Medical marijuana dispensary openings in S.D. delayed by several factors

A delay in supply chains meant a delay in buildings being ready to grow the plants
Published: Jun. 27, 2022 at 8:41 PM CDT

SIOUX FALLS, S.D. (Dakota News Now) - Friday will mark a big step for South Dakotans hoping to relieve their physical pain with legal medical marijuana for the first time in their lives.

That is the first day when nurses and physician assistants can sign a written certification to make patients eligible for the medicine. Previously, only doctors could sign the cards, and only 106 in the state are approved to do so.

As of Monday, almost 1,200 South Dakotans already have their cards and therefore can purchase the cannabis anytime, as long as it comes from licensed businesses within the state’s borders.

Some of the state’s dispensaries like East River Farms LLC in Sioux Falls are ready to open their doors. But the consensus among dispensary owners across the state, Winter said, is that the first one won’t likely open until early September at best, and some may not be ready before the calendar flips to 2023.

The reason comes down to one major obstacle — they’re waiting for the marijuana to grow and be ready to distribute.

”We just don’t have a product yet,” East River Farms partner Zach Winter said. “We’re waiting, more or less, on the cultivation side.”

The first of the state’s 25 licensed cultivators is South Dakota Cannabis Company, who had the green light from the state to start preparing the cannabis plants in February but whose building wasn’t ready to do so until late May.

The biggest reason for that is a common one across the country — supply chain issues.

“Getting stuff here that we need,” said Logan Denning, a partner with South Dakota Cannabis. “A/C units and wires and things like that. You know, everybody’s running into those problems.”

And once those things finally get there?

”We’ve got to make sure the environment is right in the room,” Denning said. “We have to make sure there is no traffic in there. So, if there’s an electrician that needs to go in there, a plumber, anything like that, we really can’t do anything until all of that is taken care of.”

And the plants take a while to grow.

“Each strain has different timelines and different environmental considerations,” said Emmett Reistroffer, the chief operation officer of Genesis Farms LLC, which has a cultivation center in Box Elder (just outside of Rapid City) and will sell cannabis at six dispensaries across the state, including two in Sioux Falls.

”We’re focused on quality,” Reistroffer said. “While we are working urgently, we don’t want to rush the process. It’s a natural process.”

Reistroffer is a longtime legal and recreational marijuana advocate in South Dakota. His passion for making cannabis accessible started when he was 12 years old, when his grandmother used it to alleviate the nausea from chemotherapy, and to help her eat food.

He said another factor delaying the opening of dispensaries is available customers. Why open a store when not early enough people are even qualified to buy your product?

Reistroffer estimates 20,000 South Dakotans could and want to benefit from medicinal marijuana, but only a tenth of them have their cards. Many are not aware how to get them, and the process, which starts by going to the website, can seem tedious... and nearly difficult if you don’t have internet access.

As of now, only those with physical ailments — not mental illness — are eligible.

”There’s enormous market potential,” Reistroffer said. “I believe the South Dakota cannabis market is worth half a billion dollars, but with that said, there is a lot more red tape for this industry than any other business I’ve been part of. The cost of licensing, which in certain municipalities is over $100,000 a year, and of course, our legislators will have to consider the impacts of taxes on cannabis.”

He hopes that medical cannabis will have a “normal” tax rate and nothing more.

“The more you tax cannabis, we find in other states, the more people will just stick with the black market, and we want to keep this above ground. We want folks going into legal stores, paying taxes. That means we need to have a fair tax rate on it, and that will create the most potential for business, and for the state, and for the consumers.”

It is a concern that piles on to the already sizable heap of hoops marijuana entrepreneurs like Reinstroffer and Winter have had to jump through.

“It has not been an easy process,” Winter said. “There’s no playbook on this business. So, it’s really hard, and there’s no financing. So, you have to talk to someone who has done it successfully to create a good game plan, and then you have to either finance it yourself or find some investors. So, I mean, it’s been a tough run.”

But for Winter — whose fellow owners were a 1-in-76 shot to be one of five winners in November’s Sioux Falls “pot lottery” to open a dispensary within the city — the rugged road has been worth it.

“I think this is definitely going to pay off,” Winter said. “I’m excited to open up my own dispensary in my hometown and really focus on helping patients with their needs...

“It’s just a great alternative to pain meds, specifically,” Winter said. “I mean, popping ibuprofen pills like Skittles when you’re in pain, rather than taking an edible that’s a safe plant in a safe space?...”

He shook his head. It doesn’t make sense to him.

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