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Call to order of the Medicinal Marijuana Oversight Committee. I want to welcome everybody. Thank you for those here attending and online. Just a reminder, a little housekeeping here. Please turn off your cell phones or set cell phones to silent. Those wishing to present or testify in front of the committee must register by either scanning the QR code on the meeting agenda or by clicking the blue person icon next to the meeting link on the LRC homepage. So welcome to everybody. Madam Secretary, I'd like to take a roll call.

Andera?

Here.

Nelson?

Here.

Arneson?

Here.

Bostic? Excuse— excuse? Oh, here. Antwistle?

Here.

Palmer?

Here.

Shock?

Here.

Toom?

Present.

West?

Here.

Carley?

Here.

Garcia?

Here.

Madam Chair, you have a quorum.

Thank you, Madam Secretary. So I'd like everyone to please introduce Introduce yourselves on the committee before we begin, if that's okay. I'm Representative Josephine Garcia, Chair of the Medicinal Marijuana Oversight Committee.

I'm Senator John Carley, Vice Chair of the Medical Marijuana Oversight Committee.

Hi, I'm Representative Andera, District 10.

Hi, State Senator Lauren Nelson, District 18, which is Yankton and Clay Counties.

Casey Entwistle, patient representative.

I'm Andrew Shock. I am a physician assistant working in geriatrics.

Anybody online like to introduce themselves that's on the committee, please do so. Thank you.

John Toom, Sioux Falls Police Chief.

Francine Arneson, palliative care physician at Avera in Sioux Falls. Kristi Crickett-Palmer, licensed addiction counselor.

Pat West, Meade County Sheriff.

Oh.

Thank you for everybody introducing themselves. We'll go on to the first order of business, which is approval of minutes from November 2025. Hopefully everyone's looked at the minutes, and I ask for a motion for approval.

Madam Chair, a motion to approve the minutes from November 2025, the 3rd Medical Marijuana Committee meeting.

Second.

All in favor say aye. All opposed? Aye.

Aye.

Minutes are approved. Before we begin with its presenters, I just want, as the chair, to really go over our mission here and the objectives, as I've done every meeting for this committee, which is our duties and what the purpose of this actual committee is, so we can all be concise and stick to the agenda. So I may bore some of you because you have this in front of you, but I do believe it's important that we reiterate it for the public as well and those listening. They might not have access. The Oversight Committee shall meet at least 2 times per year for the purpose of evaluating and making recommendations to the legislature and the department regarding the following. The ability of qualifying patients in all areas of the state to obtain timely access to high-quality medical cannabis. The effectiveness of the dispensaries and cultivation facilities individually and together in serving the needs of qualifying patients, including the provision of educational and support services by dispensaries, the reasonableness of their prices, whether they have generated any complaints for security problems and the sufficiency of the number operating to serve the state's registered qualifying patients. Number 3, the effectiveness of the cannabis testing facilities, including whether a sufficient number are operating. Number 4, the sufficiency of the regulatory and security safeguards contained in this chapter and adopted by the department to ensure that access to—

Madam Chair?

—and use of cannabis cultivated is provided Only to cardholders. Number 5, any recommended additions or revisions to the Department regulations or this chapter, including recommendations relating to security, safe handling, labeling, and nomenclature. Number 6, any research studies regarding health effects of medical cannabis for patients. And number 7, any medical and clinical aspects of the medical cannabis program. The oversight committee shall ensure that it seeks relevant input from qualifying patients, designated caregivers, pharmacists, school boards and administrators, parents, municipal representatives, state agencies, including the Department of Health, the South Dakota Division of Criminal Investigation, and the Department of Public Safety and medical cannabis establishments. I just want to say that is 34-20-G-93 as our duties here today. I want to remind the committee before we begin the present— bringing the presenters up that all questions must be addressed through the Chair. And then with that, if anyone doesn't have any questions, I'd like to just go ahead and proceed with our first presenter.

Thank you, Madam Chair.

We have on the agenda the medical cannabis program overview and status. I believe that's you, Ms. Berner. Thank you very much. From— just please state your name, the department. Thank you. Thank you.

Sure, go right ahead.

One moment, we'll get that up. Thank you.

Well, good morning.

