purchases, owns, cultivates, distributes, transfers, transports, provides, or sells cannabis and related materials to a medical cannabis facility.
Medical Dispensary License
A person or business who obtains, keeps, stores, distributes, transmits, transports, sells, furnishes, or dispenses cannabis, cannabis products, paraphernalia, or associated supplies to cardholders and is registered with the department under the Act.
Medical Manufacturing License
In accordance with the act, an entity that procures, owns, manufactures, distributes, transmits, transports furnishes, or sells cannabis commodities to a medical cannabis dispensary.
How to Get a License
The South Dakota state government is accepting applications for licenses for all kinds of cannabis businesses. Be ready with all relevant documents and register yourself online to fill out the license application.
Here’s what we know about how to open a dispensary in South Dakota so far:
- The applicant must be a resident of South Dakota, or at least one of the partners should be a resident if there are multiple partners in one business.
- All the applicants must undergo a mandatory criminal history background check.
- When you submit an application, it means that you are agreeing to inspections of the facility, vehicles, paperwork, and electronic records.
- Applicants have a two-week grace time after submitting their application to submit their sales tax ID.
South Dakota Dispensary Fees
Many of South Dakota’s peer cities charge between $2,500 and $5,000. Watertown charges $25,000 for an initial license and $50,000 for renewal, while Sioux Falls charges $50,000 for an initial license and $50,000 for renewal.
Therefore, the license fee will depend on the city or county you are planning to start your cannabis dispensary.
Requirements for South Dakota Dispensary Licenses
Here are some of the major requirements for obtaining a dispensary license in South Dakota:
- Criminal background check of the applicant
- Business plan
- At least one among the applicants must have lived in South Dakota for at least one year
What Else Do You Need to Open a Dispensary in South Dakota?
Understand Cannabis Laws In South Dakota
The cannabis laws in each state are different, and they may differ from one region to the next in South Dakota. So, before applying for a cannabis dispensary license in South Dakota, be sure you know the laws so you can stay compliant and increase your chances of getting your license approved.
Create A Scalable Business Plan
A solid business plan will become the backbone of your cannabis business. Include the following points to ensure you create a good business plan to stay ahead of your competitors:
The practice of discovering market gaps that your product or service can fill is known as competitive analysis. It’s all about figuring out what the competitors are up to so you can acquire an advantage.
Market Research and Strategies
Explain your market research and strategy, and include sales projections, timelines and milestones, and how you compare to your competitors. If you are not able to get ample data you can use client testimonials instead.
Calculate Your Financial Forecast
All of the activities you select for your strategy have a cost and, presumably, will result in some revenue. Examine your financial condition to see if you can expect revenues to cover all costs while still leaving room for profit in the long run.
Begin by entering your financial assumptions and start-up costs into a financial model that can generate a first-year cash flow statement for you, providing you with the most accurate picture of how much investment you’ll need to fund your early operations.
A complete set of financial statements include information about a company’s operations and performance, as well as its expenses and profits for each accounting period (quarterly or year-to-date). Financial statements also show the company’s present financial situation, including assets and liabilities. Take time and prepare this document accurately.
This is when you start to delve into the specifics of your business. How will your dispensary function on a daily basis? This should be clearly stated in your proposal.
What is the legal structure of your cannabis business? Is it a one-person operation or are there more people involved? Include all this information in your business plan. If there are several stakeholders, we recommend creating an organizational chart to highlight not only who’s involved but also how everyone contributes something.
Now is your chance to talk about what you’ll be selling or offering in greater depth.
Make sure to explain your cannabis product range and how it differs from competitors. How will it be priced, and how does that compare to competitors in the market?
You must include a marketing strategy in this section as well. It doesn’t matter if you have the best cannabis product line in the country if no one knows about it. Determine your target market and plan out just how you’ll make them aware of your offering.
Choose A Winning Team
You may have an excellent cannabis product line idea in your hands, but more often than not, you won’t be able to do everything by yourself. You need a diversely skilled team to make your dispensary run successfully. So, hiring the right team members for your dispensary is crucial for the success of your business.
Don’t hire to fill a job if you want to create a stable business. Hire your first employees with the future in mind. You don’t have to recruit people simply because they are competent and available in general. These types of opportunistic or terrible hires can sink you if you’re opening a dispensary.
Choose Your Location With Care
Even if medical and recreational cannabis is legalized in your state, that doesn’t guarantee you can open a dispensary everywhere. Each municipality has the authority to decide whether or not cannabis dispensaries are allowed to operate inside its borders. Even if they do allow cannabis businesses, they may only allow a limited number of them. Before you set your sights on a particular location, double-check that you’ll be able to set up shop there.
You’ll also need to lease a commercial location for your dispensary if you don’t have the means to buy or build a shop. While you may have confirmed that your city permits a medical dispensary, the building owner may not. To put it another way, you’ll need to get your landlord’s approval first. You don’t want to sign a contract just to find out later that your shop’s landlord is anti-cannabis.
Just picking a good location for your cannabis dispensary is not enough. Local legislation, the community itself, and any competitors in the area are all factors to consider. However, with proper planning, you may find the ideal location for your business.
Tech Integration with Leading Technology Partner
When choosing technology partners, it’s critical to understand not only how they measure up with the competition in terms of price, but also who they are, what they can provide, their preferred technology, and how they develop their products or source it from reputed vendors.
Working with tech partners can be beneficial to your dispensary, but we know from our two decades of experience, partnering with other organizations can be a complex process. Therefore, at Cure8 we make sure tech integration for your dispensary is seamless and trouble-free.
How Can Cure8 Help?
Cure8, as cannabis IT solutions provider company, has over two decades of experience helping cannabis businesses achieve their goals.
We encourage your cannabis business to not only stand on solid ground but to prepare for the inevitable. We are a constantly upgrading and adapting technology based on the changing needs of our clients. Our services include IT consulting, managed IT services, and custom hardware and software solutions.
To know more about our services, click here.