SDLRC - 2021 House Bill 1225 - SD Legislature establish provisions concerning the sale of adult-use retail marijuana.

21.525.15 96th Legislative Session 781

2021 South Dakota Legislature

Introduced by: Representative Derby

An Act to establish provisions concerning the sale of adult-use retail marijuana.

Section 1. The Legislature enacts this legislation to put in place a statutory system of laws for the regulation of the sale, possession, and consumption of adult-use retail marijuana as authorized by the passage of Constitutional Amendment A at the general election on November 3, 2020. The Legislature does not endorse the decision of the voters to make lawful the sale, possession, and consumption of adult-use retail marijuana. However, in recognition of the voters' recent decision on Amendment A, the Legislature believes it is necessary to enact this legislation to properly ensure the regulated and enforceable administration of laws concerning the sale, possession, and consumption of adult-use retail marijuana.

Section 2. The provisions of this Act are essentially and inseparably connected and interdependent. It is the intent of this Legislature, that if at any time before or after the effective date of this legislation, the provisions of Constitutional Amendment A is declared invalid by the South Dakota Supreme Court, this legislation is repealed, effective immediately.

(1) "Adult-use retail marijuana," marijuana that is sold and subject to tax in a South Dakota retail location pursuant to S.D. Const., Art. XXX, and not sold or provided by a medical cannabis dispensary, as that term is defined in § 34-20G-1;

(2) "Adult-use marijuana retailer" or "retailer," any person who is licensed to sell marijuana for other than resale;

(4) "Manufacturer," any person who owns, has a controlling interest in, or aids in operating any establishment involved in the production, cultivation, packaging, processing, or transportation of marijuana in South Dakota;

(5) "Marijuana," the plant of the genus cannabis, and any part of that plant, including the seeds, the resin extracted from any part of the plant, and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or its resin, including hash and marijuana concentrate. The term includes an altered state of marijuana absorbed into the human body. The term does not include hemp, or fiber produced from the stalks, oil or cake made from the seeds of the plant, sterilized seed of the plant that is incapable of germination, or the weight of any other ingredient combined with marijuana to prepare topical or oral administrations, food, drink, or other products;

(6) "Sale," the transfer, for a consideration, of title to any adult-use marijuana;

(8) "Transporter," any common carrier or operator of a private vehicle transporting or accepting for transportation any marijuana within the state.

35A-1-2. Secretary of revenue to administer Act--Employment of personnel--Equipment and supplies.

The secretary shall administer the law as set forth in this Act, and may employ such help and purchase such equipment and supplies as are necessary for performance of the secretary's duties.

35A-1-3. Certain revenue department employees prohibited from engaging in marijuana business.

Neither the secretary nor any employee of the division within the department that issues any adult-use retail marijuana license may have any interest, financial or otherwise, in the production, transportation, storage, or sale of marijuana.

No person may produce, transport, store, or sell any marijuana except as authorized under the provisions of this Act and under rules promulgated by the department pursuant to chapter 1-26. This section does not apply to medical cannabis pursuant to chapter 34-20G.

No person may transact any business as an adult-use marijuana retailer without an adult-use retail marijuana license as provided by this Act and under rules promulgated by the department pursuant to chapter 1-26. A violation of this section is a Class 1 misdemeanor.

Any person who, in any application, report, or statement knowingly makes a false statement as to any matter required by any provision of this Act or under rules promulgated by the department pursuant to chapter 1-26 to be set forth in the application, report, or statement, is guilty of a Class 6 felony.

No manufacturer or transporter may sell or deliver any package containing marijuana manufactured or distributed for resale, unless the person to whom the package is sold or delivered is authorized to receive the package as provided in this Act and under rules promulgated by the department pursuant to chapter 1-26.

Any application for an adult-use retail marijuana license as provided in this Act shall be made on forms prescribed by the secretary. The application shall contain information required by the secretary and necessary to determine the eligibility of the applicant.

