The amendment reorganizes and renumbers the definitions section of the industrial hemp law, clarifying the definition of "greenhouse" by removing unnecessary language and reordering the definitions for better structure, while also substantively preserving the existing regulatory framework for industrial hemp. This change NARROWS the scope slightly by making the greenhouse definition more precise (removing "which is" and using "contain" instead) but primarily REDIRECTS the bill toward clearer statutory organization rather than changing hemp policy itself.
26.385.9 26.385.10 101st Legislative Session 39 2026 South Dakota Legislature Senate Bill 39 HOUSE AGRICULTURE AND NATURAL RESOURCES ENGROSSED Introduced by: The Chair of the Committee on Agriculture and Natural Resources at the request of the Department of Agriculture and Natural Resources Underscores indicate new language. Overstrikes indicate deleted language. An Act to revise provisions relating to industrial hemp. 1 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2 Section 1. That § 38-35-1 be AMENDED: 3 38-35-1. Terms used in this chapter mean: 4 (1) "Applicant," a person, including the state or any agency or institution thereof, any 5 municipality, political subdivision, public or private corporation, individual, 6 partnership, limited liability company, association, or trust; and includes any officer 7 or governing or managing body of any municipality, political subdivision, or public 8 or private corporation, or limited liability company, applying for an industrial hemp 9 grower license, processor license, or both; 10 (2) "Department," the Department of Agriculture and Natural Resources; 11 (3) "Chemically derived cannabinoid," a chemical substance created by a chemical 12 reaction that changes the molecular structure of any chemical substance derived 13 from the cannabis plant. The term does not include: 14 (a) Cannabinoids produced by decarboxylation from a naturally occurring 15 cannabinoid acid without the use of a chemical catalyst; 16 (b) Non-psychoactive cannabinoids; or 17 (c) Cannabinoids in a topical cream product; 18 (4) "Greenhouse," any indoor structure or enclosed building capable of continuous 19 cultivation throughout the year, no less than two thousand eight hundred and 20 eighty square feet, which is not part of a residential dwelling. Greenhouses may contain 21 contain multiple lots that are separated and identified; 22 (5)(2) (5) "Hemp" or "industrial hemp," the plant Cannabis sativa L. and any part of that 23 plant, including the seeds thereof and all derivatives, extracts, cannabinoids, 24 isomers, acids, salts, and salts of isomers, whether growing or not, with a total 25 26.385.9 26.385.10 2 39 Underscores indicate new language. Overstrikes indicate deleted language. delta-9 tetrahydrocannabinol concentration of not more than three-tenths of one 1 percent on a dry weight basis; 2 (6) "Key participant," a sole proprietor, a partner in a partnership, a principal executive 3 officer for a government entity, or a person with executive managerial control in a 4 corporation or limited liability company; 5 (7)(3) (7)(2) "Industrial hemp product," a finished manufactured product, or consumer product 6 made from industrial hemp with a total delta-9 tetrahydrocannabinol concentration 7 of not more than three-tenths of one percent, derived from or made by processing 8 industrial hemp. This term does not include a product containing any of the 9 following chemically derived cannabinoids, including: 10 (a) Delta-8 tetrahydrocannabinol, also known as delta-8-THC; 11 (b) Delta-10 tetrahydrocannabinol, also known as delta-10-THC; 12 (c) Tetrahydrocannabinol acetate, also known as THC-O-acetate or THC-O; 13 (d) Hexahydrocannabinol, also known as HHC; or 14 (e) Tetrahydrocannabiphoral, also known as THCP; 15 (8) "Industrial hemp stalk bale," a bale that contains two main types of fiber, bast or 16 long fiber found in the bark (skin) and hurd (shive), or short fiber located in the 17 core of the stem, with a total delta-9 tetrahydrocannabinol concentration of not 18 more than three-tenths of one percent; 19 (4) (9) "Lot," a contiguous area in a field or greenhouse containing the same variety or 20 strain of hemp throughout the area. In addition, "lot" means the terms, "farm," 21 "tract," "field," and "subfield" used by the United States Department of Agriculture 22 Farm Service Agency to mean "lot"; 23 (10) "Measurement of uncertainty," the parameter associated with the result of a 24 measurement, that characterizes the dispersion of the values that could reasonably 25 be attributed to the particular quantity subject