I'm Whitney Bruner, Medical Cannabis Program Administrator with the South Dakota Department of Health. I'm going to pull this a little closer to me. There we go. On behalf of the department, I do want to thank the committee for your offer to let us come and speak today and share a little bit about the program. This morning I want to do a brief review of the program mission and purpose as well as the program responsibilities. I know last year we really went into the depths of all the various processes. So this year we'll focus more on what the state of medical cannabis is right now. We have a pretty robust FY26 data update prepared for you today. As well as some FY26 program accomplishments and updates. And then we're going to take a look ahead at what we're doing right now and what is coming up. But before I do that, I do want to pause on this screen for just a moment and move my microphone. The Department of Health is committed to ensuring that all audiences are equipped with the knowledge of what public health is. And this slide provides a nice visual encompassing the components of the public health framework. I won't read through the entire slide, but I will direct your attention to the left of the screen, as I think this description really captures how the medical cannabis program fits into the public health framework. It reads that public health is a system of entities and individuals working together to protect the health of entire populations, whether it's as small as a local government or as big as the entire state. And this program really is a collaboration of efforts, whether it's working with our partners in law enforcement, other state medical cannabis authorities, our registered patients, and our registered establishments. We're all working together to ensure a safe and effective medical cannabis program for South Dakota. The mission of the medical cannabis program is to promote public health and safety by upholding the highest standards of regulatory compliance and fostering a transparent and accountable framework for the medical cannabis industry. And the purpose of the medical cannabis program is to provide rigorous oversight, continuous education, and collaboration with stakeholders to support responsible use of medical cannabis and ensure the well-being of our communities. The mission and purpose statements were adopted in 2025, and I also just want to note they're available on our website if you need them for future reference. And then a review of the medical cannabis program responsibilities. We want to ensure a safe and effective medical cannabis program, and one of the ways that we do that is through regulation of the medical cannabis industry. Our role is to ensure compliance with the statutes and administrative rules that govern this program. We also develop and implement internal policies and procedures to support this role. Additionally, we register and issue medical cannabis cards to patients and their caregivers, and we certify the 4 types of establishments, which includes cultivators, manufacturers, dispensaries, and testing facilities. Regarding inventory tracking statewide, the department's role here is to serve as a second set of eyes and ensure that establishments are keeping accurate and up-to-date inventory records. We also conduct inspections of establishments and we investigate complaints. All right. So let's get into the data portion of the presentation. I do just want to remind, and I mentioned this last year too, but our data in med cannabis can be quite fluid, particularly the patient data. We've always got individuals coming into the program, dropping out of the program. So for today's purposes, we really focused in on what did this look like in FY26. And the same goes for establishments, not quite as fluid, but still some fluidity there. So starting off— forgot to advance that one. All right. So starting off with our patient counts. At the end of FY26, we had just over 19,000 patients enrolled in this program. Now you may notice there is a bit of a jump there from FY25. We noticed that too. We noticed it in real time as it was happening. It was mostly concentrated to the very beginning of FY26. We were pulling monthly counts and we were noticing that every month we were pulling a significant number or a out more than the previous month. And we did look into this pretty extensively, not because we were concerned about an increase in patients, but more so because we were a fairly new team and we wanted to make sure it wasn't something we were doing on our end. We always want to ensure that the data is as accurate as possible, but we did not find any discrepancies there. So we did experience a true spike in early FY26, but by fall that number had started to level off and that final number that we see there has remained fairly stable. We're now seeing those more minor incremental increases that we're used to seeing. So let's take a look at who we've got here in that count. 97% of our patients were South Dakota residents and just 3% were non-residents. And off to the right there you can see the non-resident cardholders by state location. Those top states are going to be our bordering states: Iowa, Nebraska, Minnesota, North Dakota, and Wyoming. As we can see there, Iowa is really leading the charge on our of state resident cards. We do see that the majority of those Iowa patients there are concentrated to the Sioux City area. And then looking at a patient breakdown by race, income, and gender. In FY26, 84.38% of our patients were white, followed by 7.36% of the American Indian population. Now one important thing to note there is that the Department of Health does not have jurisdiction over tribal-owned medical cannabis dispensaries on tribal land. So that 7.36% may not encompass the full percentage of the American Indian population in South Dakota that utilizes medical cannabis. And then this question is optional. So we see the next highest category there was individuals who chose to leave that blank at 2.87%. 2.38% were Hispanic, 2.36% African American, 0.47% Asian, and 0.17% Hawaiian or Pacific Islander. And then off to the right we have patient percentage by income. Just 8% of our patients were low income. Low income is defined in this program as 130% or less of the federal poverty level. And I do want to note there that if any individuals were interested in medical cannabis, wondering if it might be beneficial but that cost might be a barrier, this low-income information and instructions is available on our website. So anyone could go in and find those instructions or have a provider print them out for them. And then below that we have patient count by gender. We had quite a few more males in FY26, 53% to 45% females. But the important thing to note here is this question is also optional and 5% of patients chose not to answer it. And then looking at patient count by age in FY26, that 40 to 49 age group was the top category of ages that we saw utilizing medical cannabis. One thing I would draw your attention to on this chart is when we look off to the far right, we do have that 0 to 17 age category. This program is available to individuals under the age of 7— under the age of 18, excuse me. But as you can see, that utilization in that age group is fairly low in this program, and that number does remain pretty stable year to year. The other age categories, we may see some fluctuations. It just depends on who's coming in or going out of the program. But that 0 to 17 age category does remain fairly stable and at a low number. And looking at patients by condition, this data has not changed much since last year. Severe debilitating pain is still the top condition that we see in this program at over 70% of patients, followed by post-traumatic stress disorder and severe and persistent muscle spasms, cancer or its treatment, and severe nausea except nausea associated with pregnancy. And we see from there on down those numbers do taper by condition.

Next slide.

