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IM 27 Alone Won’t Authorize Marijuana Sales or Boost Sales Tax

An anonymous commenter makes an interesting point about Jamie Smith’s suggestion that we could make up for the lost revenue of a food tax repeal by passing Initiated Measure 27 and taxing recreational marijuana. Upon reviewing the text of Initiated Measure 27 (on your ballot now!), my unknown correspondent determines that passing IM 27 will not open up any new revenue streams for the state, since it does not legalize selling marijuana.

Section 4 of IM 27 would forbid the state and political subdivisions from punishing possession, use, ingestion, processing, transport, delivery, and distribution of an ounce or less of marijuana. An ounce is not much pot for a dealer to keep in stock. But even that small amount could not be handed around “for consideration”:

Section 4. That title 34 be amended by adding a NEW SECTION to read:

Subject to the limitations in this chapter, and notwithstanding any other law, the following acts, if done by a person at least twenty-one years of age, may not be an offense under state or local law, regulation, or ordinance; be subject to a civil fine, penalty, or sanction; be a basis for detention, search, or arrest; be a basis for the denial of any right or privilege; or be a basis for asset seizure or forfeiture:

(1) Possessing, using, ingesting, inhaling, processing, transporting, delivering without consideration, or distributing without consideration one ounce or less of marijuana, except that not more than eight grams of marijuana may be in a concentrated form;

(2) Possessing, planting, cultivating, harvesting, drying, processing, or manufacturing not more than three marijuana plants and possessing the marijuana produced by the plants, if:

(a) The plants and any marijuana produced by the plants in excess of one ounce are kept at one private residence, are in a locked space, and are not visible by normal, unaided vision from a public place;

(b) Not more than six plants are kept in or on the grounds of a private residence at one time; and

(c) The private residence is located within the jurisdiction of a local government where there is no licensed retail store where marijuana is available for purchase pursuant to this chapter.

(3) Assisting another person who is at least twenty-one years of age, or allowing property to be used, in any of the acts permitted by this section; and

(4) Possessing, using, delivering, distributing, manufacturing, transferring, or selling to persons twenty-one years of age or older marijuana accessories [emphasis mine; Initiated Measure 27, Section 4, retrieved from South Dakotans for Better Marijuana Laws, 2022.10.20].

If an individual cannot possess enough marijuana to maintain a profitable store, and if delivery and distribution of marijuana for consideration remain illegal, how will the state be able to tax the sale of marijuana?

Section 4 and Section 5 both mention licensed marijuana establishments (Section 5(3) allows for smoking marijuana in “an area licensed for such activity” by the Department of Health), but IM 27 creates no regulatory framework for such licensing. It would thus appear that if voters pass IM 27 and the law takes effect July 1, 2023, absent any additional action by the Legislature, there would be no legal way to purchase marijuana in South Dakota. You could grown a little at home. You could bring an ounce back from your trip to Denver. But you could not buy marijuana at any stores, and the state would not have any legal vendors who could remit sales tax for marijuana sales.

Passage of IM 27 would certainly open the door for a new Governor Jamie Smith and a pot-friendly Legislature to authorize the sale of marijuana, license respectable vendors, and tax the heck out of that new commercial activity. But IM 27 does not authorize the sale of marijuana or the taxing thereof.

I would thus suggest that if you are looking to legalize marijuana to boost state revenues, you’re going to need to do more than vote Yes on IM 27. You’re going to need to vote marijuana-hating Kristi Noem out of office and install a new Governor willing to take further action to legalize commercial marijuana.

22 Comments

  1. larry kurtz 2022-10-20

    I bought ten feminized seeds from the dispensary, got three clone starts from a hobbyist, planted twenty four seeds from previous years, killed the males and only came away with ten ounces which might get me to next October’s harvest.

    Since at least 2011 I’ve taken my proposal to mirror state gaming statutes and make Deadwood the non-tribal cannabis market to mayors and several commission members but they have always blown me off because they want the sports betting gig. So my position today is that the tribes must have exclusive production and distribution privileges. If the Neanderthal South Dakota Legislature had any integrity or ethics (they don’t) they would empower Indigenous communities to be the sole producers and marketers of legal cannabis in the state (they won’t).