to measurement; 26 (3) "Licensed hemp producer," a person licensed by the United States Department of 20 27 Agriculture or a tribal program to produce hemp, as provided in 7 C.F.R. §§ 990.20 21 28 to 990.32, inclusive (January 1, 2026), and any authorized employee or agent of 22 29 the person; 23 (9)(5) "Lot," a contiguous area in a field or greenhouse containing the same variety or 24 strain of hemp throughout the area. In addition, "lot" means the terms, "farm," 25 "tract," "field," and "subfield" used by the United States Department of Agriculture 26 Farm Service Agency to mean "lot"; 27 (10) "Measurement of uncertainty," the parameter associated with the result of a 28 measurement, that characterizes the dispersion of the values that could reasonably 29 be attributed to the particular quantity subject to measurement; 30 (11)(6) (11)(4) "Process," or "processing," to render raw industrial hemp plants or plant parts 31 from their natural or original state to an initial processed form. Typical processing 32 includes decortication, devitalization, crushing, or extraction; 33 (12)(7) (12)(5) "Processor," a person an entity that converts raw hemp into an initial processed 34 form; 35 26.385.9 26.385.10 3 39 Underscores indicate new language. Overstrikes indicate deleted language. (13)(8) (13)(6) "Produce," or "producing," to grow, germinate, dry, sort, grade, bale, grind, 1 mill, pelletize, and harvest hemp plants in the field or in a greenhouse; 2 (14)(9) (14)(7) "Product in process," the product industrial hemp being processed at no higher 3 than one percent total delta-9 tetrahydrocannabinol by a state licensed hemp 4 processor or the transfer of that product at no higher than one percent total delta-5 9 tetrahydrocannabinol between one or more licensed hemp processors during the 6 process of processing of state or federally approved, lab-tested biomass from a 7 licensed grower into a finished industrial hemp product; 8 (15) "Remediation," the process of rendering non-compliant cannabis compliant using 9 methods accepted by the USDA; 10 (16) "Secretary," the secretary of the Department of Agriculture and Natural Resources; 11 (17)(10) (17)(8) "Total delta-9 THC or total delta-9 tetrahydrocannabinol,"" Total delta-9 12 tetrahydrocannabinol," the value determined after the process of decarboxylation, 13 or the application of a conversion factor if the testing methodology does not include 14 decarboxylation, that expresses the potential total delta-9 tetrahydrocannabinol 15 content derived from the sum of the THC and THCA content and reported on a dry 16 weight basis; and 17 (18)(11) (18)(9) "Transporter," any person transporting, hauling, or delivering immature or 18 mature hemp or product in process, but not industrial hemp product or sterilized 19 seeds that are incapable of beginning germination. 20 Section 2. That § 38-35-17 be AMENDED: 21 38-35-17. If the transporter is not a grower producer licensee, licensee licensed hemp producer, that 22 transporter 22 shall must have in the transporter's possession the following documentation: 23 (1) A copy of the license under which the industrial hemp was grown or produced; 24 (2) A laboratory report produced by a Drug Enforcement Administration-registered 25 laboratory confirming that confirms the lot of origin of all hemp being transported 26 complies with 7 U.S.C. Chapter 38, Subchapter VII, as provided in 7 C.F.R 27 990.70(d) and 990.71(d) in effect as of March 22, 2021 7 U.S.C. §§ 1639o. 1639o to 28 1639s., 1639s, inclusive (January 1, 2026); 29 (3) A signed affirmation from the licensee licensed hemp producer and the transporter 30 that no illicit drugs or 30 variations of hemp not explicitly authorized by 7 U.S.C. 31 Chapter 38, Subchapter 31 VII will be transported; and 32 (4) A bill of lading or manifest that includes the shipment contents, the specific name 33 and address of the transporter, the specific name and address of the origin and lot 34 26.385.9 26.385.10 4 39 Underscores indicate new language. Overstrikes indicate deleted language. of origin, the destination of the shipment, the total weight of the load, and the type 1 of vehicle being used. 2 Failure to possess the appropriate documentation pursuant to this section is a Class 3 2 misdemeanor. 