Okay, so when an individual applies for a medical cannabis card, there are a few options that they may choose to select during that process. On the left, we see the caregiver process. They may elect to have a caregiver or a couple caregivers or however many they need to be able to safely use cannabis. And sometimes we see caregivers being selected for reasons, you know, maybe the condition presents a physical hardship, maybe there's a cognitive component. All patients under the age of 18 Okay. So those are the numbers for the patients. So patients under the age of 18 are required to have a caregiver, and at least one caregiver must be a parent or legal guardian. These numbers, we don't see a lot of trends happening with them. They tend to, as you can see there, they're kind of all over the place. Again, it just depends on who is applying in the program. But off to the right, this is the number of home cultivators that we saw last year and how that number is trending upwards consistently every year. Those bars in the blue are going to be your patients cultivating for themselves, and the orange is going to be cultivators Or excuse me, caregivers cultivating for patients that they are a caregiver for. These numbers are going up quite significantly every year, and this has caught our attention. And we do have just a few concerns in this area, namely just the the lack of solid regulation in this area. I'm not going to say that there's things going on. I don't know that information. I don't want to falsely accuse anyone of anything. But I will say that the lack of regulation in this area is a bit concerning to us. In order to become a home cultivator, you simply have to submit to the department at the time of registration a diagram of the place in which you intend to cultivate. Typically those are hand-drawn and they don't contain a lot of detail. They also have to submit a photo of the room in which they intend to cultivate cannabis as well as a photo of the lock on the door leading into that room. And then they pay a $20 fee. And that's really where it ends with us. So that is concerning to us. And we have looked into, you know, is there anything more that can be done? But I think that's greater conversation to be had. It does present some legal and safety considerations if we were to attempt to regulate this further. But I'll leave it there that we can just— we can see that that is trending upward. Patient card revocations. And I apologize for that FY24 and earlier. We had some difficulty getting those numbers to tease out. So we just lumped them all into one category. But card revocations are not something that we do regularly. 34-20G84 says that the department May revoke a registry identification card of any cardholder who knowingly commits multiple unintentional violations or a serious knowing violation of the chapter. If we're going to revoke a card, we want to have a police report showing that they were convicted of something relating to cannabis use that would result in a card revocation, and then card revocations also have to go to a hearing. Okay. And then practitioners. We ended FY26 with 117 physicians, 18 physician assistants, and 71 nurse practitioners. You may or may not remember last year I mentioned in FY25 we did a bit of a quality assurance project in our office. We noticed that we had quite a few providers in our system that had signed up initially when the program was first implemented but hadn't issued a certification even after several years in the program. So we didn't want to make it look like we had more practitioners signed up than we actually have utilizing the program. So we had deactivated all practitioner accounts and sent them a message that, hey, next time you go in to certify a patient, just reactivate your account. All your information will still be there. It just gives us more accurate data. So we can see in FY25 those went way back due to that project, but now it's, it's coming back up there as they're all coming back to certify. Okay, let's switch gears here a little bit now and talk about establishments. We ended FY26 with 67 dispensaries, 14 manufacturers, 30 cultivation Okay. So we have 30 cultivations and 1 testing facility. One thing to note here, if you're looking at that number 30 for cultivations, we teased this number a little further and we found that most of these cultivations are small to medium-sized. I believe it was 18 out of 30 had less than 500 plants. So I just didn't want that number to catch your eye. I know in South Dakota sometimes we think about fields for days, cornfields, bean fields, and as far as the eye can see, but these are actually relatively small operations. Some of them are, some can be a little bit larger. But— and then we do conduct inspections, one routine inspection every year, and sometimes we'll do a drop-in site visit too if there's a complaint. We are trying to get better about doing site visits after every inspection just to be sure that any items that had to be addressed through a corrective action plan have in fact been implemented. SD 3420G.69 does give the department authority to conduct inspections on establishments. And you might notice some of those numbers are a bit lower than what was on the previous slide. Again, that's due to the fluidity. We had some establishments coming on, coming off. We also had a handful that got conducted the first week in July, so they didn't make the FY26 cut. But I didn't want that to cause concern. Everybody did receive an inspection. Okay. Most frequent rule violations cited during inspections in FY26. I'm going to pause here for a minute because the thing I want to call out here about this list is that it hasn't changed from last year. With the exception of operating hours being added to the list, and that's unfortunate because a lot of these citations could be easily avoided. So let's look at operating hours. How do we avoid a citation in operating hours? You send our office an email saying that I updated my operating hours and here's what they are. That's it. That's all you have to do to avoid that citation. You don't even have to tell us why. Just tell us you changed them. Let's look at training in the inventory tracking system. This citation is the number one citation year after year. If you establish an administrator with your business in the metric seed-to-sale tracking system, you can be on top of this. You can check on your team and make sure that they're completing all their required hours, and you can get ahead of that inspector that's coming. Number two, security cameras placement, recording, and storage. You have to have 90 days of security footage stored. Check your cameras. Do you have 90 days? If you don't, let us know. Again, you don't have to know why you don't have 90 days. Maybe there was a glitch. Maybe something went wrong. We understand that. Just let us know. So many of these citations could be avoided just with preventative communication. So another thing that I want to talk about on this slide is that Again, with these being avoidable and being proactive and doing your due diligence, you know establishments are ultimately responsible for their compliance or non-compliance. They are there every day. We're not. We come in once a year to do a routine drop-in inspection, and we're there for a moment in time. We may see stuff. We may not see stuff. But you're there every day, and prevention is the greatest key to this. You know, hire and train your staff and train them well. Conduct QA and QI. Log into your systems. Do those regular proactive checks. Get ahead of that inspector before they come. Inspections aren't a substitute for that. Previous inspections should not be relied upon as the sole barometer of your compliance. Is it possible that an inspector can come around this year and cite something that a previous inspector missed? Oh yes, it's possible. We know it's possible. We also know that the administrative rules are what ultimately govern this program. The department inspections don't set the target. The rules are the target. Just something to keep in mind. If you're making changes to the facility, reference the rules. If you're setting up cameras, reference the rules and log into them and look around and make sure that they're in a good spot. Regularly check in on your staff and their training. Check in on your storage footage. Check that sticker on your scales and make sure that certification hasn't lapsed. Let's talk about revenue. I want to start by focusing your attention in on that penalties and fines category. $84,500 were paid in fines over the last year. Why? And what I want to call your attention to about that number is that's not even representative of what it could have been. But we realized right out of the gates that we had to put some protocols in place or we were going to end up fining way too many establishments the maximum. We can fine up to $10,000 per license in administrative rule. We don't want to do that. We absolutely don't want to do that. We don't want to shut anybody down. Fines aren't about the money. They're about compliance. Be proactive. Use the fine as a motivator. Get some protocols in place. Check in on your team. Check in on your procedures. We don't want to have to do that. All right. I'll switch gears here. Let's talk about the rest of revenue and expenditures. As we can see here, cardholder fees are the top source of revenue that this office brought in in FY26. That's the cardholder fees, that $75 for a standard application or $20 for low income. We also have carry card fees, which is $20, and home cultivation fees, which are $20. If you'll excuse me, I need to take a quick drink. Thank you. And then we also have another source of cardholder revenue that's not teased out here. I assume it gets put under the cardholder fees. And that's if you lose your card or have it stolen, you can pay $20 and get a new one printed. And then we brought in the second portion of that is the establishment fees revenue. Now, as you can see here, our expenditures were quite low in FY20. This is not the norm. We were very low in FY26, and that was very intentional. We were being very diligent to spend as far under as we could due to the fact that we were getting ready to make a very major software purchase, which I will talk about later in the presentation. But I do just want to note that that number was intentional. I didn't put the total breakdown of expenditures. If you may recall from last year when we provided that information, expenditures is quite a list, and so it just didn't fit nice in a slide. But I am I'm willing to answer any questions on that if you have any.