  2. Richard Schriever 2022-10-20

    Make no mistake. if/when IM 27 passes, the Republican legislators WILL devise a way for the state to profit from it (pass a sales and tax provision). ALL taxation in SD has been created by Republicans. ALL of it.

  3. Richard Schriever 2022-10-20

    Geez Larry, that’s pretty poor production. Back in 1980, I got 28 Afghan Indica seeds (real pre-coup/Russian invasion direct from Afghanistan seeds) and eventually got 14 female plants – grown OUTDOORS in corn-planter skips (a key to success here) which produced 12 POUNDS of sticky gooey flower. For comparison, I grew 3 potted plants on an apartment balcony 20 years later and got about 8 ounces. Not so good by comparison, but OUTDOOR growing makes a huge difference. i never have understood the logic (beyond pure paranoia) behind indoor grow ops.

  4. larry kurtz 2022-10-20

    Indeed, Dick.

    Think pesticide drift is destructive?

    Medicine and a potential revenue source are being put at risk by an experiment that makes Jerusalem artichokes and Belgian endive look like safe investments. South Dakota’s budding hemp industry will drive more growers of therapeutic and “recreational” cannabis indoors to prevent pollen drift from destroying crops while boosting energy costs.

    White people who grow industrial cannabis in South Dakota want to double the number of acres as a declaration of war on the tribal communities who yearn to develop economic opportunities and test off-reservation sovereignty.

  5. Ryan 2022-10-20

    Humbug to the taxes and the politicians and all that crap. A guy just wants to grow a half dozen plants in his basement and have a little harmless fun. Jeez.

  6. P. Aitch 2022-10-20

    Wow, Cory. You’ll be writing weed regs for the Big Red state before long. You did a good job there, amigo. But in SD the quality of a ballot measure doesn’t matter much when the head of the Republican Party makes a living fleecing the families of kids caught with a gram or two of smoke with his and his worker Pat Power’s exorbitant bail bond rates.

  7. P. Aitch 2022-10-20

    @Larry – Your proposal to mirror state gaming statutes and make Deadwood the non-tribal cannabis market was in cahoots with grudznick, huh?

  8. larry kurtz 2022-10-20

    My discussions were mostly with Deadwood people including Jerry Apa, my old boss the late Paul Miller, French Bryan a former mayor, the Keehns, several commissioners and other former mayor, realtors even Bill Walsh.

  9. P. Aitch 2022-10-20

    That’s very politically diplomatic, Lar. “Mostly”, huh?

  10. larry kurtz 2022-10-20

    There are certainly people in LawCo now who are ready to capitalize on the therapeutic cannabis industry as it evolves. Better late than never, as they say.

  11. P. Aitch 2022-10-20

    Better sooner than later, I believe. This “fifteen years behind progress” in SD is stupid and that’s a word I very rarely use.

  12. ABC 2022-10-21

    Why should we make up for LOST sales tax revenue after sales tax on food is gone?

    100 million less dollars is cool, then we will have 100 million dollars less of bad programs!.

    We cut out the tax on eating and drinking, why replace it at all?

    Sales tax on food is medieval. Get rid of it forever. Then never replace it! Dakota South will be 100 million dollars richer every year. Adding 100 million in taxes is a republican idea. Let Dakota South government be 100 million dollars skinnier forever- its healthier for all of us!

  13. Richard Schriever 2022-10-21

    Well Larry, considering it was 1980 – pre-GMO round-up tolerant corn (damned near organic farming practices by comparison to today’s) – AND I was the guy cultivating that field and about 400 acres around it in 3 directions (the prevailing wind directions were to my windward) AND that those plants didn’t go out into the field until AFTER all in-field activity was done…….. no – I was not worried about chemical (or pollen) drift. The difference between the small container size the plants were when they were placed in the field in August and the October harvest was astounding!! And likewise, with the balcony-grown, chemical drift is a non-factor in Southern Cali – near the beach.