4 Section 3. That § 38-35-17.1 be AMENDED: 5 38-35-17.1. A grower producer licensee traveling from the land as described in the 6 the licensee's application to the storage location as described in the licensee's application 7 licensed hemp producer transporting hemp shall have in the transporter's licensee's 8 possession the following: 8 9 (1) A copy of the grower producer producer's license under which the industrial hemp was grown 9 10 or produced; and 10 11 (2) A manifest that includes the specific name and address of the transporter, the 11 12 specific lot from which the industrial hemp being transported was harvested, the 12 13 destination storage location for the hemp, and the type of vehicle being used. 13 14 Failure to possess the appropriate documentation pursuant to this section is a Class 14 15 2 misdemeanor. 15 16 Section 4. That a NEW SECTION be added to chapter 38-35: 16 17 Only a licensed hemp producer may cultivate hemp in this state. 17 18 Section 5. That § 38-35-2 be REPEALED. 18 19 No person may purchase, receive, or obtain industrial hemp or product in process, 19 20 other than industrial hemp seed or industrial hemp product, for planting, storing, 20 21 propagating, producing, or processing unless the person has a license as provided by this 21 22 chapter or is working under contract with or under the direction of a licensee. The licensee 22 23 is responsible, either civilly or criminally, for any person working under contract with or 23 24 under the direction of a licensee for all sections of this chapter. 24 25 It is a Class 2 misdemeanor to purchase, receive, or obtain industrial hemp or 25 26 product in process, other than industrial hemp product, for planting, storing, propagating, 26 27 producing, or processing without a license. No unlicensed person is subject to criminal 27 28 penalties for possession or distribution of hemp seed. 28 29 Section 6. That § 38-35-3 be REPEALED. 29 26.385.9 30 26.385.10 5 39 Underscores indicate new language. Overstrikes indicate deleted language. After the department receives approval by the United States Secretary of 1 Agriculture for the state plan submitted pursuant to § 38-35-15, any person seeking to 2 purchase, receive, or obtain industrial hemp, other than industrial hemp product and 3 industrial hemp stalk bales, for planting, storing, propagating, or producing shall apply to 4 the secretary for a grower license on an application form prescribed by the department 5 and submit a nonrefundable annual application fee. The secretary shall deposit fees 6 collected under this chapter in the hemp regulatory program fund. 7 An application for licensure to plant, grow, or produce industrial hemp must be for 8 at least one-half, contiguous outdoor acre with a three hundred plant minimum, or in a 9 greenhouse with a fifty plant minimum, or combination thereof. No industrial hemp 10 grower's license may be issued by the secretary to plant, grow, or produce industrial hemp 11 within the corporate limits of any incorporated municipality without receiving verification 12 from the municipality that it meets all applicable municipal zoning regulations. 13 Section 7. That § 38-35-3.1 be REPEALED. 14 Any person seeking to plant, store, propagate, or produce industrial hemp for the 15 purpose of research shall apply to the secretary for a research license on an application 16 form prescribed by the department and submit a nonrefundable annual application fee. 17 The secretary shall deposit fees collected under this chapter in the hemp regulatory 18 program fund pursuant to § 38-35-6. Research licensees may be exempt from lot size 19 minimums pursuant to § 38-35-3. Applicants for a research license must be affiliated with 20 an accredited university. Applicants for a research license must submit a summary to the 21 department that outlines the applicant's objectives and a timeline of activities. 22 All industrial hemp produced or processed under a research license must be: 23 (1) Grown, used, or processed for research purposes only; and 24 (2) Properly disposed of in a manner to render irretrievable and unable to enter the 25 stream of commerce, except for industrial hemp seed. 26 Section 8. That § 38-35-4 be REPEALED. 27 After the department receives approval by the United States Secretary of 28 Agriculture for the state plan submitted pursuant to § 38-35-15, any person seeking to 29 purchase, receive, or obtain industrial hemp, other than industrial hemp product, for 30 processing shall apply to the secretary for a processor license on an application form 31 prescribed by the department and submit a nonrefundable annual application fee. The 32 applicant may submit an application form for a processor license at any time. The 33 26.385.9 26.385.10 6 39 Underscores indicate new language. Overstrikes indicate deleted language. secretary shall deposit fees collected under this chapter in the hemp regulatory program 1 fund. 2 The applicant shall provide to the department the street address, legal description, 3 and latitude and longitude coordinates for any location where hemp will be processed 4 under the processor's license and certify that any location where hemp is to be processed 5 is under the control of the applicant. A processor licensee shall provide notice of any 6 change in ownership or location to the department within ten days of a change. Failure to 7 amend change of ownership or location automatically invalidates the license, and a new 8 license must be obtained. 