Madam Chair?

Yes, sir.

Yeah, Ms. Bruner, just a quick question on that last slide.

Yes.

$18,000 was cultivation. $18,000, just a moment ago you mentioned $20 per license. So is that 900 or 900? I'm just trying to figure out how $18,000 you get from $20 per home cultivation.

I might have to go back on my slide and take a look at that. I can go back on my computer.

Yeah, just back up one slide.

Okay.

Okay, I can see it on this one. I might have to go back on this one. There we go. There we go. Okay.

Does that make sense, the question?

Yes. The question is—

$20 per license. How is it $18,000? Because that would be $900.

Yes. And that's going to be some of that fluidity coming into play. We may have had some patients that came on during that year that paid that fee to home cultivate, but then they dropped off by the time we pulled the FY26 data. We may have had— and that works in all different scenarios in that regard. It's just a reflection of that fluidity.

Okay, can you back up then a couple more slides to slide 15?

Yeah, a little pie chart.

So that shows 30 cultivations. So 30 at $20 apiece would be $600 in cultivation fees.

So, um, no, so the establishment registration fee is $9,000.

To cultivate.

Yes, to register.

Thank you.

Great questions.

Okay.

I'm going to advance this one too. We'll get into some FY26 program accomplishments updates. And these are going to be in no particular order. But one of the first ones I want to highlight here is the website consolidation. You may recall in the past this program had 2 different websites, 2 different presences on the internet, and each site had different information on it. Not conflicting, just different. And it seemed that it didn't matter who you are, what you're looking for, you're on the wrong site. And this, we experienced this over and over again. And we realized in FY26, you know what, this is not working. Let's just consolidate the 2 sites. Let's make it easier on everybody. And so we sitemapped both sites. We gave those maps to our comms team. They did beautiful work and consolidated both of them onto the DOA website. They also, when they did that, they created a permanent redirect. So if anybody was used to going to the other site, it's medcannabis.sd.gov. If you type in that URL, it's going to bring you right back here. We still— this is always going to be a work in progress. It's on my FY27 updates too. We're always reviewing this information, updating it. There's still a few pieces that we haven't added back in yet because with our new software system coming, we're still evaluating what might fit better there versus the website. But the The major work here has been done and it has put a stop to a lot of the confusion that we were hearing about these 2 sites. And then with that, we've also added provider education to the website. We had our DOH medical director test drive several trainings that were geared toward practitioners so that she could review them from that practitioner perspective. And the training from the Association of Cannabinoid Specialists came out overwhelmingly on top. They offer a 3-hour CME training course for practitioners. Now we don't have statutory authority to require practitioners to take these trainings. It's all voluntary. But we do strongly encourage it and we sent out a notice to all of our practitioners that hey, if you want this opportunity, it's available to you now. Another nice thing about the Association of Cannabinoid Specialists is they also offer a membership opportunity. So if a provider wanted to opt into that option, it does unlock some more resources as well as a vital networking opportunity. They would have the opportunity to network with other providers working in the cannabis space and ask questions. And then in addition to that, we've also got— we linked to 2 articles from the American Academy of Family Physicians that include informational resources and tools for clinical practice. I think that's where I got that image from the right, was from one of those articles.

Madam Chair, thank you. Senator Bruner, question. You said voluntary.

Yes.

What is the uptake? What is the percentage people are— you mentioned the practitioners— what percentage are joining the voluntary training program?

You know, that's a great question and it is something we should probably look into. Yes, I appreciate that. We did get some feedback right out of the gates on some of the training from practitioners, but we haven't collected that information. So that's a good point. And then looking at patient education, off to the right there is an example of one of two new rack cards that we've developed over the last year. This one focuses on health considerations, so different tips and points regarding pregnancy and breastfeeding, interactions with other medications, considerations for older adults, as well as chronic medical conditions. And then off to the left there, this one is not new, but I did want to highlight it because it's good information. This is the medical cannabis safe storage checklist.

Okay.

