SD State lawmakers pass recreational marijuana tax bill

Published: Feb. 17, 2022 at 6:28 AM MST
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PIERRE, S.D. - One way or another, it appears that recreational marijuana is going to be back on the ballot this November.

With that in mind, South Dakota state lawmakers in Pierre are inclined to lay down the framework for the industry before it actually becomes legal.

HB 1045, sponsored by State Rep. Ernie Otten (R-Tea), is a bill that would “increase a tax on the gross receipts of all sales of marijuana,” and sets the framework for how adult-use marijuana would be taxed in South Dakota, should it become legal.

“The thing about this bill is it doesn’t legalize marijuana, but it works in tandem with what the voters will put on the ballot or whatever is coming this Fall,” said State Rep. Drew Dennert (R-Aberdeen). HB 1045 passed through the House Taxation committee, which Dennert chairs. “If that legalizes marijuana, it still wouldn’t set up a taxing system, so this bill is extensive. But it set that taxing system up.”

The framework makes it so that marijuana would be taxed at 15%, which was what Amendment A proposed as well.

Counties and states would effectively split that money, and counties would be able to put it back into infrastructure.

“The counties are strapped for cash right now, all the revenues for counties fall on property taxes,” said Dennert. “I think property taxes are way too high right now, so this is also an additional revenue source for counties.”

In committee, some opponents argued that the bill is too preemptive.

“I think we are getting the cart before the horse,” said State Rep. Tony Randolph (R-Rapid City). “This is something that is anticipated to be a ballot measure. What if this does fail?”

For proponents of legalized adult-use marijuana, they are happy to see the conversation on legalization change from if, to when.

“I am excited to see the South Dakota state legislature take one step forward toward creating a system of taxation and regulation on cannabis,” said Emmett Reistroffer, Operations Manager for Genesis Farms. “Someone like myself is very excited because I have been advocating to end prohibition in South Dakota for over a decade. I have seen these laws and systems work in other states, and it is the right thing to do.”

As of right now, a petition is being circulated to put recreational marijuana back on the ballot in November. However, lawmakers could also pass a joint resolution themselves that would have the same effect.

HB 1045 is scheduled to be heard on the floor of the House sometime next week.

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