Any applicant for a new adult-use retail marijuana license or the transfer of an existing adult-use retail marijuana license shall submit an application to the governing body of the municipality in which the applicant intends to operate, or if outside the corporate limits of a municipality, to the governing body of the county in which the applicant intends to operate. The applicant shall submit the required fee with the application. The governing body may approve the application for a new adult-use retail marijuana license or the transfer of an existing adult-use retail marijuana license if the governing body considers the applicant suitable to hold the adult-use retail marijuana license and the governing board considers the proposed location to be suitable.

Any application for the reissuance of an adult-use retail marijuana license may be approved by the municipal or county governing body without a hearing unless, in the past year, the adult-use retail marijuana licensee or one or more of the adult-use retail marijuana licensee's employees have been subjected to a criminal penalty for violation of the adult-use retail marijuana law or the adult-use retail marijuana license has been suspended.

Each application for an adult-use retail marijuana license under this Act shall include an agreement by the applicant that the applicant's premises, for the purposes of search and seizure laws of the state and any ordinances of the municipality where the adult-use retail marijuana license is issued, are considered public premises. In addition, the agreement shall state:

(1) The premises and all buildings, safes, cabinets, lockers, and storerooms on the premises are at all times, on demand of the secretary, the attorney general, or officers charged with law enforcement in the county or municipality, open to inspection;

(2) All of the applicant's records and books dealing with the sale and ownership of marijuana are open to the secretary, attorney general, or officers charged with law enforcement in the county or municipality for inspection; and

(3) The application and adult-use retail marijuana license issued on the application is a contract between the applicant and the state and the county or municipality having jurisdiction, entitling the state and the county or municipality, for the purpose of enforcing the law, rules, and ordinances, to inspect the applicant's premises and books at any time.

No license for an adult-use marijuana retailer may be issued to an applicant until a public hearing is conducted pursuant to §§ 35A-2-5 and 35A-2-6.

35A-2-5. Request for notice of hearing on application--Notice by mail required.

If any resident of an incorporated municipality files with the finance officer of the municipality, or if any resident of a county files with the county auditor a written request that the resident be notified of the time and place of hearing upon any specified application for a license for adult-use retail marijuana, the finance officer or county auditor shall give notice to the resident. The notice shall be sent by mail a sufficient length of time before the hearing to allow the resident a reasonable opportunity to be present.

The governing body of any incorporated municipality or county being presented an application for adult-use retail marijuana licenses shall fix the time and place for hearing upon the application. The finance officer or county auditor shall publish one notice in the official newspaper of the municipality or county. The notice shall be headed "Notice of Hearing Upon Applications for Sale of Adult-use Retail Marijuana," shall state the time and place when and where the application or applications will be considered and shall state that any person interested in the approval or rejection of any application may appear and be heard. The notice shall be published at least one week before the hearing. At the hearing, the body shall consider each application and any objection to the application before making a final decision on an application.

Any adult-use retail marijuana licensee under this Act shall be a person of good moral character who was never convicted of a felony. If the licensee is a corporation, the managing officers of the corporation shall meet the same qualifications.

35A-2-8. Transfer of licenses--Affidavit as to bulk sale--Payment of taxes--Facts shown as to new location--Procedure and fee.