And informational document that all patients receive when they get their card. So both of these items plus the other RAT card all get sent out to every patient along with their card. And they're also available on the website. Complaint process. This was very much in process and I think we even talked about it a little bit last year, but now that it's complete, I just wanted to bring it up again. We developed in FY26 a more formalized process for submitting complaints. to the office. Prior to this, complaints could be received a number of ways. It might be through email or phone calls. And what was happening there was sometimes complaints weren't well documented. Sometimes we were having— we would struggle if asked, you know, how many complaints do you get in this area? Well, I don't know, because I can't speak for anybody who was here before, or I don't know what this person's heard. So we definitely recognized a need to streamline this so that we could be able to better track these. So these went into effect in September 2025. We have 2 different forms available on the website. This one here is just the cardholder form. The purpose of this form is to submit a complaint against a cardholder. So things like, you know, my neighbor has a card and I see them selling in the streets, or, you know, things like that. We also have an establishment complaint form. Hey, just so you know, this establishment's doing some sales out the back door. That was the idea behind the forms. Not saying that's what we're hearing. That's just the idea behind the forms. One thing that we noticed right away, I would take that data. I wanted to— I still wanted to share the data, but I would take it with a bit of a brain assault this year. We had some hiccups when we first released these forms, which is reflected in the data. We did not get 23 cardholder complaints. What happened initially when we put these out there was cardholders were utilizing the forms as a means to communicate with us. So we did receive more forms that weren't exactly complaints. And we've experienced something similar on the establishment side, and that still happens sometimes. We'll get a former employee that may have been let go or they left on unfriendly circumstances and they want to complain about their manager or their coworker. Worker or what have you. So we're still working on tweaking the language on these forms. We did tweak the cardholder language a little bit to try to discourage this from being a communications method. This is for submitting a complaint that you see. So I'm hoping that those numbers go down. This program doesn't get a lot of complaints, not compared to some of our other DOH regulatory programs, and I think it's just because the industry is a little bit smaller. So hopefully we can have some better data for you next year on that. And then the informal dispute resolution process. This was not yet created last year. It actually went into effect in November of 2025. And what this process is, is it provides an opportunity for an establishment to dispute a citation found on an inspection by submitting additional information to support compliance at the time of inspection. So what this basically means, you know, sometimes where we see this is, you know, our inspections are drop in. And sometimes an inspector will drop into an establishment and actually I shouldn't say sometimes, more often than not, it's on a day that there's not an owner or manager present. Or the person that's there just might be brand new. Or they're working alone. And so sometimes our inspectors can't get all their questions answered. Sometimes things can't be located. And those things do result in citations in the inspection report. So typically when we see these IDRs, we're getting it from an owner-manager saying, wait a minute, wait a minute. You were not advised correctly. There is more to the story here. We have sometimes seen this play out too, where an establishment may have just a more unique or creative way of addressing the rule, and it's not something that the inspector typically sees, which may trigger something that, oh, I don't know what I think about this. I'm going to mark that. But then they'll come back and say, no, here's the rest of the story. Here's why we do it this way. And let me show you why I was in compliance on that. That day. So we've received approximately 10 of these, actually 11. We just got one last week. And roughly— and that number 5 is going to go up because the one last week was successful. So we've seen roughly 5, 6, 7, 8 adjustments made. And we call them adjustments because sometimes it's not that a citation gets overturned. We may reduce it to something that was corrected on site. We may also— we've actually had these submitted for something that wasn't a citation. It was marked as corrected on site, but they don't even want that on the report, and they have a valid reason for that. And so these can be successful if done right and when used for the right reasons. The one last week was very successful. So, but again, it goes back to that due diligence. The more, the more attention you're paying to what's going on in your business, the more you know, the more facts you can provide, the more timestamps and documentation, it's going to work to your advantage. And then the rest of these I just consolidated to this site here. We conducted in FY26 what I believe— I don't want to misstate this— I believe it was the first patient survey that this office had done. It had to have been because it was a pretty rough process figuring out how are we going to go about communicating with, at that point, around 18,000 patients. What our goal here was, was first off just to engage with our patients a little more than, you know, usually if they're calling us, it's because they need something. Or they're upset about something. And so we wanted to just get some more information out of them, not under those circumstances. And so— and this was also done around the time we were doing the website review. We wanted to know where are they getting their education? Do any of you even use this website? And so we did get— we got a fairly decent turnout. Coming from the survey world, I would have liked to have seen it a little bit higher. Out of 18,000 patients we had, it depended on the question, anywhere from 1,200 to maybe 1,700 that responded. We did get some emails back, why are you emailing me? Go away, I don't want this. So this is definitely something that we want to do again in the future, but we're still kind of tweaking the process and figuring out how can we get more engagement, how can we make this not a burden on patients and something maybe that they would want to contribute to and have a say in. And then we have enhanced the data available on our website. We used to primarily just provide the number of cardholders and the number of practitioners, but we've We have greatly enhanced that. I'll be honest with y'all, I'm not a fan of how we're doing it right now. It's right now it's in report format. It's a Word upload. But with our new software system, which I'll talk about in a minute, we are going to make that much more robust. It'll be more interactive. It won't just be a Word upload. It will have an actual— we're going to have a data presence on our website, and we're really looking forward to that. And we've also made our inspection reports available on the website. So what is available on the website will tell you if they were in compliance, out of compliance, or if something was corrected on site. We do refrain from posting the full narrative that establishments get from the inspector after the inspection, just due to the fact that, well, I'll point it out there. The second citation is cameras, and we certainly don't want to be putting out in the public where they may be lacking camera coverage. That's a security concern for them that we don't want to do. We also