Recreational Marijuana is on the ballot; Here’s what IM 27 means

What is Initiated Measure 27?

Initiated Measure 27 is a ballot measure on the November 2022 ballot which, if passed, will legalize the use, possession, and cultivation of marijuana for adults over the age of 21.

Specifically, if passed it would legalize, for those 21 or older:

  • The possession of 1 ounce of marijuana.
  • The use of marijuana.
  • The giving of marijuana under 1 ounce, without pay.
  • If there is NO licensed recreational marijuana dispensary within the town or county, the growth of 3 marijuana plants at home, and the right to keep the production of those plants (even over 1 ounce) as long as the plants and the product are kept locked away and not in public view.

The initiative, if passed, would NOT:

  • Legalize the sale of marijuana.
  • Legalize the smoking of marijuana in public.
  • Legalize the smoking of marijuana anywhere smoking cigarettes is outlawed.
  • Establish any regulations related to the taxation, sale, or commercial growth of cannabis.
  • Prevent private business from disallowing the use of marijuana in their establishments, or drug-testing their employees.

Anything NOT specifically addressed by the measure, such as taxation, sale, or commercial growth, would have to be worked out by the South Dakota Legislature and relevant state agencies as they craft the laws and regulations necessary to implement IM 27.

How does it work if the measure legalizes ownership but not sales?

Issues like the legalization of sales, business licensing, tax rates, and the distribution of revenue are left to the South Dakota State Legislature. There is no legal requirement for them to pass any law, but if they don’t, the measure allows users to grow their own marijuana plants.

However, State Representative Mike Derby said he expects the legislature to pass follow-up regulations if it passes.

“I guess this is this truly is one of those issues where it’s, you hear this overused phrase, ‘the will of the people,’ and the way I look at this is two ways. Once it passes, then our job is as a legislature is to promulgate the rules and regulations, figure out how it’s distributed, how it’s going to be taxed, how it’s going to be safe, how it’s going to be tested, how we’re going to keep it out of the hands of children and people under the age of 21, all with the goal of reducing the black market in the State of South Dakota.” Derby said, “But if it fails, I don’t see the legislature taking a lead role on legalizing cannabis for adult use. Once again it’s the will of the people, if it fails, why would we override that?”

Didn’t we vote on this already?

Yes, but no.

In the 2020 election, Amendment A was passed by the voters of the State of South Dakota. That initiative was much broader than Initiated Measure 27, covering the use, sale, and taxation of recreational marijuana as well as medical marijuana and hemp.

Because South Dakota has a law, passed in 2019, requiring ballot measures to cover only a single subject, the Amendment was deemed invalid by the South Dakota State Supreme Court.

Now, IM 27 is attempting to legalize the use of recreational marijuana once again, but in a way that is narrow enough that proponents hope will avoid similar legal challenges.

What about medical marijuana?

In 2020, voters passed Initiated Measure 26, a measure legalizing medical marijuana use by any “qualifying patients.” The initiative defined this as the use of marijuana or marijuana-based products to treat or alleviate “debilitating medical conditions” as certified by a health practitioner.

This measure was not overturned, and in November 2021, the first medical cannabis cards were issued to patients. As of October, over 4,000 South Dakota residents have received marijuana cards.

Medical marijuana use remains legal in South Dakota regardless of the vote on IM 27.

Isn’t marijuana federally illegal?

Yes. Initiated Measure 27 cannot and will not alter federal laws regarding cannabis. It remains a Schedule I drug, meaning it is classified in the same category as heroin in regard to federal law enforcement.

While the federal government has a history of lax enforcement related to marijuana, using it can impact those who work on federal property, like a military base, those who work for the federal government, or those who undergo federal background checks, such as the background check when purchasing a firearm.

Federal law prohibits cannabis users from owning or purchasing a firearm. This includes those that have a medical marijuana card, or who live in states where marijuana use has been legalized.

What will it cost? Will there be any tax revenue?

State ballot initiatives are required to include a 50-word fiscal note from the Legislative Research Council, which analyzes how the measure may impact the State budget.

However, because this bill does not directly legalize the sale of marijuana, nothing related to the sale or taxation of marijuana was evaluated by the LRC in regard to IM 27. The LRC wrote that the state can only expect negligible costs and benefits from the issuance of marijuana-related fines, and a reduction in marijuana prosecutions.

The LRC did provide a more detailed financial analysis of Amendment A, but there is no guarantee that any laws will be passed by the legislature that will regulate and tax the sale of marijuana in the ways that Amendment A did.

The fiscal note for Amendment A estimated a net revenue for the State of:

  • $355,705 one year after passing.
  • $10,765,004 two years after passing.
  • $19,589,466 three years after passing.
  • $29,372,397 four years after passing.

or a total of around $60 million over 4 years.

These numbers are not directly comparable to expected revenues from Initiated Measure 27, for which no LRC estimate exists, but they demonstrate what could be expected if similar regulations are passed regarding recreational marijuana as those in Amendment A, such as a 15% excise tax.

According to State Senator Derby, who is on the Joint Appropriations Committee, the estimate from industry experts is “$80 to $130 million per year.”

“The question then is what does the State of South Dakota get out of that? If you use, for easy math, the middle, $100 million, with a 15% sales tax, then $15 million per year,” Derby said.

For statements from both sides on why they support Yes or No on this measure go here.



Categories: Cannabis Legislation, Local News, Politics & Elections, South Dakota News