Any adult-use retail marijuana license granted under this Act may be transferred to a new location or to another person. If the transfer is to another person, the adult-use retail marijuana licensee shall show in writing, under oath, that the adult-use retail marijuana licensee has made a bulk sale of the business operated under the adult-use retail marijuana license. The bulk sale may be conditioned upon the granting of a transfer of the adult-use retail marijuana license. The transferee shall make an application as an original applicant, and the application shall be acted upon in the same manner as an original application. No transfer of any adult-use retail marijuana license to another person may be granted until all taxes incurred by the transferor as a result of the operation of the licensed premises, including municipal and state sales and use taxes, state reemployment assistance or unemployment insurance tax, or any other state tax, are paid or are not delinquent. No transfer of any adult-use retail marijuana license to another person may be granted until all property taxes that are the liability of the adult-use retail marijuana licensee and levied on the licensed premises are paid or are not delinquent. No transfer of any adult-use retail marijuana license may be granted from an Indian tribe operating in Indian country and controlled by the Indian tribe, or from an enrolled tribal member operating in Indian country, until all use tax incurred as a result of the operation of the licensed premises by nonmembers, and any other state tax, has been remitted or is not delinquent. If the transfer is to a new location, the adult-use retail marijuana licensee shall make application showing all the relevant facts for the new location. The application shall be acted upon in the same manner as an original application. If an adult-use retail marijuana license is transferred, a fee of one hundred fifty dollars is required to continue the unexpired portion of the adult-use retail marijuana license.

35A-2-9. Continuation of business by representative of deceased--Responsibility of representative--Bonds continued.

If an adult-use retail marijuana licensee under this Act dies, the personal representative of the deceased adult-use retail marijuana licensee may succeed to all the rights of the deceased adult-use retail marijuana licensee under the license if the personal representative satisfies the provisions of § 35A-2-7. By operating under the adult-use retail marijuana license, the personal representative agrees to all the terms and conditions of the adult-use retail marijuana license and is subject to all the liabilities and responsibilities of the adult-use retail marijuana licensee. Any bond executed under this Act includes the personal representative as a principal if the adult-use retail marijuana license passes to the personal representative.

Any retailer authorized to deal in marijuana, upon termination of the adult-use retail marijuana license, may, at any time within thirty days after the termination of the adult-use retail marijuana license, sell the whole or any part of the marijuana included in the retailer's stock in trade at the time of the termination, back to the manufacturer from whom the retailer purchased the marijuana.

35A-2-11. Conditions under which license may not be revoked or suspended for sale to persons under twenty-one--Civil penalty.

No adult-use retail marijuana license may be revoked or suspended because of a violation of any statute, ordinance, rule, or regulation prohibiting the sale or service of any marijuana to a person under the age of twenty-one years if the violation was committed by an employee or agent of the adult-use retail marijuana licensee and the adult-use retail marijuana licensee has not had more than two violations of any statute, ordinance, rule, or regulation prohibiting the sale of adult-use marijuana to a person under the age of twenty-one years on the premises where the violation occurred in the previous twenty-four months.

If the adult-use retail marijuana licensee meets the requirements of the conditions of this section, the secretary shall impose a civil penalty of five hundred dollars for a first violation and one thousand dollars for a second violation, to be deposited in the general fund. However, if the employee or agent has not been certified by a training program, approved by the department, that provides instruction on techniques to prevent persons under the age of twenty-one years from purchasing or consuming adult-use retail marijuana, the secretary shall impose a civil penalty of one thousand dollars for a first violation and two thousand dollars for a second violation, to be deposited in the general fund.

An adult-use retail marijuana licensee may request an administrative hearing, pursuant to chapter 1-26, to contest the imposition of a civil penalty.

35A-2-12. Directory of training programs--Department website--Attendance--Penalty reduction--Burden of proof.

The department shall maintain on its public internet website, a directory listing all training programs that are approved by the department. Any adult-use retail marijuana licensee making a prohibited sale or service of adult-use retail marijuana to a person under the age of twenty-one years has the burden of proof to show that the adult-use retail marijuana licensee's employees have attended an approved adult-use retail marijuana training program to be eligible for any reduction in the penalty imposed for the violation.

Any enforcement entity that conducts compliance checks using underaged informants to determine if an adult-use retail marijuana licensee will sell adult-use retail marijuana to a person under the age of twenty-one shall inform the licensee in writing of the results of any compliance check within forty-eight hours after the compliance check takes place. No licensed premises may be subject to more than one compliance check within a forty-eight-hour period.

35A-2-14. Local governing body recommendations--Suspension or revocation--Grounds--Action by secretary.