9 Section 9. That § 38-35-5 be REPEALED. 10 Each applicant for any license under this chapter, key participant, and landowner, 11 if the applicant is the lessee, shall submit to a state and federal criminal background 12 investigation by means of fingerprint checks by the Division of Criminal Investigation and 13 the Federal Bureau of Investigation. A licensed applicant must only submit to a background 14 criminal investigation pursuant to this section once every three years, unless requested 15 by the secretary. Upon application for a license, the department shall submit fingerprints 16 to the division. Upon completion of the criminal background check, the division shall 17 forward to the department all information obtained as a result of the criminal background 18 check. This information must be obtained prior to the licensure of the applicant. All costs 19 or fees associated with the criminal background checks are the responsibility of the 20 applicant. Information provided to the department under this section is confidential, is not 21 public record, and is exempt from the provisions of chapter 1-27. However, the 22 department may share this information with law enforcement and the Department of 23 Public Safety. Failure to submit to or cooperate with a criminal background check is 24 grounds for denial or revocation of a license. The secretary may deny licensure if any 25 applicant, key participant, or landowner has been convicted of a misdemeanor or felony 26 relating to a controlled substance or marijuana under state or federal law within the 27 previous ten years. Licensure under this chapter is not required for employees of the state 28 of South Dakota if performing official duties. Any person who has previously submitted 29 fingerprints to the Division of Criminal Investigation as part of an application under the 30 hemp program is not required to resubmit fingerprints but shall authorize the use of the 31 previously submitted fingerprints for an updated state and federal background check. All 32 costs or fees associated with the criminal background checks are the responsibility of the 33 applicant. The secretary may waive the requirement that landowners submit fingerprints 34 26.385.9 26.385.10 7 39 Underscores indicate new language. Overstrikes indicate deleted language. for a state and federal background check if the applicant is unable to have a fingerprint 1 card completed. Other types of background checks may be required in lieu of submitting 2 fingerprints on cards or online. 3 Section 10. That § 38-35-6 be REPEALED. 4 There is hereby created within the state treasury the hemp regulatory program 5 fund, into which all application fees, license fees, inspection fees, and other fees or 6 revenue paid to the state from the operation of the hemp regulatory program shall be 7 deposited. All moneys in the fund created in this section shall be used for the purpose of 8 administering the hemp regulatory program. Interest earned on money in the fund shall 9 be deposited into the fund. Expenditures from the fund shall be appropriated through the 10 normal budget process. 11 Section 11. That § 38-35-7 be REPEALED. 12 If the applicant has completed the application to the satisfaction of the secretary, 13 paid the application fee, returned a criminal background check compliant with § 38-35-5, 14 and is eligible for a license under this chapter, the secretary shall issue the license upon 15 receipt of an annual license fee. 16 A grower or research license issued under this chapter is valid for fifteen months 17 from the date of issuance. A processor license issued under this chapter is valid for up to 18 three years from the date of issuance. 19 The department may deny, revoke, or suspend a license of any person who: 20 (1) Violates any provision of this chapter or administrative rule promulgated under the 21 authority of this chapter; 22 (2) Violates any rule set forth by the United States Department of Agriculture regarding 23 industrial hemp; 24 (3) Provides false or misleading information in connection with any application required 25 by this chapter; 26 (4) Has been convicted of a misdemeanor or felony relating to a controlled substance 27 or marijuana under state or federal law within the previous ten years; 28 (5) Has been charged with or convicted of a misdemeanor or felony relating to a 29 controlled substance or marijuana under state or federal law since the most recent 30 criminal background check; or 31 (6) Requests the secretary to revoke or suspend the license. 