Cannabis approaches differ in Hill City, Keystone

While the two towns of Keystone and Hill City  share many things, their vision of marijuana may not be one of them. The towns have taken different paths when it comes to rolling out the ordinances for what medical marijuana will look like when dispensaries, cultivation, testing and manufacturing centers begin to open in South Dakota.

Neither town was given much guidance on the state’s roll out of medical marijuana. The South Dakota Municipal League, however, provided towns across the state with template ordinances. Towns could use these ordinances as is, filling in the blanks  to enact something specific for their town.  

That’s what Keystone chose to do. The tiny town has no planning and zoning and thus any marijuana establishment is free to open anywhere in town. The only state requirement was that these establishments not be within 1,000 feet of a school. And since Keystone’s former schoolhouse is now a museum, this ordinance did not apply. The town board was receptive to marijuana consultants who came to several meetings with ideas, concerns and practical information. The state left towns free to make their own decisions, merely requiring two things—that each town make available at least one medical marijuana dispensary license and that no town  enact an ordinance that, according to codified law, interferes with  the “time, place, manner, and number of medical cannabis establishments in the locality.” 

Keystone officials looked at medical marijuana as a medical need for patients who have a valid prescription from a doctor. They chose to require dispensaries to be open year-round, so that patients in Keystone would not have to drive to outlying communities to get their prescriptions filled. Board officials also set hours of operation that would be convenient for locals. Dispensaries cannot be open past 7 p.m. or before 7 a.m.

And although dispensaries do not have to operate full time, the town board required they must be open a minimum of 16 hours per week. 

Town attorney Mitch Johnson tweaked the Municipal League template ordinance to reflect these changes and the town put the ordinance into effect Sept. 1.

The town had intended to allow for only two dispensary licenses. During the tweaking, however, Johnson used the word establishment throughout the ordinance. That opened the door to allowing just that: two establishments versus two dispensaries. This came to light at the  Keystone Town Board meeting Oct. 20. The town accepted and certified the application of dispensary licenses from Puffy’s LLC and Dakota Farms and accepted and certified an application for cultivation from 1889 Farms LLC at that same meeting. That meansKeystone may end up with one cultivation facility and only one dispensary.

A town must wait one year after passing an ordinance to update it, according to Johnson. Ultimately the state will determine, via a lottery system, which applications will be accepted. And applicants do have the ability to withdraw or not accept a license if granted (much in the same way liquor licenses can get passed on). 

Hill City chose a much different path for medical marijuana, choosing to create its own stopgap ordinance. The ordinance, which went into effect July 1, allows for one dispensary per codified law and did not allow  a facility for cultivation, testing or manufacturing.

The ordinance states  that it would be  “inappropriate” for  the town to issue a local license to a medical cannabis establishment while there is “insufficient information and direction from the state.” According to city administrator Brett McMacken, “our ordinance allows our common council to be the gate keeper and decider of when all of this makes sense and then to allow applications to be processed.” The ordinance makes clear the city intends to review the relationships  medical marijunana establishments will have with its comprehensive plan.

One such area of review is zoning. Because of state law restricting the location of medical marijuana facilities within 1,000 feet of a school, the entire business district of Hill City is virtually eliminated as a potential dispensary, cultivation, testing or manufacturing site. The Planning and Zoning Commission has had two discussions on medical marijuana. City administrators stress that this is a legal plant, no different from a tomato, and P and Z board members need to have an open mind when considering how to zone establishments accordingly.  

City officials also explained that grow and cultivation facilities use hydroponics and offer some of the higher paying jobs in this fast growing industry.  Buildings are virtually indistinguishable from other manufacturing businesses. Testing labs employ people with advanced degrees and look like any other type of laboratory. 

P and Z will help shape the rules regarding where medical marijuana establishments will be located, their hours of operation, allowable signage or even whether the  requirement of filtration will be necessary to  help eliminate odors. 

So far the board is in consensus that there is no place in a residential zone for facilities of this type. 

“It’s all about respecting the integrity of residential zones,” said president Ron Walker.

Conversations tend to lean toward allowing a dispensary in a C1 (commercial) zone, with some sort of setback or distance from residential zones that may neighbor this zone type. However the board has yet to make any recommendations on this.

It is unclear how long the city can put accepting applications on hold. The state had authorized the Department of Health to provide some regulation by Oct. 29. 

On Oct. 8 the Department of Health released a document  to provide direction on its anticipated treatment of medical cannabis establishment applications in relation to any municipality or county with ordinances pertaining to licensure of these establishments. The Department of Health issued an application checklist on the state website Oct 21. with the “application coming soon” tag below.