PIERRE, S.D. (KELO) — Lawmakers and Gov. Kristi Noem (R-SD) will be working on coming to an agreement on industrial hemp in South Dakota over the 2020 legislative session.

As Capitol News Bureau Correspondent Bob Mercer reports, a lot of hurried work in Pierre and in Washington, D.C., needs to get done for South Dakota farmers to be able to plant industrial-hemp seed into their fields this year.

KELOLAND News is breaking down the bill and how it compares to the “guardrails” Noem announced last week if she were to authorize the bill this year, there are four things she requires.

House Bill 1008 was pre-filed the day after Noem told KELOLAND News of her change.

✔ The bill appears to address Noem’s request
❌ The bill doesn’t appear to address Noem’s request
➖It’s unclear if the bill addresses Noem’s request

Noem’s Guardrails

Reliable Enforcement

➖ Gov. Kristi Noem is looking for four things in this category: growth or possession of hemp is a consent to an inspection and a search.

House Bill 1008

In section 38-35-11, of the new bill, law enforcement may collect a sample of the product for the purpose of testing when its being transported. The bill also says in section 38-35-7, the Department of Agriculture may enter on any land or area where hemp is grown, stored, or produced for the purposes of inspections, sample collection, testing, or investigation.

✔ Noem is also looking for agency authorization to inspect fields and loads, confiscate or seize, and destroy or dispose of unlawful hemp – without liability – and the actual costs of disposal must be paid by the grower or possessor.

As shown above, the bill gives the Dept. of Ag the power enter on any land or area where hemp is grown, stored, or produced for the purposes of inspections, sample collection, testing, or investigation. In addition, the proposed legislation says any hemp found to be in violation of the law is subject to confiscation and disposal by the department.

“Any costs arising from the confiscation and disposal shall be the responsibility of the grower, producer, or owner of the hemp. The department is not liable for any destruction of hemp or hemp products carried out under this chapter. If a violation occurs, the grower shall be given, in writing, a copy of the results.”

❌ Noem wants to ensure the sale or use of hemp and hemp derivatives for smoking is prohibited.

There is nothing in the bill that explicitly bans growers from selling or using hemp to smoke. The bill defines industrial hemp as “all derivatives” of the Cannabis sativa L plant and with a “delta-9 tetrahydrocannabinol concentration (THC) of not more than three-tenths of one percent on a dry weight basis.”

❌ Lastly, in this section, Noem wants an annual statistical report by the Attorney General to the Governor and Legislature as to how this act affects criminal drug prosecutions.

The bill doesn’t have any requirements like this.

Responsible Regulation

✔ Gov. Kristi Noem wants regulations regarding licensing, reporting, and inspections that are at least compliant with USDA standards.

The state’s plan will have to be approved by the U.S. Department of Agriculture and outlines a path to do that.

The federal guidelines have a requirement for producers to report acreage to the USDA. The federal agency also outlines requirements for inspections.

The state plan requires producers to be licensed through the state’s Department of Agriculture and follow criminal background checks.

For reporting, the state plan requires each licensee to file with the Department of Agriculture documentation indicating that the seeds planted were of a type and variety certified to have no more than three-tenths of one percent tetrahydrocannabinol. This has to be done in 30 days.

In addition, one line of this bill likely will satisfy Noem’s request that “all applicants and licensees shall abide by the any (sic) rules set forth by the United States Department of Agriculture.”

Minimum land area size: contiguous outdoor 5 acres.

The bill states: “if the land area is to be used to grow hemp, the land area must be at least five contiguous acres.”

➖ Noem also wants an appropriate fee structure for application, annual license, and inspection.

The governor didn’t explain what an “appropriate fee structure” would be.

The bill sets a license fee not to exceed $350. The license is valid for 15 months.

The bill sets an inspection fee not to exceed $250.

All fees will go into the state’s industrial hemp licensure program fund.

Safe Transportation

✔ Gov. Kristi Noem is requesting that a permit is required for all transportation of hemp.

The bill follows that and says: “an industrial hemp transportation permit is required to transport industrial hemp.”

The bill also sets the transportation application is valid for 15 months. It has to be filed at least five business days ahead of transportation.

Appropriate legal consequences for hemp transported without documentation.

Similar to the fee structure request, what is appropriate is up to interpretation by the governor.

The bill says: “it shall be a Class 2 misdemeanor to transport industrial hemp without appropriate licensure or paperwork from a federal or state authority.”

Adequate Funding

Total Department of Public Safety Projected Costs:

9 full-time employees for transportation and enforcement, and nine seasonal inspectors.

The one-time cost is anticipated to be: $1,157,517 and on-going costs of $1,044,345.

Total SD Department of Agriculture Projected Costs:

3 full-time employees for program management.

The one-time cost is anticipated to be $36,586 and ongoing costs of $349,697.

Total Department of Health Projected Costs:

2 full-time employees for lab chemists.

The one-time cost is anticipated to be $705,700 and on-going costs of $198,739.

The bill only establishes the creation of a fund for fees to be deposited. It didn’t include any appropriations.

In addition, the inspectors in the bill worked for the Department of Agriculture, not the Department of Public Safety.

Capitol News Bureau Correspondent Bob Mercer reports this section is going to take a lot of work from lawmakers over the next few months in Pierre.

Mercer analyzed Noem’s funding projections and said South Dakota would need, to break even on the ongoing costs, some 4,000 to 6,000 license holders at $350 apiece, with the number of $250 inspections being the other variable.

What’s next?

The bill will be referred to a committee.

Once in committee, the bill will be presented for a hearing. The committee can then amend the bill, which could help alleviate some of Noem’s concerns.

If the bill eventually passes both chambers and is signed by Noem, it will likely go into effect immediately. That’s because the bill contains an emergency clause. Otherwise, it would have been likely delayed until July 1.

That doesn’t mean producers can plan on planting right away this year.

The next step would be for the State of South Dakota to file an application with the U.S. Department of Agriculture.

As of this week, there are 22 states and tribal applications under review with the federal agency. They’re also anticipating at least 21 more applications either being drafted right now or in the process of being re-submitted.

The agency will then either approve or deny the application. So far, they’ve already denied 8 plans and those states and tribes are adding edits and amendments to fit the federal government’s framework.

The state will need to start up an application process and do the necessary hiring, as outlined by Noem’s cost estimates.

South Dakota’s Flandreau Santee Sioux Tribe was one of the first in the country to be approved by the USDA. Oglala Sioux Tribe also filed. They were denied by the USDA and have to make edits or amendments before resubmitting. The Yankton Sioux Tribe is also working on a plan to submit.

For now, it’s a waiting game to see when farmers will begin to plant industrial hemp.