An Act to provide for the taxation of marijuana.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. That a NEW SECTION be added to title 10:

Terms used in sections 1 to 6, inclusive, of this Act mean:

(1) "Dispensary," a licensed entity that acquires, possesses, stores, delivers, transfers, transports, sells, supplies, or dispenses marijuana, marijuana products, and related supplies to a consumer;

(2) "Manufacturer," a licensed entity that acquires, possesses, manufactures, delivers, transfers, transports, supplies, or sells marijuana products to a marijuana facility;

(3)(2) "Marijuana facility," an entity licensed to cultivate, test, manufacture, or dispense marijuana or marijuana products;

(4)(3) "Marijuana," as defined in § 22-42-1;

(5)(4) "Marijuana concentrate," the resin extracted from any part of a marijuana plant and every compound, manufacture, salt, derivative, mixture, or preparation from such resin;

(6)(5) "Marijuana product," any product infused with marijuana concentrate and intended for use or consumption by humans.

Section 2. That a NEW SECTION be added to title 10:

There is hereby levied on all marijuana an excise tax of fifteen percent that must be calculated based on the average market rate. A manufacturer shall pay the marijuana excise tax on all marijuana manufactured and sold directly to a dispensary. In order to calculate the tax using the average market rate, the weight or unit of marijuana sold must be multiplied by the average market rate and the result must be multiplied by fifteen percent. For purposes of this section, the term, average market rate, means the average prices as determined by the department on all marijuana sold or transferred from manufacturer to dispensary.There is imposed an excise tax at the rate of eight and one-half percent on the gross receipts from the sale of marijuana, marijuana concentrate, and marijuana products by a dispensary. The excise tax imposed under this chapter does not apply to gross receipts from the sale of marijuana, marijuana concentrate, and marijuana products to a cardholder as defined in § 34-20G-1(6).

Section 3. That a NEW SECTION be added to title 10:

The excise tax revenue collected pursuant to section 2 of this Act must be divided proportionally amongst the counties based on where the revenue was generated. The revenue must be distributed to the county by September first of each year. Each county shall use the revenue for necessary expenses incurred by the county under the provisions of chapters 7-12, 7-16, 7-16A, and 23A-40.

Section 4. That a NEW SECTION be added to title 10:

In lieu of any tax imposed under chapter 10-52A, there is imposed an excise tax at the rate of five percent on the gross receipts from the sale of marijuana, marijuana concentrate, and marijuana products by a dispensary.

Section 5. That a NEW SECTION be added to title 10:

The excise tax revenue collected pursuant to section 4 of this Act must be divided proportionally amongst the municipalities based on where the revenue was generated. All moneys received and collected on behalf of a municipality by the department, pursuant to section 4 of this Act, shall be credited to a special municipal tax fund and after deducting the amount of refunds made, the amounts necessary to defray the cost of collecting the tax, and the administrative expenses incident thereto, shall be paid within thirty days after collection to the municipality entitled thereto.

Section 6. That a NEW SECTION be added to title 10:

In lieu of any other tax imposed under chapters 10-45 or 10-46, there is imposed an excise tax at the rate of one and one-half percent on the gross receipts from the sale of marijuana, marijuana concentrate, and marijuana products by a dispensary.

Section 7. That a NEW SECTION be added to title 10:

There is hereby created within the state treasury the marijuana fund into which all funds collected under section 6 shall be deposited. Expenditures from the fund must be appropriated through the normal budget process.

Section 8. That a NEW SECTION be added to title 10:

The excise taxes imposed under sections 2, 4, and 6 of this Act shall be collected and remitted pursuant to chapter 10-45 and administered pursuant to chapter 10-59.

Section 9. That a NEW SECTION be added to title 10:

Each manufacturer liable for the payment of taxes levied under this chapter shall file with the secretary of revenue a return, on a form prescribed by the secretary, showing the kind and quantity of marijuana manufactured, received, and in the manufacturer's possession, together with the names of the persons from whom received, the amount of tax due, and any other information prescribed by the secretary. The return, covering the period of one calendar month, together with payment of the tax due, must be transmitted to the Department of Revenue on or before the twenty-fifth day of the second month following the close of the reporting period. A violation of this section is a Class 1 misdemeanor.

Section 10. That a NEW SECTION be added to title 10:

Any manufacturer required to file returns or reports under this chapter, who fails to file a return or report or pay the tax when due, is subject to interest and penalty at the rates set forth in § 10-59-6. For reasonable cause shown, the secretary of revenue may reduce or eliminate the penalty. If any manufacturer files a false or fraudulent return, an amount equal to the tax evaded, or attempted to be evaded, shall be added to the tax. Penalty and interest are considered the same as tax for the purposes of collection and enforcement, including liens, distress warrants, and criminal violations. Any payment received for taxes, penalty, or interest is applied first to tax, beginning with the oldest delinquency, then to interest, and then to penalty. No court may enjoin the collection of the tax or civil penalty.

Section 11. That a NEW SECTION be added to title 10:

Any manufacturer liable for the payment of the taxes shall keep, in current and available form on the licensed premises, records of all purchases, sales, quantities on hand, and any other information the secretary of revenue may prescribe by rule promulgated pursuant to chapter 1-26. The secretary of revenue may require from a manufacturer any report necessary to administer the requirements of this chapter. The secretary may require the production of any book, record, document, invoice, and voucher kept, maintained, received, or issued by the manufacturer in connection with the manufacturer's business that, in the judgment of the secretary, may be necessary to administer and discharge the secretary's duties, to secure the maximum of revenue to be paid, and to carry out the requirements of this chapter. A violation of this section is a Class 1 misdemeanor.

If default is made, or if any manufacturer fails or refuses to furnish any other relevant reports or information upon request, the secretary may enter the manufacturer's premises where the records are kept and examine the records as necessary to compile the required report. The cost of the examination must be paid by the manufacturer whose reports are in default.

Section 12. That a NEW SECTION be added to title 10:

There is hereby created within the state treasury the marijuana fund into which all funds collected under this chapter shall be deposited. Expenditures from the fund must be appropriated through the normal budget process.

Section 13. That chapter 10-45 be amended with a NEW SECTION:

The tax imposed by this chapter applies to the gross receipts of all marijuana and marijuana products sold to any person by a dispensary.

Section 14. That chapter 10-46 be amended with a NEW SECTION:

The tax imposed by this chapter applies to the gross receipts of all marijuana and marijuana products sold to any person by a dispensary.