The governing body of a municipality or county may recommend to the secretary following a hearing that any adult-use retail marijuana license issued under this Act be suspended or revoked for violation of any of the provisions of this Act or for violations of any ordinance or regulation of the governing body relevant to adult-use retail marijuana control that occurs on the premises of the adult-use retail marijuana licensee. Upon receipt of the recommendation, the secretary shall proceed as provided in this Act.

The secretary, in compliance with chapter 1-26, may revoke or suspend any adult-use retail marijuana license issued under this Act upon proof of violation by the adult-use retail marijuana licensee, or by the adult-use retail marijuana licensee's agents or employees, of any of the following:

(3) Any ordinance or regulation relevant to marijuana control adopted by the governing body issuing the adult-use retail marijuana license.

If the secretary receives information of a violation by any adult-use retail marijuana licensee of any provision of this Act, the secretary shall investigate the alleged violation. If there is substantial evidence to support that a violation of any provision of this Act has occurred, the secretary shall proceed in accordance with the provisions of this Act.

An applicant or adult-use retail marijuana licensee under this Act or any interested person or governing body has a right to a hearing in relation to any action taken upon the application or adult-use retail marijuana license. The hearing shall be held in the county where the adult-use retail marijuana license has been applied for or issued under the provisions of chapter 1-26. However, if the parties agree, a hearing to determine whether the secretary may suspend or revoke an adult-use retail marijuana license may be held at a location other than the county where the adult-use retail marijuana license has been applied for or issued.

Upon service of notice of a decision or order for revocation of the adult-use retail marijuana license on the adult-use retail marijuana licensee, the adult-use retail marijuana licensee's rights under the adult-use retail marijuana license terminate, except in the event of a stay on appeal.

35A-2-19. Annual waiting period after revocation--No interest in retail marijuana.

No adult-use retail marijuana licensee under this Act, whose adult-use retail marijuana license is revoked, may hold an interest in any adult-use retail marijuana license under this Act for one year after the revocation.

35A-2-20. Suspension in lieu of revocation--Maximum period--Compromise settlement.

If a violation is established in any proceeding under this Act, but the secretary determines due to the nature and the circumstances of the violation, a suspension of the adult-use retail marijuana license is adequate, the secretary may, instead of revoking the adult-use retail marijuana license, suspend the adult-use retail marijuana license for a period not exceeding sixty days. During the period of the suspension, the adult-use retail marijuana licensee may not exercise any rights or privileges under the adult-use retail marijuana license. The secretary may, in lieu of suspending or revoking the adult-use retail marijuana license, accept a monetary settlement of any proceeding under this Act. The amount of the settlement may not exceed seventy-five thousand dollars, to be deposited in the general fund. The secretary may also recover the actual costs of investigation and prosecution.

No adult-use retail marijuana license granted under this Act may be reissued until all taxes incurred by the adult-use retail marijuana licensee as a result of the operation of the licensed premises, including municipal and state sales and use taxes, state reemployment assistance or unemployment insurance tax, or any other state tax, are paid or are not delinquent. No adult-use retail marijuana license granted under this Act may be reissued until all property taxes which are the liability of the adult-use retail marijuana licensee levied on the licensed premises are paid or are not delinquent. No adult-use retail marijuana license granted under this Act may be reissued to an Indian tribe operating in Indian country and controlled by the Indian tribe, or to an enrolled tribal member operating in Indian country and controlled by the enrolled tribal member's tribe, until the Indian tribe or enrolled tribal member remits to the department all use tax incurred by nonmembers as a result of the operation of the licensed premises, and any other state tax has been remitted or is not delinquent.

An applicant for an adult-use retail marijuana license shall meet the following criteria:

(1) Obtained a sales tax license pursuant to chapter 10-45, if applicable, or a use tax license pursuant to chapter 10-46, if applicable;

(3) Submits to a background investigation. If the applicant is a partnership or corporation, the requirement for a background check includes each partner of a partnership and each director and officer and all stockholders in the corporation, its parent corporation, or its subsidiary corporation; and

(4) Is a resident of this state. If the applicant is a partnership or corporation, the majority of ownership interest shall be held by residents of this state.