32 26.385.9 26.385.10 8 39 Underscores indicate new language. Overstrikes indicate deleted language. Any person whose license is denied, revoked, or suspended under this section may 1 request a hearing pursuant to chapter 1-26. 2 Section 12. That § 38-35-8 be REPEALED. 3 Within thirty days of planting, each grower licensee under this chapter shall file 4 with the department planting verification documentation as required by the secretary to 5 identify the type and variety of each hemp seed planted with its corresponding lot. 6 Section 13. That § 38-35-9 be REPEALED. 7 The secretary may contract with the Department of Public Safety to conduct 8 inspections and sampling of lots and any processor location. The department and the 9 Department of Public Safety may enter on any land or other property where hemp is 10 grown, produced, stored, or processed for the purpose of inspections, sample collection, 11 testing, or investigation while enforcing this chapter. Any person who holds a license under 12 this chapter is deemed to have given consent to the reasonable search and seizure of any 13 hemp without a warrant to determine the lawful amount of total delta-9 14 tetrahydrocannabinol concentration and for enforcement of the provisions of this chapter. 15 The secretary shall assess a grower inspection fee per lot for grower licensees, a 16 research inspection fee per lot for research licenses, and a processor inspection fee per 17 location for processor licensees. 18 Any substance found to be in violation of this chapter is subject to confiscation and 19 disposal at the direction of the Department of Public Safety. Any costs arising from the 20 loss of crop, destruction, confiscation, or disposal are the responsibility of the grower, 21 producer, processor, or owner of the substance. The state is not liable for any confiscation, 22 seizure, disposal, or destruction of any substance carried out under this chapter. Any 23 testing, inspection, and investigation results must be provided to the licensee. Notice of 24 any violation must be provided to the licensee in writing. Inspection and investigation 25 records are not open records pursuant to chapter 1-27. 26 Section 14. That § 38-35-10 be REPEALED. 27 At the discretion of the secretary, a grower licensee may be inspected and samples 28 collected no more than thirty days before the hemp is harvested. The grower licensee shall 29 contact the department prior to harvest to ensure a reasonable amount of time to schedule 30 an inspection. The grower licensee is required to be present during the inspection. No 31 26.385.9 26.385.10 9 39 Underscores indicate new language. Overstrikes indicate deleted language. harvested lot of hemp must be commingled with another harvested lot of hemp and no 1 hemp may leave the dominion of control of the grower licensee until the grower licensee 2 receives a laboratory result from the department that confirms each lot complies with 7 3 U.S.C. Chapter 38, Subchapter VII, as provided in 7 C.F.R §§ 990.70(d) and 990.71(d) in 4 effect as of March 22, 2021. 5 Any location of the processor licensee is subject to random inspection. The 6 processor licensee is required to be present during the inspection. 7 At the discretion of the secretary, a research licensee may be inspected, and 8 samples may be collected. The research licensee is required to be present during the 9 inspection. 10 Section 15. That § 38-35-11 be REPEALED. 11 The department shall promulgate rules, pursuant to chapter 1-26, to: 12 (1) Establish application, application form, licensure, and renewal procedures; 13 (2) Establish requirements to prevent the spread of hemp and hemp seeds from 14 licensed land areas and provide for the assessment of costs for the remediation 15 thereof; 16 (3) Establish criteria and procedures for denial, revocation, or suspension of a license 17 under this chapter; 18 (4) Make any modification or addition to the hemp regulatory program in order to 19 comply with any federal statutes or any rules and regulations regarding hemp 20 enacted or implemented by the United States Department of Agriculture; 21 (5) Establish a nonrefundable annual license application fee not to exceed fifty dollars, 22 a non-refundable annual grower license fee not to exceed five hundred