South Dakota Officials Frustrated By Federal Silence On Rescheduling

Officials Cite Lack of Federal Guidance

South Dakota state officials told lawmakers Monday that a federal change in medical marijuana’s legal classification should help the state’s medical cannabis industry claim business tax deductions and gain access to banking. However, questions remain about the broader impact. Whitney Brunner, administrator of the state’s medical cannabis program, addressed the legislative Medical Marijuana Oversight Committee during a meeting at the Capitol in Pierre.

She noted that the federal government has shared little information about the change with the state, other than to request data.

“At the state level, we probably have more questions than answers,” Brunner said. In April, the federal government moved medical marijuana from Schedule I to Schedule III under federal drug law. Schedule I drugs are considered to have no accepted medical use and a high potential for abuse.

Schedule III drugs are recognized as having accepted medical uses and a lower potential for abuse.

Businesses Seek Clarity on Compliance

Recreational marijuana remains a Schedule I drug under federal policy, even though 24 states and the District of Columbia allow recreational cannabis in various forms. South Dakota does not allow recreational marijuana use. Medical marijuana has been legal in South Dakota since 2021, after voters approved it through a citizen-led ballot measure in 2020.

Since then, the state has built a regulatory framework, including licensing systems, testing requirements, and oversight.

Brunner did not say whether South Dakota businesses will be required to register with the Drug Enforcement Administration to participate in the state program or what new compliance requirements they might face. The uncertainty leaves operators unsure of their immediate next steps regarding federal registration and specific operational mandates.

State Program Undergoes Internal Overhaul

The federal changes arrive as South Dakota’s medical cannabis program is in transition. Brunner told lawmakers that the department overhauled its inspection program over the last year.

Brunner said a rules package moving through administrative review would make operations easier for establishments. The package would simplify language around inventory tracking training and reduce how long businesses must store security camera footage. It would also restructure the fines system so first-offense minor violations result in a corrective action plan rather than an immediate fine.

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