35A-2-23. Licensees or employees--Felony charges--Prohibited from licensed premises.

Any adult-use retail marijuana licensee or employee of an adult-use retail marijuana licensee who is charged with a felony offense involving a minor, a crime of violence pursuant to subdivision 22-1-2(9), or a felony drug-related offense committed on the licensed premises may, as a condition of bond, be prohibited from entering onto the licensed premises.

The fee for an adult-use retail marijuana license shall be established by rules promulgated by the department, pursuant to chapter 1-26, not to exceed one-thousand dollars.

35A-2-25. Possession of multiple licenses--Multiple types--Exercise of privileges.

Any adult-use retail marijuana license issued under this Act may also hold other license types issued by the department under rules promulgated pursuant to chapter 1-26, except independent testing facilities. A licensee holding two or more licenses pursuant to this section may exercise the privileges granted under each license.

35A-2-26. Duration and expiration of retail licenses--Full fee charged for part of year.

The period covered by adult-use retail marijuana licenses under this Act is from twelve o'clock midnight on the thirty-first day of December to twelve o'clock midnight on the thirty-first day of the next December. However, the adult-use retail marijuana license is valid for an additional three days if a proper application for a new adult-use retail marijuana license is in the possession of the secretary before midnight on the thirty-first day of December when the adult-use retail marijuana license expires. The full fee shall be charged for an adult-use retail marijuana license for any portion of the period.

Fifty percent of all license and transfer fees received pursuant to this Act shall remain in the municipality in which the licensee paying the fee is located. If the licensee is located outside the corporate limits of a municipality, fifty percent of the fees shall remain in the county in which the licensee is located. The remainder of all license, transfer fees, and penalties received shall be credited to the general fund.

No adult-use retail marijuana licensee may sell any marijuana between the hours of two a.m. and seven a.m. A violation of this section is a Class 2 misdemeanor.

All premises licensed to sell adult-use retail marijuana shall prominently display the sign provided for in § 35A-3-3. The sign shall be displayed in such a manner as to provide an unobstructed view to the customers of an adult-use retail marijuana licensee. Failure to display such sign is a petty offense.

The Department of Social Services shall create a nine-inch-by-twelve-inch sign to be displayed pursuant to § 35A-3-2. The sign shall explain the dangers posed by consuming marijuana. The language in the sign shall be approved by the secretary of health. The Department of Social Services shall provide a copy of the sign to each adult-use retail marijuana licensee required by § 35A-3-2 to display the sign.

No adult-use retail marijuana may be sold below the cost the adult-use marijuana retailer paid to the manufacturer, unless the sale constitutes the termination of the sale of the adult-use retail marijuana on the licensed premises. Any adult-use retail marijuana offered for sale at less than the cost paid to the manufacturer may not be offered again for sale on the licensed premises for a period of less than one year after termination of the sale of the product on the licensed premises. The cost paid to the manufacturer is the consideration paid by a retailer to a manufacturer to acquire adult-use retail marijuana and includes the cost of doing business, which is presumed to be fifteen percent of the price paid by the retailer to the manufacturer, the purchase price, and transportation charges.

35A-3-5. Department to promulgate rules regarding types of marijuana products that may be sold.

The department shall promulgate rules, pursuant to chapter 1-26, establishing the types of marijuana products that may be sold by an adult-use marijuana retailer.

An excise tax on adult-use marijuana shall be imposed and disbursed in accordance with S.D. Const., Art. XXX, § 11.

An adult-use marijuana retailer may not sell marijuana to any person unless the person produces a valid, unexpired government-issued identification showing that the person is twenty-one years of age or older. Identification presented to satisfy this section must contain a photograph and the date of birth of the person.