don't want to inadvertently release proprietary information that could compromise their business. So what is out there will tell you though, are they in compliance, out, And where, and then this next one is actually a pretty big one. We developed inspection standard operating procedures. So we realized last year, and it wasn't a difficult realization to make. We realized we had a lot of work to do on inspections and our processes. And so, in addition to developing standard operating procedures, which by the way is a whole manual developed for inspectors, and it covers everything from how do you introduce yourself when you walk into when you walk in the door to how do you wrap things up when you're walking out the door. In addition to doing that, we've also thoroughly vetted and gutted all of our inspection policies and procedures, and really all of our policies and procedures, even outside of inspections. But all of those inspections policies and procedures to ensure that they are clear, to ensure that we know what our deadlines are that we're holding ourselves accountable to as far as follow-up communication. You know, how many days are we giving ourselves to finish that report and get it out to them? How many days are we giving them to respond with a corrective action plan? And then how many days do we take to respond? Those types of things all really needed to be spelled out for consistency. We also added mandatory pre-inspections. Before, pre-inspections were maybe more of a suggestion, but not so much mandatory. Now they are mandatory. Before you leave the office to go conduct an inspection, you have to complete this mandatory inspection report, turn it into your supervisor, and your supervisor has to approve it. If you haven't, she's going to call you back and say, hey, get back to the office. Where are you going? Thankfully, we haven't had that happen, but that is what would happen. Mandatory pre-inspections include They have a whole checklist, but one of the things that they include too is logging into all of those security cameras and checking each one from various angles to make sure there's no blockages. They're looking at inventory training, system training. They're looking at inventory in general. They're just looking for all those things so that when they arrive on an inspection, they know what they're looking for. They know where to take a closer look. And hopefully the whole point of this is we are hoping to reduce those oversights that have happened in the past on inspection. We want to make sure that inspectors are well prepared, they know what they're looking for, and that they— we can greatly reduce those oversights. But in addition to that, we've also implemented a 1-to-2 ratio direct supervisor for inspectors. When I started in this program, inspectors along with everybody else was reporting to my position, and my position is pulled in a lot of directions. And so they just weren't getting that direct support and oversight that they needed. So now they have a supervisor that supervises just the 2 inspectors and she is there to support them before, during, and after an inspection. She serves as a second set of eyes on all of their reports. She's double-checking everything to hope— hopefully to improve upon our processes and reduce some of those errors that we saw in the past. We have expanded research and development testing. This is something that is available in our inventory tracking system. It is a series of tests that they can do before they go to do the big final form testing. It's like preliminary testing that can help them to know if maybe their plant has too much, you know, microbials, fungus, heavy metals, that type of thing. A few years ago, and this would have been before my time, that ability was greatly reduced. And I don't want to speak too much because I wasn't here at that time. I'm not clear if it was fully taken away or if it was just heavily reduced. It was reduced when I started. There was about 5 options for this. And I heard the industry loud and clear when I started that this is not good. You need to bring this back. This is a safety concern for our plants. We have to be able to do this preliminary testing to be able to determine what tweaks we have to make to ensure the safest product. So when I had looked into this, I discovered that there was quite a loophole. And I almost don't even want to say this because I don't even know if everybody was aware it was there. But there was a loophole in our seed-to-sale tracking system, which likely played a role in that decision that was made a few years before my time. And it would of allowed research and development testing to bypass or overrule the final form testing that was required. And so in the fall, I met with our vendor and they proposed some solutions to fix it. We weren't quite there yet. But what if this happens? But what if that happens? Okay, we have a little more work to do. But in the spring, we were finally able to get that loophole closed. We were able to ensure that research and development testing can be conducted. for safety and development purposes, but not to bypass that required final form testing. So as soon as we had that closed up, we opened it all up to everybody. And so that's been restored, and I'm pleased to see that that's being well utilized by the industry. And then PDMP integration. I'm going to look at Senator Nelson. We have done a lot of work in this area since legislative session. We, for a long time there, we were meeting with the PDMP weekly. We did just now taper that back because we're at a point we don't need to meet quite That's great. I know it doesn't seem like that often, but this is an ongoing process. But we've made great strides here. What we would like to do— when we first started meeting with them following legislative session, we had to address the challenge of that patient card fluidity. I think originally we were thinking, well, we could just do a monthly upload to the PDMP. But we had to call out that if we do that, you're going to have a lot of inaccurate records in there because you could have people listed as patients, but they've since dropped off. You could have people not listed in there, but they are patients now. And so So for a while there we talked about maybe we'll do a weekly upload, but that still doesn't help. The elephant in the room is what we need to do is integrate with our patient registry system, and we're in the process of changing our patient registry system. And so the amount of time and effort and cost in doing that just wouldn't have been— wouldn't have been good in this case. So what we did is we actually came up with a middle ground solution for now. Eventually the goal will be the PDMP will integrate directly with our patient registry. The vendor we have selected is aware that this is going to happen and they are on board with that. But in the meantime, until our new system goes into place, we have come up with the solution of an SFTP folder is being created and our system will— I'm not a tech person, so forgive me, but our system will integrate with that SFTP folder. The Bamboo system will integrate with that SFTP folder and the two will talk to each each other. This was a much more cost-effective solution in the meantime until we get our new system. Where we're at right now is our piece of that is done, and now Bamboo, or the PDMP vendor, is working on their piece of that, getting their piece now to talk to ours. So that is well underway, and I believe they told us they are expecting to be done with their piece of it in September. October is when we can expect to see that. go live. And then the request for proposals. This was probably the biggest project that we did this year. When I came into this office, all of those software contracts were coming to the end. They were all 5-year contracts, and a request for proposals was going to be necessary in order