To the casual observer, it might look like South Dakotans are addicted to voting on recreational marijuana. Legalizing grass was on the ballot in 2020, 2022 and will be again in 2024.
For the backers of legalized marijuana, the high point came in 2020 when voters here approved a constitutional amendment with 54% of the vote. Just about everything that had to do with marijuana was in that initiative. It was overturned by the South Dakota Supreme Court, citing a violation of the state’s one-topic rule for constitutional amendments. That killed the recreational portion of the measure, even as state government went ahead with implementation of a medical marijuana program.
In 2022, an initiated measure to legalize recreational marijuana failed with 47% of the vote. Backers of that initiated measure offered voters a scaled back version of the constitutional amendment that was approved in 2020. Pro-marijuana advocates said the Supreme Court took so long to rule on the legality of the amendment that they didn’t have time to take direction from the court’s ruling.
The initiated measure in front of voters in 2024, IM 29, allows people 21 and older to possess, grow, sell, ingest and distribute marijuana. They may possess up to 2 ounces of marijuana and have up to six marijuana plants with a limit of 12 plants per household.
Limits would be imposed on locations where marijuana can be used, and employers could restrict employee use. Property owners could decide whether or not they want it used on their property.
Unlike the constitutional amendment voters approved back in 2020, IM 29 makes no mention of the licensing of retail establishments or growing operations. There are also no provisions for a 15% excise tax on marijuana. Amendment backers also talked about a construction boom for growing operations and new retail outlets. Those considerations were a big part of the push for legalization in 2020.
A fiscal note on the 2020 amendment said that by 2024, legalized marijuana would have raised $60 million for South Dakota with half of the money earmarked for schools and half for the state budget’s general fund.
Those who fought against the amendment said that the revenue projections were too rosy. There would also be administrative costs to set up the program and they predicted an increase in the need for social services. While backers of the amendment said legalizing pot would free up police and courts to deal with more serious crimes, those fighting against the amendment foresaw greater law enforcement costs.
With no licensing or taxation provisions in this year’s measure, it would be up to the Legislature to set the licensing and taxation rates. Perhaps a voter’s decision about IM 29 should consider the financial aspects of marijuana legalization. It’s looking more and more like South Dakota could use the money. Consider this:
In 2023, flush with federal pandemic cash and predicting continuing sales tax growth, the Legislature cut the state sales tax from 4.5% to 4.2%. This change was predicted to cut state sales tax revenue by an estimated $104 million.
In 2024 lawmakers debated, but didn’t do much about, the fact that South Dakota teachers are once again among the lowest paid in the nation. At some point, that bill will come due.
When voters consider legalizing marijuana, they’ll also consider another measure on the ballot that calls for eliminating the state sales tax on groceries. A new South Dakota News Watch poll showed 66% of voters favor doing away with the state sales tax on groceries. That could result in an estimated $120 million loss in state revenue.
A recent South Dakota Searchlight story noted a meeting of the Governor’s Council of Economic Advisors where they learned that sales tax revenues from July through April were down $32 million. The state was still able to have a good year, relying on increases in the unclaimed property fund, state investments and the contractor’s excise tax. None of those are traditionally predictable sources of revenue.
Twenty-four states and the District of Columbia have legalized marijuana, and in November, South Dakota voters will need to decide if they want to join them. There are many factors to consider in this decision: if a continuing prohibition is the right way to approach marijuana, if public safety would be threatened, if legalization will make marijuana more readily available to young people, and if it’s worth the effort to set up new marijuana usage rules for employees and tenants.
The kind of financial windfall the state would receive should also be a factor in that decision. Some voters might not look forward to the day when the pungent aroma of marijuana is common in South Dakota. Perhaps they should consider that it just might be the smell of money.
H/T: news.yahoo.com