No adult-use marijuana retailer may make any delivery of marijuana outside of the premises described in the adult-use retail marijuana license. A violation of this section is a Class 2 misdemeanor.

An adult-use marijuana retailer may not permit any person to consume marijuana on the property of the retailer.

It is a Class 1 misdemeanor for an adult-use retail marijuana licensee to furnish marijuana to any person under the age of eighteen years.

35A-4-2. Furnishing to a person eighteen years or older but less than twenty-one years prohibited--Violation as misdemeanor.

It is a Class 2 misdemeanor for an adult-use retail marijuana licensee to furnish marijuana to any person eighteen years or older but less than twenty-one years.

Any person charged with a violation of § 35A-4-1 or 35A-4-2 may offer evidence, as a defense, that the person made a reasonable attempt to investigate the age of the person by examining an age-bearing identification document that would have appeared valid to a reasonable and prudent person.

35A-4-4. Sale to underaged person based on false identification document--Conviction barred.

No person may be convicted of illegally selling any adult-use retail marijuana to any underage person pursuant to § 35A-4-1 or 35A-4-2, if the underage person was in possession of, and the seller relied upon, any false age-bearing identification document that was furnished to the underage person by any state agency or local law enforcement agency or any agent, employee, contractor, or associate of any state agency or local law enforcement agency for the purpose of attempting to illegally purchase any adult-use retail marijuana.

35A-4-5. Furnishing to underage person--No criminal penalty imposed--Circumstances.

No criminal penalty may be imposed on an adult-use retail marijuana licensee licensed pursuant to this Act if:

(1) The person making the sale in violation of § 35A-4-1 or 35A-4-2 is an employee or agent of the adult-use retail marijuana licensee;

(2) The employee or agent does not own a controlling interest in the adult-use retail marijuana licensee; and

(3) The adult-use marijuana licensee or person having a controlling interest in the adult-use retail marijuana licensee is not present at the time of the sale.

35A-4-6. Furnishing to underage person--Fine imposed in lieu of criminal offense.

If a sale is in violation of § 35A-4-1 or 35A-4-2 and does not constitute a criminal offense against the adult-use retail marijuana licensee, the state's attorney for the county in which the sale took place may, as part of any proceeding against the person making the sale, request that the court require the adult-use retail marijuana licensee to pay a fine in accordance with § 35A-4-7.

35A-4-7. Hearing on liability for furnishing adult-use retail marijuana to underage person--Amount of fine.

Upon a request from the state's attorney and notice to the adult-use retail marijuana licensee, the court shall conduct a hearing to determine if the adult-use retail marijuana licensee is liable under §§ 35A-4-5 and 35A-4-6, inclusive, and upon a finding that the adult-use retail marijuana licensee is liable, the court may order the adult-use retail marijuana licensee to pay a fine not to exceed:

For a fourth violation within two years, the court may order the adult-use marijuana licenses revoked.

35A-4-8. Purchase, possession, or consumption by person under twenty-one years prohibited--Exception--Misrepresentation of age--Violation as misdemeanor.

It is a Class 2 misdemeanor for any person under the age of twenty-one years to purchase or attempt to purchase adult-use retail marijuana or to misrepresent the person's age with the use of any document for the purpose of purchasing or attempting to purchase adult-use retail marijuana from any adult-use retail marijuana licensee under this Act.

35A-4-9. Merchant may detain person under twenty-one who purchases, attempts to purchase or possesses--Conditions.

Any merchant who is an adult-use retail marijuana licensee under this Act, or the merchant's employee, who has reasonable grounds to believe a person under the age of twenty-one has illegally purchased, attempted to purchase, or has misrepresented the person's age with the use of any document for purposes of purchasing or attempting to purchase adult-use retail marijuana from the merchant or the merchant's employee, may detain the person, on the premises of the merchant's establishment, in a reasonable manner and for a reasonable length of time solely to:

(4) Inform a law enforcement officer of the detention of the person and surrender that person to the custody of a law enforcement officer; or

(5) In the case of a minor, inform a law enforcement officer or the parents, guardian, or other private person interested in the welfare of that minor of this detention and to surrender custody of the minor to that person.