to choose another vendor or choose to stick with the current vendor. And so a lot of work hours Yes. So I know that there are a lot of months that went into this process. There are way more details than I would have imagined that go into this process. But we did complete that. The RFP was posted in January. We made a final selection in— I'm wanting to say early, early summer, late spring. Unfortunately, we are still in the legal contract negotiations, so I can't speak to too much detail on this. But we have selected a vendor. Representative Garcia, I know you were interested in hearing about Okay. We have selected a vendor that is very experienced in digital ID cards for patients. We wanted to make sure when we selected a vendor that we selected a vendor that was experienced in that area, that knew what they were doing. We certainly don't want to accidentally drop accounts. Not even one account do we want to see dropped. And so we did pick an experienced vendor in this area. Additionally, well, I guess I'll get into this more on the next slide. I'll just, I'll just beat the next slide. Additionally, this system is going to be all-in-one for the state office. So what that means is for us on the admin side, when we log in, we're going to have access to establishment registrations, access to the patient registry portal, and access to, for the first time ever, an inspections tracking system. We don't have that right now. We're using a series of spreadsheets and Teams folders to track inspections. So for the first time, we're going to have I do want to clarify that all-in-one does not mean that patients can access establishment information or establishments can access patient information. They will each have their own front doors that they enter in the system, and they cannot access those other areas of the system. It's just on the backend, the admin side, we will be able to log in and see that information. So we are very excited about this project, but I'll get— I'll talk even a little more about it on the next slide. And then rules package is the last thing on this slide. So we have been working all year on a rules package. Right now it is done. Right now it is just in the administrative review process. So it has left our office. It is getting reviewed by those higher authorities. As soon as we get it back, we intend to take that to an interim rules committee meeting. Hopefully we can still make the last one of the year this year. If not, we will bring it in the spring. Just some highlights, definitely not all-inclusive, but some highlights from that. This one is largely cleaning up language. And a lot of this comes from that stakeholder meeting that we held with establishments last fall. They had brought up a lot of good information. Hey, this is what it says in the rule, but that is not practical for our processes, and this is why. So we are cleaning up some of that. We're also cleaning up some language on our end too. There's some things in there that we just don't— it does not follow the practical day-to-day processes. So we're cleaning those up. We are addressing those top 2 citations in rule this year, hoping to make this a little bit easier on establishments. I know that training in the inventory tracking system, that rule can be confusing to interpret, and we have had to send memos out in the past about how to interpret it, but it is an ongoing challenge. So we are greatly going to simplify this rule. We are going to make it so that depending— right now it's depending on what your position is, what your role is, as far as What kind of— how many hours of training? And we're just going to make it so one person on your staff has to have the training and they're responsible for training everybody else. Storage of camera footage. We've heard loud and clear that having to have 90 days of footage is expensive. It's cumbersome. It's just a lot. So we did do a research project on other state medical cannabis programs. How many days are they requiring? And based off of that research, we do agree to reduce that amount to just 60 days required. Hopefully that will make it a little bit easier and less costly to establishments. And then fines, that's a big one. Fines in administrative rule are broken down into 5 categories, 1 being the least serious— excuse me, 1 being the most serious offensive down to 5 being the least serious offensive. So when we get into that category in 4 and 5, that's where we're getting into your operating procedures haven't been updated. Okay. Your employees haven't completed the amount of training they're supposed to complete. They're just those more minor citations. We are going to be making those so that the first offense will be correction plan only, and a subsequent offense is then when a fine would be implemented. So if this package is approved, if approved and if we go forward with it, that timeline would begin when the rules go into effect. So that first year that these rules are in effect, everybody starts over. Nobody's going to get a fine in those lower Categories, those 4 and 5, a corrective action plan must be submitted and approved by the department. And then if on the following year we come back and this is still a problem, then a fine would be assessed. All right. I'm already at an hour, I realize. So I'm going to just book it through this last slide because I've already touched on some of this. So looking ahead, that new all-in-one software system that's coming up, we do expect that to roll out next summer as planned. Right now, like I said, we're just going through the legal contracting process. Right now our legal teams are discussing contract terms, and then as soon as we get that done, we're going to begin our communications. Communications will be going out to all establishments, to all patients, to all providers. We probably will be putting something on our website about that. And as we near the go-live dates in next summer, those communications will only ramp up. We'll be sending out a lot of communication on this. Just waiting for that contract to be in place and all those announcements. will be made. As part of the new software system, we saw an opportunity to do some QI again, and we are streamlining our establishment registration process. This new system does give us some options that currently aren't available to us as far as making the registration process a little less cumbersome and a little more straightforward. And so we are working through that process right now, hoping that by the time we get this contract in place, we can tell them exactly what We want there. Again, robust interactive data reporting will be on the website with that new system. Updates to the website is ongoing, and then cannabis rescheduling. I was so pleased to see that you're addressing cannabis rescheduling in this meeting because personally I don't have much of an update on this this year. We have been in at the state level. We have probably more questions than answers still. We have not had great communication from the federal government on this as far. As what do you expect of us as a state program? Our questions are out there; they just haven't been answered quite yet. And and I'm going to assume that's because they're still working on answers, because we are in contact with other state medical cannabis programs, and we've we've heard that our story is not unique. It's it's it's with all state programs. But I do know that some of our establishments have been hearing from the DEA. That's great. We have just started to hear from the DEA a little bit, but it's always in the form of. Data requests. Hey, I'm on your website looking at your inspection reports. Do you happen to have this report or that report? That type of thing is the communications that we've had. So I'm looking forward to hearing those next speakers as well. So with that, that concludes my presentation, and I do stand by for questions.

