South Dakota’s First MMJ Business

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South Dakota's first medical marijuana dispensary's owners are the Flandreau Santee Sioux Nation. Photo: Flandreau Santee Sioux Nation

Despite voter approval, legal cannabis is on pause in South Dakota—everywhere except for a tiny town located on an Indian reservation, where the Flandreau Santee Sioux opened the state’s first legal cannabis business in July.

Last fall, South Dakota became the first state in the US to legalize adult-use marijuana at the same time as medical cannabis when voters approved a pair of ballot measures. Little has gone to plan since then.

A lawsuit backed by the state’s Republican Gov. Kristi Noem may scuttle recreational cannabis, and bureaucratic and legislative roadblocks may delay the state’s medical-marijuana program from selling its first gram until mid-2022.

But starting July 1, anyone with a medical cannabis recommendation—from any state—will be able to walk into an old police station in Flandreau, a town of about 2,200 people forty minutes north of Sioux Falls, and buy legal marijuana at the Native Nations cannabis dispensary, owned and operated by the Flandreau Santee Sioux tribe.

The tribe is capitalizing on increased acceptance of cannabis as well as their legal rights as a sovereign nation to become the first legal cannabis business in South Dakota, said Seth Pearman, the tribe’s attorney general, in an interview on Wednesday.

Under an Obama-era Department of Justice memorandum, federally recognized Indian tribes with cannabis businesses that obeyed state law and kept weed out of the hands of criminals and minors were not priorities for prosecution. The Flandreau Santee first tried to open up a cannabis business in 2015, but chose to close up business—and burn its first crop—under pressure from law enforcement.

That meant waiting until South Dakota caught up to other states legalizing cannabis. After that happened last November, the Flandreau Santee pushed forward with writing and passing its own cannabis regulations that apply within the boundaries of its reservation.

Though the state won’t issue medical marijuana cards until November and though dispensaries won’t open until next year, the state’s medical-marijuana law still takes effect July 1.

In sum, all this means anyone buying cannabis on the reservation under the Flandreau Santee’s own cannabis laws—which are consistent with state law, while also being independent, in an arrangement called a compact—won’t risk prosecution once leaving the reservation, Pearman said.

“That individual will have legal protection under the law,” Pearman said.

The tribe will issue medical-cannabis cards to anyone with a qualifying condition, but the tribe will also recognize anyone with a medical cannabis recommendation from another state.

And if the state Supreme Court dismisses the complaint brought by Noem and state law enforcement officials against Amendment A, the dispensary will also sell cannabis products to anyone 21 and over.

The state’s first cannabis business—a long but doable drive from nearby big cities without legal marijuana like Minneapolis—is already employing 15 people and could generate as much as $1 million in revenue a month, tribal officials told the Sioux Falls Argus Leader.

The Flandreau Santee already have a casino on their reservation, but cannabis “could get as big as gaming and be as viable of a revenue source,” Pearman said. “It will also provide jobs and economic opportunities, and fund programs [on the reservation, like housing, roads, and schools] where there have been deficiencies for decades.”

There’s still a possibility that Noem or other authorities in South Dakota law enforcement could decide to take action. That would be vastly unpopular—and it would also violate the reservation’s federally protected status as a sovereign nation, potentially triggering a legal battle.

For now, that seems unlikely.

“We’re all good,” Pearman said. “I haven’t had any communication otherwise.”