If a merchant chooses to implement the provisions of § 35A-4-9, the merchant shall conspicuously post a notice, on the merchant's premises, stating that any person who the merchant reasonably believes was under the age of twenty-one and has attempted to purchase adult-use retail marijuana, will be detained and surrendered to a law enforcement officer.

It is a Class 1 misdemeanor for any person twenty-one years of age or older to purchase or otherwise acquire adult-use retail marijuana from a retailer and to give or resell the adult-use retail marijuana to any person under the age of twenty-one years.

35A-4-12. Immunity for possession and consumption--Underage person who reports need of emergency assistance.

No person under the age of twenty-one years may be subject to any penalty arising out of underage consumption or possession of marijuana if that person contacts law enforcement or emergency medical services and reports that a person is in need of medical assistance due to marijuana consumption and that person remains and cooperates with medical assistance and law enforcement personnel on the scene.

35A-4-13. Underage purchase, possession, or consumption--Venue--Criminal proceeding.

In any arrest, citation, or prosecution arising from a violation of § 35A-4-8, if the person is apprehended for the purchase or attempted purchase of adult-use marijuana, the venue is the locality where the purchase or attempted purchase occurred.

35A-4-14. Underage purchase, possession, or consumption--Venue--Juvenile proceeding.

In any juvenile adjudication arising from a violation of § 35A-4-8, if the person is apprehended for the purchase or attempted purchase of adult-use marijuana, the venue is the locality where the purchase or attempted purchase occurred or the juvenile's county of residence.

No social host or adult-use retail marijuana licensee is civilly liable to any injured person or the injured person's estate for any injury suffered, including any action for wrongful death, or property damage suffered, because of the sale or consumption of any marijuana in violation of the provisions of this chapter.

The secretary shall promulgate rules, pursuant to chapter 1-26, regarding the sale, purchase, distribution, and licensing of adult-use retail marijuana under this Act.

35A-5-2. Notice of convictions mailed to local and state licensing authorities.

(1) A violation of any provision of this Act, or any law or ordinance regulating the sale of adult-use retail marijuana; or

(2) Any violation of law or ordinance in the operation of the licensed premises,

the court or magistrate shall, within ten days after the conviction, mail a written notice of conviction to the finance officer of the municipality or the county auditor of the county having jurisdiction to approve adult-use retail marijuana licenses for the premises. A copy of the notice shall also be mailed to the department.

35A-5-3. Marijuana unlawfully used or possessed as contraband--Conviction as confiscation--Return to owner on dismissal.

Any marijuana used or possessed in violation of provisions of this Act constitutes contraband, and is subject to confiscation as provided in this Act. Any judgment of conviction of illegal use or possession against the person from whom the marijuana was taken constitutes a confiscation of the marijuana unless the marijuana, within twenty days after the judgment, is claimed by some other person who establishes to the satisfaction of the court that the person is the true owner and had no participation in the illegal use or possession. If prosecution on any such charge terminates in a dismissal of the charge, any marijuana, if previously seized, shall be returned to the owner.

35A-5-4. Application by officer for judicial determination as to marijuana --Notice of time and place of hearing.

If there is no dismissal of prosecution or no judgment of conviction of illegal use or possession of marijuana, any officer seizing the marijuana may apply to the court that issued the search warrant under which the marijuana was seized, or if the marijuana was not seized under a search warrant, to any court of record for the county where the marijuana was seized, for an order determining whether the marijuana was, in fact, possessed or used in violation of the provisions of this Act. The court shall thereupon make an order fixing a time and place for hearing and providing for reasonable notice of the hearing to the person from whom the marijuana was seized and to any probable claimant of the marijuana. If the person or claimant is unknown, the notice may be by posting or publication as the court directs.

