PIERRE, S.D. — South Dakota lawmakers have approved the final rules to get the state’s industrial hemp program up and running.
The state’s Interim Rules Review Committee voted 5-1 on Dec. 7 to approve the rules, which lay out the dollar amounts for the various fees, licensing, inspection and transportation requirements for industrial hemp in the state.
The South Dakota Legislature voted earlier this year to approve the industrial hemp with emergency administrative status, which would speed up how quickly the hemp program could get going. But it still needed federal approval from the U.S. Department of Agriculture, which occurred in October.
The South Dakota Departments of Agriculture and Public Safety worked together to create the plan, which addressed the seven areas that the USDA requires for approval: maintaining producer and land information, sampling, procedures for both disposal and inspection, collection of information, enforcement compliance and certification that the state has resources and personnel to carry out the industrial hemp program.
According to the rules approved Monday, every hemp grower licensed by the state must pay a grower inspection fee of $250 and every lot shall not be inspected more than 15 days before the hemp is harvested. Once it has been inspected and tested, it can then be harvested. Growers must contact the Department of Public Safety at least 30 days prior to harvest to schedule an inspection. Industrial hemp in the program must not exceed a THC concentration of more than 0.3%, and noncompliant hemp must be disposed of.
Enforcement is broken into negligent and non-negligent violations. Negligent violations are not subject to criminal prosecution and could lead to a grower being placed on a corrective action plan. Three negligent violations in a five-year period result in a grower being ineligible to produce industrial hemp for a period of five years.
Non-negligent violations could be prosecuted under state or federal law and that is reflected in the industrial hemp law, as individuals who possessed a product determined to meet the definition of marijuana would be subject to prosecution. That could be complicated if South Dakota's recent constitutional amendment passed by voters legalizing recreational marijuana goes into effect. But in the case where a person has possession of more than 10 pounds of legally determined marijuana could be charged with a Class 3 felony, according to state law.
Every hemp processor would be subjected to an inspection fee of $500 per location and each location would be inspected annually. Hemp transporters would need to pay $25 as a fee and obtain a permit to transport hemp in South Dakota, which would also apply to out-of-state haulers.
Growers also must submit license and acreage information to their local FSA office and must maintain data about each lot that can be reported to the South Dakota Department of Agriculture to use in the state’s reports to the USDA. Applications to grow industrial hemp must be for at least five acres.
Licenses will be issued over a 60-day period, from Nov. 1 to Dec. 30 each year. Once the new rules are in place, there will likely be a 60-day application period opening, as well. Growers licenses, which would be good for 15 months, will require a $50 application fee and, if approved, a $500 grower license fee.
In documents provided to the committee, Hunter Roberts, the interim secretary of Agriculture, said the requirements in the rules are the minimums required by state law and for the USDA approved industrial hemp plan.
A fiscal impact statement provided by the Department of Agriculture’s office and signed by Roberts indicates that the state estimates it will generate $78,450 annually in revenues through the program. That is with the estimate of administering 65 grower licenses and four processor licenses, with the largest share of that earned from grower inspection and license fees. Another $11,625 is estimated annually in revenues for the Department of Public Safety, which expects to administer more than 400 transportation permits for growers and haulers at $25 apiece.
The South Dakota Department of Agriculture will have two full-time employees dedicated to administering the program.
Reps. Jean Hunhoff, Ryan Cwach, Jon Hansen and Sens. Craig Kennedy and Margaret Sutton voted for the approval of the rules. Once the rules are filed with the Secretary of State’s office, the rules will go into effect in 20 days.
Sen. Lance Russell, R-Hot Springs, was the lone opposing vote on the matter. He was also one of the three senators to oppose the final version of the bill in March when it passed 30-3.
Hunhoff, a Yankton Republican and the chairwoman of the committee, appreciated the cooperative nature of the two state departments on the rules. She acknowledged that it was “a slower process than anticipated” but disagreed with the premise that the industrial hemp issue was an emergency situation and said the state took the time to get it right.
Proponents of the program also spoke in favor of the effort behind the rules. South Dakota Industrial Hemp Association Executive Director Katie Sieverding said that the time involved with the rule-making process was worth it. She joked that some members of her group would have liked to “press the go button before the ink was dry” on the bill but the process ironed out some potential wrinkles in the program.
“We strongly believe South Dakota needs to be involved in this,” said Derrick Dohrmann, the vice president of the association who is also involved with Horizon Hemp Seeds located in Willow Lake. “It will benefit our farming community greatly.”
No formal opposition spoke during the meeting.