Davison County has formalized a set of medical marijuana rules to go into effect in July, giving the county and potential entrepreneurs something to work with when industry begins operating late in 2021.

The rules allow one medical dispensary license in the rural area of the county and pigeonholes those potential businesses to just a few parcels of land in the county zoned as rural commercial properties. The rules were finalized during a public hearing and second reading of the county's new zoning and permitting regulations on Tuesday at the Davison County North Offices.

A few potential local entrepreneurs came forward on Tuesday to learn more about what the county’s rules and requirements are going to be. Don Livesay, an owner of the Kongo Klub on the north end of Mitchell, said he has interest in being in the marjiuana industry. He said the business used to have a tobacco shop in the building for 20 years and he would like to utilize the retail space in the building.

The Kongo Klub is within one mile of the Mitchell city limits, potentially testing the extra-territorial jurisdiction debate about medical cannabis as it relates to city and county. In those scenarios, the city of Mitchell has zoning rights to the land that is outside city limits, but Davison County retains permitting rights. Potential applicants would need both jurisdictions to cooperate to get a license and Davison County has stipulated that its cannabis-related licenses must be zoned in rural commercial areas.

The Kongo Klub gets its malt beverage license annually through Davison County.

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“We have not ceded license authority to the city of Mitchell,” Davison County Deputy State’s Attorney Jim Taylor said. “The city can zone it however they want, but our licensing regulation applies to everything outside the city limits.”

Tera Shawd was also at the meeting, saying she also has interest in renting a retail location in Mitchell and considering a second location on the north side of the county. She said she has been working in the marijuana industry for the last three years in other states. She wanted to know why the county was looking at only allowing one license, and whether Davison County would consider allowing more licenses in the future.

Mitchell is in the process of allowing up to five dispensary licenses in the city. Commission Chairwoman Brenda Bode said the county's rules being enacted are there to “develop a baseline” set of regulations.

“Maybe this is wrong of me to say it, but the state has done a poor job of setting the rules to this point,” Bode said. “And we know we can change this down the line. We’re doing the best with the information we have today. This is not a concrete rule.”

Taylor noted that county license holders will also need to have a state license at the same time to operate.

“I know that could cause significant angst because the state’s rules aren’t set … Are they going to say you need to have a county license first? We don’t know. The dog may be chasing the tail,” Taylor said.

With regards to zoning, Davison County is only allowing cannabis businesses in areas zoned rural commercial, which limits the industry to just a handful of parcels, particularly in the Betts Road area near Interstate 90 west of Mitchell and on a single parcel 3 miles south of Mitchell off State Highway 37.

Applicants for a new license to operate a cannabis license would include meeting county ordinances and state law, operate the business consistent with the nature of the neighborhood and not to adversely affect the health, safety or welfare of the neighborhood and would need to pass a background check. Applicants would also need to provide a plan showing the layout of the building, a description of the products being sold and a security plan.

The commission will hold a public hearing about the application within 30 days and will make a ruling on accepting or denying the application within 40 days of the hearing. The application fee for a medical cannabis dispensary in Davison County will be $5,000, which would need to be renewed annually at the same price.