As medical marijuana is a month away from becoming legal in South Dakota, the Mitchell City Council is establishing zoning codes and licensing regulations to welcome the new industry.

During Tuesday’s special meeting, the council unanimously approved the first reading of a pair of ordinances that spell out the city’s regulations for medical marijuana establishments to operate in Mitchell. While medical marijuana officially becomes legal in the state on July 1, City Attorney Justin Johnson emphasized the state’s own set of regulatory provisions in which cities are to follow likely won’t be adopted until October or November. Therefore, Johnson said the city won’t issue any licenses until the state adopts their own.

The city’s medical marijuana roll out comes after voters approved a measure to legalize medical marijuana in South Dakota during the November election. Cities throughout the state now have the authority to roll out their own set of regulations in their respective cities. However, those regulations are subject to change when the state adopts their provisions.

“If we don’t put anything in place, then it is essentially the Wild West. I think it is important we get our regulations in the books even if we have to come back and make changes down the road,” Johnson said. “There is importance in getting our regulations in place before the state laws become effective, and the zoning side of things will determine where these types of businesses can be located and operate.”

Council President Kevin McCardle opened Tuesday’s special meeting addressing concerns he’s heard from residents recently that center around the claim the city is “just looking to make a buck off selling medical marijuana.” McCardle highlighted the measure was voter-approved and will become state law soon, noting it would be irresponsible to not put a plan in place for the city to regulate it before it becomes legal.

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According to the city’s ordinance that outlines the zoning regulations for medical marijuana establishments, licensed entities that sell, manufacture and cultivate medical marijuana would be permitted to operate in highway business (HB) oriented districts, transportation, warehousing and commercial (TWC) districts and central business (CB) districts.

“This applies to cannabis cultivation facilities, cannabis manufacturing facilities, testing facilities and dispensaries. With the dispensaries, there is the additional regulation of buffer zones around certain types of other lands,” Johnson said.

The Planning and Zoning Commission approved recommending the zoning ordinance in a 5-1 vote on Monday, but the council will make the final determination on adopting the ordinances. The second hearing on the ordinances is scheduled for next week, which will adopt it into law, if the council approves them.

Although medical cannabis will become legal in South Dakota in roughly a month, it's still criminalized at the federal level, adding more grey area to states and cities that moved to legalize it. To legally purchase medical marijuana at licensed establishments, one must possess a medical card that has to be issued by an authorized health professional.

Prohibited zoning districts, buffer zones draw concerns

The zoning ordinance also outlines which areas of the city that licensed medical marijuana establishments are prohibited to operate. According to the ordinance, no cannabis dispensary shall operate within 300 feet of an educational institution, religious institution, childcare center (excluding family residential childcare), preschool, nursery, detention facility and mental health facility. While Mitchell's ordinance has a 300 foot buffer zone from schools, Johnson noted state law mandates a 1,000 foot buffer zone. Therefore, Johnson said establishments must adhere to the 1,000 foot buffer zone from schools.

"Our ordinance wouldn't require the 1,000 foot buffer around schools, but the way the state law is written they still wouldn't be able to be located inside that area," Johnson said. “We selected the 300 feet because it represents the distance of a city block.”

In addition, marijuana dispensaries would not be permitted to operate within 1,000 feet of another cannabis dispensary.

That means any type of cannabis establishment is prohibited in residential districts, along with neighborhood shopping districts, public lands, institution districts, conservation districts, and urban development and planned unit development districts. All non-licensed cannabis establishments are prohibited in all zoning districts.

Johnson explained there is a legal provision that states dispensaries are “not to be prohibited to operate,” noting it factored into the decision to establish the 300 foot buffer zone.

In response to recent concerns from residents who suggested to expand the 300 foot buffer zone to 500 feet or beyond, Mitchell Mayor Bob Everson explained that expanding the buffer zone beyond 300 feet would “make no sense,” as it would restrict marijuana dispensaries to do business in the respective permitted zoning areas, especially the downtown central business district area.

“The logic here is that you will have somebody wanting to dispense downtown. If we try to go to that 500 or 600 feet, you’d eliminate most of that,” Everson said, noting it would “make no sense” considering the city’s been focused on ways to rejuvenate downtown Mitchell. “I know there are a lot of people opposed to this whole medical marijuana measure, but the fact is it’s coming and it will be here. But we need to have something in place to address it.”

Johnson noted distances of the buffer zones will be measured “from the closest point of the property lines but excluding public rights of way.” However, those buffer distance requirements may be waived through the variance process, which would require approval from the respective city boards.

Doug Backlund, a Mitchell real estate developer, asked what the city’s policy is if a church moves to a building next to an existing dispensary. Johnson noted the dispensary would be grandfathered in if such a scenario arises.

During Monday’s Planning Commission meeting, Chairman Jay Larson said he was on board with the 300 foot buffer zone due to the risk of creating “too restrictive” zoning codes, which he claimed puts the city at legal risk with the “feds.”

“I agree with Justin (Johnson), it would be too restrictive and maybe the feds would come after us about that since they have been known to do that with too restrictive zoning,” Larson said on Monday.

Licensing regulations, consumption rules

On the licensing side of things, the city is proposing to have four types of licenses for medical marijuana establishments, which includes cannabis cultivation, cannabis dispensary, cannabis product manufacturing and cannabis testing licenses.

For dispensaries, the city's ordinance sets a maximum of five licenses. That means there may be a maximum total of five dispensaries in the city at any given time. The remaining licenses available do not have a cap, but the respective cannabis operations would still have to abide by the zoning regulations and buffer zones. However, the council has the authority to change that at any time through a resolution.

“Say somebody wants to come in and cultivate it and dispense it, that would require two different licenses,” Johnson said. "Dispensaries are the only ones that are capped because they are selling it. A person is not prohibited from having multiple licenses as well, meaning one can have a dispensary license and cannabis product manufacturing license.”

For all licenses, the city set a $5,000 application fee. It must also be renewed on an annual basis at a cost of $5,000. All employees at the marijuana establishments must be at least 21. Licensed establishments must also follow strict guidelines to operate in accordance with the city's ordinance.

Among the most notable dispensary operation guidelines are implementing a verification lobby separated from the portion of the business where marijuana is on display and sold in the establishment. That allows each establishment to verify a patron seeking to enter has a medical marijuana card. Sales must also take place inside the business, eliminating internet or any remote selling of medical marijuana.

“Only cannabis card holders can go into the retail area inside dispensaries. An average joe off the street can’t proceed into the retail area,” he said.

The licensing ordinance also addresses regulations for the consumption of authorized medical marijuana in the city. Nobody, including those who possess a medical card, may smoke cannabis in any public place, correctional facilities, public transportation and cannabis establishments. In addition, operating a vehicle, boat or aircraft, while under the influence of marijuana is prohibited.

Marijuana establishments must also abide by signage rules, which the city's ordinance states may not display the words "cannabis" or "marijuana" and other words commonly used to identify marijuana.

Police Chief Mike Koster joined the discussion following a question asking what his take on the ordinance is. Koster echoed Mayor Everson’s stance on it, noting it would open the door for more issues if the city didn’t have regulatory measures in place by the time it’s legal.

“We need to have something in place, otherwise it will be the wild west. I think what Justin (Johnson) put together is a fair balance to consider,” Koster said.