    But like I said – paranoia is the main driver of indoor growing so far as I can tell. Someone who is SERIOUS about growing good, healthy, natural environment cannabis will also be SERIOIUS about finding and maintaining a quality environment for doing so and NOT BURNING UP FOSSIL FUELS to power their greenhouse(s).

  14. larry kurtz 2022-10-21

    Here in the Land of Enchantment supporters are lauding cannabis legalization as a way to diversify New Mexico’s economy, bring in tax income and address inequities left by the war on drugs while balancing the state’s water crisis with growers. Groundwater is notoriously corrosive in much of New Mexico while prolonged drought bleeds supplies to critical and coveted acequia rights can literally be to die for but according to researchers at Colorado State University the industry’s carbon footprint should be at least as worrying as tight water supplies.

  15. John Dale 2022-10-21

    I feel like this was a poor facsimile of the CC4L proposal, but I digress. I still support steps toward the dismantling of the marijuana state-sponsored gestapo and the deregulation of this great and useful little plant.

    I wrote down all the assertions being put forward by the Catholi .. er .. I mean “save your kids” lobby. I’ve responded to each in kind with an official opinion of the CC4L.

    I’ll wear the freedom mantle and enter the arena on such an obvious issue.

    I am not a Libertarian and consider that, when extrapolated, to be a failed philosophy.

    I am a Republican, election integrity advocate, and cannabis advocate.

  16. John Dale 2022-10-21

    Richard, interesting comments.

    Sticky flower attracts pollen. Don’t want to ingest pollen.

    But the Sun’s spectrum grows the densest and most full-spectrum complete flower.

    Growing in a greenhouse gets the best of both worlds, but you only get one really good crop a year that way.

    Indoor lights aren’t as good, but produce a decent product if you can keep the room cool enough and if you purchase the right lights.

    Is natural sunshine fed plants in organic soil how Willie Nelson’s reserve pushes those THC strains so *ahem* high, or is it because his people are pushing chemicals through hydro?

  17. larry kurtz 2022-10-21

    John Dale just told the readers of Pat’s Pissoir that South Dakota’s Republican secretary of state accepted 50,000 fraudulent ballots in 2020.

  18. John Dale 2022-10-21

    Larry; these were estimates bandied about by credible parties. I assume that since Hemp and Marijuana are both part of the cannabis plant, that the multi-subject rule was a stretch, but the Supreme Court turned into plastic men after verifying some troubling registration trends in the lead-up to the election. After a preponderance of the issue, I have high confidence that the Supreme Court decision was end-means (my opinion).
    The rub – also my opinion – is that even with the Supreme Court’s justified knee capping of Amendment A, IM26 still passes easily while Amendment A would have lost by a larger margin than it passed. We knew Trump would easily carry SD, but the down ticket issues and candidates may have been impacted here, too. I’ve interviewed our Auditor. I’ve spoken with some well connected sources, we have a change in the SDGOP’s SOS, SDCanvassing turned up very bad voter role data and porous state election law. Was there fraud? I believe so, even though it doesn’t help my own personal political motivations (#lderegulate/legalize). If SOS looked the other way or Auditors were derelict with respect to their IT skill sets, I also believe that, after attending the meeting on the 4th floor of the capitol earlier this year, our county auditors are in trouble and South Dakota’s elections are being held hostage by a firm in MN, away from auditors (public and professional). I have viewed and pondered sufficient evidence to make these reasonable claims .. and I am not alone.

    Names have been named.

    It’s a mess.

    It’s been a mess.

    It’s time to clean it up.

    And keep naming names.

  19. John Dale 2022-10-21

    Your characterization of my comment/opinion as a state of witnessed fact is a stretch, too.

    In an age of Alex Jones selling more books than the Beetles, let’s do our best to ignore the free speech boogie men, shall we?

  20. John Dale 2022-10-21

    I think the law business is going to go fast and hard after legitimate bank rolls, but will quickly run out of credibility for enforcement if Alex Jones suits roll-out (AI + LexisNexis?) writ large.

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