PIERRE, S.D. — A House committee on Thursday unanimously approved a bill to legalize and regulate the growth, processing, and transportation of industrial hemp in South Dakota.
The bill’s advancement to the House floor marked progress on an issue that divided legislators and Governor Kristi Noem last year, but disagreements remain on how to fund the hemp program.
The Republican governor vetoed a bill that would have allowed industrial hemp last year. She said in the fall she would veto a hemp bill again this year because it could lead to legalizing marijuana, but changed her position just before the session began.
Noem said she still doesn't think industrial hemp is a good idea, but her office worked with legislators to craft the bill this year and she spoke in favor of the bill before the House Agriculture and Natural Resources committee. She wants the hemp program to be regulated by “four guardrails” that would provide for the program's enforcement, regulation, transportation permitting, and funding.
Both hemp and marijuana are derived from cannabis plants. But hemp is allowed under Department of Agriculture guidelines if it has less than 0.3 percent of THC, the compound in marijuana that produces a high.
House Majority Leader Lee Qualm, a Republican from Platte, introduced this year's bill and said proponents of the proposal have had three meetings with the governor's office to work out the details. He expected it to pass the House.
Funding the program may still become a sticking point.
“There are legislators who don't think they need to pay for the program,” Noem said.
She estimates it will cost almost $3.5 million to get the program up and running and has asked the Legislature to find room in the state budget for it. The money includes funding for holding drug evidence, four service dogs and test kits.
But some legislators said the funding demands are “holding the bill hostage.”
Representative Herman Otten, a Lennox Republican, said the state would need to pay for testing and regulating hemp anyway because the state cannot stop it from being transported through the state. Several Indian tribes in the state are also planning to grow hemp.
Health Secretary Kim Malsam-Rysdon said the increased volume of hemp would require new testing equipment that the state's labs don't currently have.
Qualm remained positive about finding the funding and said he thinks farmers could begin growing hemp this year. The state's plan would still need to be approved by the Department of Agriculture.
The proposal calls for a maximum fee of $500 to apply for a license to grow hemp, $2,000 to apply for a processing license, and $25 for a permit to transport it. Growers and processors would also have to pay inspection fees. The bill would make it a Class 2 misdemeanor to purchase, transport, or receive raw hemp without a license. It also allows for the sale of CBD products, but does not allow hemp to be smoked.