dollars, a 23 non-refundable annual research grower license fee not to exceed one hundred 24 dollars, and a non-refundable annual processor license fee not to exceed two 25 thousand dollars; 26 (6) Establish procedures for the collection of planting and harvest data for each lot; 27 (7) Establish rules for corrective action for negligent and culpable violations of this 28 chapter; 29 (8) Establish transportation documentation requirements; 30 (9) Establish inspection procedures and requirements, a grower inspection fee per lot 31 not to exceed two hundred fifty dollars, a research inspection fee per lot not to 32 exceed two hundred fifty dollars, a remediation fee not to exceed one hundred 33 26.385.9 26.385.10 10 39 Underscores indicate new language. Overstrikes indicate deleted language. dollars per hour, and a processor inspection fee per any processor location not to 1 exceed five hundred dollars; and 2 (10) Establish sampling and testing procedures to determine if the hemp tested and 3 sampled contains the lawful amount of total delta-9 tetrahydrocannabinol 4 concentration of not more than three-tenths of one percent. 5 Section 16. That § 38-35-12 be REPEALED. 6 The Department of Health shall promulgate rules, pursuant to chapter 1-26, to: 7 (1) Make any modification or addition to the hemp regulatory program in order to 8 comply with any federal statutes or any rules and regulations regarding hemp 9 enacted or implemented by the United States Department of Agriculture; 10 (2) Establish testing procedures to determine if the hemp tested contains the lawful 11 amount of total delta-9 tetrahydrocannabinol concentration and certifying results; 12 and 13 (3) Establish labeling requirements for industrial hemp products. 14 Section 17. That § 38-35-14 be REPEALED. 15 The department compliance testing must be conducted by a laboratory approved 16 by the Drug Enforcement Administration. The laboratory shall report the total delta-9 17 tetrahydrocannabinol concentration level and the measurement of uncertainty for each 18 sample tested pursuant to this section. If a test reveals a total delta-9 19 tetrahydrocannabinol concentration of more than three-tenths of one percent but not more 20 than one percent, the licensee may request a retest at the licensee's expense. If upon the 21 retesting, the total delta-9 tetrahydrocannabinol concentration exceeds three-tenths of 22 one percent, the entire lot from which the noncompliant sample was collected must either 23 be destroyed or remediated and retested according to the United States Department of 24 Agriculture guidelines. However, a sample that tests a result within a measurement of 25 uncertainty that produces a range that includes a total delta-9 tetrahydrocannabinol 26 concentration of three-tenths of one percent is compliant for the purposes of this chapter. 27 Section 18. That § 38-35-15 be REPEALED. 28 The department shall work with the attorney general to develop a state hemp 29 production plan and submit the plan to the United States Department of Agriculture for 30 approval of a program to license the growth, production, storage, processing, and 31 26.385.9 26.385.10 11 39 Underscores indicate new language. Overstrikes indicate deleted language. transportation of industrial hemp in South Dakota. The department shall establish a 1 program once approval is received by the United States Department of Agriculture. 2 Section 19. That § 38-35-18 be REPEALED. 3 Each applicant, licensee, key participant, and transporter of industrial hemp, other 4 than industrial hemp product, shall abide by any rules set forth by the United States 5 Department of Agriculture and the United States Department of Agriculture-approved 6 state hemp production plan. 7 Section 20. That § 38-35-20 be REPEALED. 8 The department, Department of Health, and Department of Public Safety may 9 provide to another state, local, tribal, or federal government entity, any specific licensee 10 or permittee information as may be necessary to verify the legality or compliance of any 11 licensee or permitee under this chapter. Application for, and receipt of, a license or permit 12 under this chapter serves as the applicant's consent to provide information without prior 13 notice or disclosure to the applicant that the information will be or has been shared. 14 Section 21. That § 38-35-22 be REPEALED. 15 Industrial hemp used in wildlife food plots not intended to be harvested must be 16 sampled by November 1 of the year planted. No cannabidiol varieties shall be grown for 17 the purpose of wildlife food plots. 18 Section 22. This Act is effective beginning January 1, 2027. 19