Legislators getting pushback from Noem over SDSU bio-institute money and hemp changes

Capitol News Bureau
KELO Pierre Capital Generic

PIERRE, S.D. (KELO) — Back in 2019 Governor Kristi Noem, the first woman elected as the state’s chief executive, and the first from a working farm or ranch background to hold the office since Walter Dale Miller in the mid-1990s, told lawmakers in her inaugural State of the State address she wanted her Republican administration to land “the next big thing” for South Dakota’s future.

Her goal was something ground-changing like when Citibank in 1981 moved its credit-card operations to Sioux Falls. Since the Noem speech, rural legislators have offered several ideas they say hold big promise for agriculture, the top driver in the state’s economy. But instead of getting support from her, they’ve met with disagreement this session, ranging from mild opposition to forceful resistance.

Last Thursday, an analyst from the governor’s budget office was the only opponent who testified against a proposal to earmark $20 million of state general funds for the design, construction, and furnishing of a $28 million bio-products institute at South Dakota State University in Brookings.

The project calls for scientists from both SDSU and South Dakota School of Mines and Technology in Rapid City to seek ways to turn raw agricultural commodities and Black Hills timber scrap into new products. The institute is one of the state Board of Regents’ priorities this year, executive director Brian Maher told the House Agriculture and Natural Resources Committee.

But the budget analyst, Lara Williams, said the project wasn’t in the governor’s recommendations. Williams said the legislation should be sent to the Legislature’s budget panel and be considered along with dozens of other spending proposals.

That same day, officials from the state Department of Agriculture and the state Highway Patrol spoke much more strongly to the House committee against legislation from Representative Caleb Finck. He wants to change a variety of laws on industrial hemp, such as allowing indoor growing in greenhouses at least 30 by 90 feet, slashing the minimum outdoor acreage of a hemp plot to one-half acre from the current five acres, and loosening or streamlining some permitting and inspection regulations.

The House committee listened to the arguments but moved both bills forward.

The SDSU legislation went to the House Appropriations Committee for consideration whether it should be passed — and if so, as a late addition to state government’s current-year budget, or as part of the 2022 spending plan.

The prime sponsor, Representative David Anderson, sponsored legislation last year that earmarked $1 million to start planning the institute. The governor signed it into law. South Dakota Soybean executive director Jerry Schmitz said producers in the state are great at growing commodities. “What we don’t do well is add value to them before we take them out of the state,” he said.

House Republican leader Kent Peterson said the institute is “a legislator-driven idea” that came from a meeting two years ago that he, Anderson and SDSU President Barry Dunn had with top officials of POET, the Sioux Falls-based producer of ethanol and other commodity-based products.

Peterson said the $20 million request is timely because state government has an unexpected abundance of one-time funds available this year, partially because so much federal aid has flowed into South Dakota’s economy in response to the COVID-19 pandemic the past year. “It’s an opportunity we may never have again,” Peterson said.

The hemp legislation meanwhile contains an emergency clause that would have changes take effect immediately upon becoming law. That means the changes would be in place for the inaugural 2021 planting season. The House committee voted 10-1 to send it to the full House for debate sometime in the next few days.

Derek Schiefelbein, director of the state’s industrial-hemp program, and Capt. John Broers, head of the patrol’s motor-carrier enforcement, said the changes would violate the governor’s “Four Guardrails” that Noem last year argued were necessary for her to drop her opposition to legalizing growing of low-THC hemp in South Dakota.

Noem had fought hemp legalization in the 2019 session and vetoed legislation lawmakers had approved, saying it was premature and warning, accurately, that hemp’s legalization would open the way for marijuana, which she opposed even more. After the Senate couldn’t override her veto, she didn’t relent, sending 315 questions to a study committee that the Legislature’s Executive Board had assigned to continue working on the topic.

The committee proposed another hemp bill for lawmakers to consider in the 2020 session. Facing a second showdown, Noem shifted with the Four Guardrails provisions. Legislators and the governor finally agreed on compromise legislation that included millions in new state funding for regulation and inspections. She signed it into state law March 27, 2020. The state’s final plan went to the U.S. Department of Agriculture on October 9 for approval.

South Dakota voters in the November 3, 2020, election approved two ballot measures legalizing adult-use marijuana and medical marijuana. Noem had campaigned against both last year. The Republican governor now is trying to get the adult-use constitutional amendment overturned in court. The medical marijuana laws are supposed to take effect July 1, 2021, but she’s been working with the Legislature’s Republican leaders to delay them until July 1, 2022, while further study occurs.

State officials are processing the first applications for hemp licenses. Captain Broers said it’s too early to make changes to laws that haven’t been tested. “The bottom line is, we don’t know what we don’t know yet,” he said. “We haven’t planted a single crop yet in South Dakota for industrial hemp.”

Representative Finck responded, “Our proposed bill does NOT go against the governor’s four guardrails.” He said allowing smaller plots would potentially generate more revenue for the regulatory program, while repealing a requirement that seed transporters need permits in advance that he said won’t be much help if farmers run out while planting.

Representative Oren Lesmeister, who sponsored the 2019 hemp bill that Noem vetoed, urged approval of Finck’s bill. “It’s been years in the making. We’re trying to make it better,” he said about the state’s hemp program. “Let’s open this for business.”

Representative Charlie Hoffman, normally one of the governor’s more reliable backers in the Legislature, sided with Finck this time. Hoffman said the hemp changes would give more freedom to the people and would restrict government’s authority a little bit. “Which I’m all for,” he said. 

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