South Dakota law banning intoxicating cannabis products goes into effect after judge refuses to block it

“The Legislature’s passage of HB 1125 aligns with police powers traditionally reserved for the states.”

Author: John Hult, South Dakota Searchlight

A new law banning the production and sale of high-inducing cannabis products will go into effect Monday after a judge refused to block it.

Hemp Quarters 605, a Pierre-based store that sells the products, filed suit earlier this month in U.S. District Court in South Dakota. The company claims the new law’s provisions are unconstitutional and violate federal law.

The 2018 federal farm bill legalized the production and sale of industrial hemp and hemp products, provided they contain less than 0.3 percent of the intoxicating compound delta-9-tetrahydrocannabinol, known as THC, by dry weight.

House Bill 1125, signed into law in March by Gov. Kristi Noem (R), targets five types of chemicals that are found in tiny amounts in cannabis plants. The chemicals can be synthesized and added in quantities large enough for cannabis products to mimic the intoxicating effects of delta-9 THC found in marijuana.

Marijuana remains illegal at the federal level, although it is legal in some states, and medicinal marijuana is legal in South Dakota.

A violation of the new law will be a Class 2 misdemeanor, the state’s lowest felony. Like most laws passed by the Legislature, its effective date is July 1.

Products like gummies, vaporizers and combustible cannabis containing chemicals covered by the new law are widely available throughout South Dakota, sold at gas stations, grocery stores, liquor stores and specialty tobacco shops like Hemp Quarters 605.

The company asked U.S. District Judge Eric Schulte for a temporary injunction that would block the law from taking effect until the case is resolved in court.

During a hearing on the injunction held Thursday in Pierre, Hemp Quarters 605 representatives testified that hemp-derived products make up more than two-thirds of their retail sales.

They argue that the state is violating the Commerce Clause of the U.S. Constitution by interfering with the sale of federally legal products across state lines. An injunction is appropriate, they said, because they will suffer irreparable harm — namely, the potential closure of their businesses — if the law goes into effect.

To obtain a preliminary injunction, a plaintiff must first prove that it is likely to “succeed on the merits,” according to an opinion filed electronically by Judge Schulte on Saturday. If the plaintiff — in this case, the cannabis dispensary — is able to achieve that goal, the judge must then find that the plaintiff would suffer irreparable harm without the injunction. The judge must also consider the injunction’s broader implications for other “interested parties” — in this case, the state and people affected by the new law.

The denial of a temporary injunction does not end the case or guarantee a victory for the state, represented in this case by the office of Attorney General Marty Jackley (R).

Judge Schulte found that Hemp Quarters’ arguments were not sufficient to obtain an injunction, even if the law could cause irreparable harm to its business.

The 2018 Farm Bill did not explicitly prohibit states from passing laws regulating hemp commerce. In fact, Schulte wrote, it did the opposite, allowing states to impose “more stringent” hemp regulations.

“The Legislature’s passage of HB 1125 furthers the police powers traditionally reserved for the states as it seeks to improve the health and welfare of South Dakotans,” Schulte wrote.

Schulte cited a case challenging a Virginia cannabis law in which a judge reached a similar conclusion.

Under the Commerce Clause, Hemp Quarters argued that a Minnesota truck driver transporting federally legal hemp through South Dakota could be subject to state prosecution.

Schulte disagreed. He wrote that the law would not apply in such a scenario because it does not criminalize possession of cannabis products. It only prohibits their production or distribution.

The opinion also noted that the Hughes County State’s Attorney has said he has no immediate plans to prosecute the Hemp Quarters owners. The Attorney General’s Office has made no such promise, Schulte wrote, but state attorneys pointed out that “the South Dakota Attorney General’s Office does not typically prosecute misdemeanors such as those contained in HB 1125.”

This story was first published by South Dakota Searchlight.

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