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South Dakota’s Medical Marijuana Industry in Crisis: Dispensaries Close Amid Oversaturation and Regulatory Issues

South Dakota’s Rejection of Recreational Marijuana Leads to Dispensary Closures

The medical cannabis dispensary industry in South Dakota is facing a crisis, with at least eight dispensaries having lost their licenses and many more expected to follow suit. The trouble began when the state’s medical pot market became oversaturated with too many dispensaries opening too quickly, leading to a price war and financial struggles for many businesses.

One of the affected dispensaries is Unity Rd. in Hartford, which closed in November after just four years in operation. Owner B.J. Olson attributed the closure to a combination of factors, including the lack of advertising allowed by the state, increasing taxes, and the difficulty of navigating the complex and ever-changing regulations.

Olson’s experience is not unique. The state’s medical cannabis program has seen a decline in patient cardholders, from nearly 14,000 last winter to fewer than 12,000 currently. The number of dispensaries has also decreased, from 78 to 70, according to the state’s medical pot website.

The failure of Initiated Measure 29, which would have legalized recreational marijuana in the state, has also had a negative impact on the industry. Many dispensaries had been counting on the legalization of recreational marijuana to boost their business and create a new market for medical marijuana.

Joe Stavig, chief financial officer of Dakota Herb’s dispensary and cultivation business, believes that the decline in patient cardholders and the oversaturation of the market are the main factors contributing to the closure of dispensaries. He also thinks that the increasing availability of pot alternatives, such as hemp-derived gummies and smokable flower, has cut into medical marijuana sales.

Alan Welsh, a co-founder of Dakota Herb, agrees that the lack of regulation and enforcement of the state’s medical cannabis rules has also contributed to the problems faced by dispensaries. He believes that the state’s failure to regulate the sale of pot alternatives has allowed them to compete unfairly with medical marijuana dispensaries.

The situation is not unique to South Dakota. Dispensaries across the country are facing similar challenges, including increased competition, regulatory hurdles, and declining patient numbers.

In the meantime, dispensary owners like Olson are left to wonder what the future holds for their businesses. While some, like Stavig and Welsh, are hopeful that the industry will rebound, others are considering closing their doors for good.