35A-5-5. Determination as to status of marijuana seized--Order for return to owner or confiscation.

Upon hearing, the court shall determine whether marijuana seized was in fact used or possessed in violation of provisions of this Act. If the court finds there was no such illegal use or possession, the court shall order the marijuana returned to or held for the owner of the marijuana. If the court determines that there was use or possession in violation of provisions of this Act, the court shall adjudge the confiscation of the marijuana.

35A-5-6. Report of marijuana confiscated--Destruction of unsalable marijuana.

Upon any adjudication in any form of confiscation of marijuana, the officer having custody of the marijuana shall make a full report to the secretary setting forth the quantity, kind, and probable value of the marijuana. If the marijuana is of such character that the marijuana cannot lawfully be sold, or is of insufficient value to justify an attempted sale, the secretary shall order the marijuana destroyed. The officer in custody of the marijuana shall comply with the order and shall report to the secretary that the order has been carried out.

35A-5-7. Sale by secretary of confiscated marijuana --Disposition of proceeds.

If confiscated marijuana accumulates in sufficient quantities, the secretary shall notify all adult-use marijuana retailers as to kinds and types of marijuana in the secretary's custody for sale. The secretary shall receive bids, and sales shall be made based on the bids as the secretary deems advantageous to the state. All proceeds of any such sale by the secretary shall be deposited with the state treasurer and credited to the general fund.

35A-5-8. Place used for violation of marijuana laws as common nuisance--Maintenance as misdemeanor.

Any structure, conveyance, or place where marijuana is manufactured, sold, kept, bartered, given away, found, consumed, or used in violation of the laws of the state relating to adult-use retail marijuana, and all marijuana and property kept and used in maintaining the same, is hereby declared to be a common nuisance, and any person who maintains such a common nuisance is guilty of a Class 1 misdemeanor.

35A-5-9. Lien against place of violation for fines and costs assessed--Enforcement of lien.

If a person has knowledge or reason to believe that the person's structure, conveyance, or place is occupied or used for the manufacture, sale, bartering, giving away, keeping, consuming, or using of marijuana, contrary to the provisions of the laws of the state, and if the person allows the structure, conveyance, or place to be so occupied or used, the structure, conveyance, or place is subject to a lien for and may be sold to pay all fines and costs assessed against the person guilty of such nuisance for such violation. Any such lien may be enforced by action in any court having jurisdiction.

An action to enjoin any nuisance, as defined in § 35A-5-8, may be brought in the name of the State of South Dakota by the attorney general or by the state's attorney of the county in which the property constituting the nuisance is located. Any action to abate or to enjoin the nuisance may be commenced and conducted as other actions or proceedings for injunction. However, the complaint or affidavit used may be made on information and belief and no bond is required in instituting the proceedings or to secure the issuance of any such injunction.

If, in an action pursuant to § 35A-5-10, it is made to appear by affidavits or otherwise, to the satisfaction of the court, or judge in vacation, that a nuisance exists, a temporary writ of injunction shall be issued, restraining the defendant from conducting or permitting the continuance of the nuisance until the conclusion of the trial. If a temporary injunction is sought, the court may issue an order restraining the defendant and all other persons from removing, or in any way interfering, with the marijuana or fixtures, or other things used in connection with the violation of the laws of this state constituting the nuisance.

35A-5-12. Order prohibiting manufacture, sale, or storage of marijuana and occupancy of place of violation

It is not necessary in an action pursuant to § 35A-4-10 for the court to find the property involved was being unlawfully used as described in § 35A-5-8 at the time of the hearing. However, on finding that the material allegations of the petition are true, the court shall order that no marijuana may be manufactured, sold, bartered, or stored in the structure, conveyance, or place. Upon judgment of the court ordering the nuisance to be abated, the court may order that the structure, conveyance, or place not be occupied or used for one year thereafter.

Catchlines are not law. (§ 2-16-13.1) Underscores indicate new language.

~~Overstrikes~~ indicate deleted language.