Thank you very much. Does the committee have any questions? Okay. Representative Ander.

Thank you, Madam Chair. First of all, I am impressed. Last time when we spoke to you, there were a lot of questions that were left unanswered. You came back this year in this interim committee and you gave us some answers. So thank you for that.

Thank you.

I particularly like the first offense will be corrective action only for the facilities. You updated the SOPs for the inspectors, which was That was a huge, huge thing that we were worried about in the past. And I also appreciate the consistency of training the inspectors because there was massive concern with the facility saying, well, they do it this way and then another inspector might do it another way. Consistency is so important. So thank you for all of the hard work. It shows. Absolutely. Especially with this presentation.

Thank you.

A few questions. So when these citations happen at these facilities, how easy is it to correct those citations?

Madam Chair?

I'm sorry. Yes, go ahead, Ms. Auerbach.

If we're referring to even some of those top citations, so inventory tracking system training, manager, get on your staff and say, hey, complete this training. Complete the training. If you're cited for cameras, your storage footage is lacking. Maybe you don't have that 90 days that's currently required. There isn't much you can do on that other than to proactively prevent it in the future. Maybe implement a protocol that, you know what, every week on this day, I'm going to check my camera footage and I'm going to get ahead of it. Because like I said, a lot of these citations could be avoided if we're just notified ahead of time. We understand that things happen. We understand glitches happen. and you can't always explain it. But as long as we know it, we're not going to cite for it. Things like inventory, again, I just can't stress enough being proactive instead of having to correct it on the back end. But typically they can even correct that pretty easily. They know what they're doing. And I should also pause here and say that most of our establishments do very, very well. They do. They're very diligent. We've had some great inspections this year. I probably hammered too much on the ones that don't. But I do want to acknowledge that, that most do very well. But yeah, a lot of these can be easily correctable right afterwards. Now, where you might run into a problem is if, if you've rearranged your whole facility and maybe didn't reference the rules when you did that. And now we're telling you, you're going to have to either unarrange it or do some construction or something like that. But again, that's, that's that proactive piece, just going back to the rules as you're making these changes.

Thank you. Follow-up question, please. Thank you for that. So basically, it's really just depending upon the citation will determine the ease or the complication.

Yes, that's fair.

Okay. So is there an easy checklist for these facilities? And maybe this is just clarification for the group. I know a lot of times when you have inspectors, having a checklist is really, really important And to ensure that you are not missing any particular major, you know, issues or items. So is there an easy checklist?

Yes, Madam Chair. Yes, there is, and it's available on our website. So it's basically the inspection template, so they know everything that an inspector is going to look for, and they can print that off and proactively do their own checks to ensure that they're ahead of that inspector when they arrive, that they've made those fixes that are identified.

Thank you. One last question.

Yes, go ahead.

Thank you, Madam Chair. So the one thing that I'm curious about is the site inspections and the announced versus the unannounced. And I know you're not doing announced, but I wanted to put that out there. Do you feel the department is going to perhaps give a little bit more leniency to these facilities regarding maybe announce, like maybe within a week or something, just so they can get used to it? Because you brought up a great point and you said sometimes the owners are not even there and then we're having to do all this follow-up work. Well, if they know you're going to be there, I mean, I'm not saying do it all the time, but, you know, maybe— Maybe, you know, release a little bit of that burden. I mean, I don't know if you guys have talked about that or not, but I'm curious your thoughts.

Yes. And oh, sorry, Madam Chair. Okay, another great question, and I'm happy to answer this one. So at this time, we're not planning to do that. But one thing that we have discussed is, you know, and perhaps we could send this out in a memo to establishments, one area that could really help with this. And the reason— I should go back. The reason we don't want to not do drop is because we want to see what you're doing on a day-to-day basis. We want to see how you are maintaining your compliance when we're not there and when you haven't had a chance to clean sweep. If you're doing that regular due diligence and those QA and QI checks and you're making sure your staff is well trained, your place should be pretty well swept up anyway when we come. But one thing that we have talked about that I would love to communicate to establishments is the importance of having an inspections protocol. We ran into this recently again where we had someone contact us after Hey, you didn't contact me and ask, you know, you know, my employee doesn't know this. Well, that's where an inspection protocol would come into play. Does your employee know that, hey, I need to contact, or who they need to contact? There's an inspector here. What do you want me to say? What do you want me to do? Having those protocols in place would also be very beneficial, especially when you don't have an owner or manager present.

That is great. Thank you so much.

Thank you, Madam Chair. Senator Nelson. Thank you, Madam Chair.

I'm going to make kind of a Debbie Downer here a little bit from her question because before I came out here, I was able to talk with 2 of my— I should say not local, but area establishments. And again, I asked them, how have things been the last year? What are your frustrations? And in both cases, their frustration was the inspections and the Yes. In the fact that, you know, they come out, they get fined, they make the improvements, they pass, you know, following inspections, and then all of a sudden, boom, they're found with a violation again, even after investing and making sure everything has been done correctly for the last couple of inspections. And so that's the frustration that they are experiencing, is just that inconsistency. So what I'm So what I'm asking is, number one, is the improvement in your inspection process that you talked about, is that going to help with that? Or 2, is it the fact that the rules have changed and that these establishments need to communicate better with you? Or, you know, because I'd like to be able to go back to them and talk with them and say, hey, you know, here's what you can do.

Sorry to interrupt, Senator Nelson. Could you please turn your mic off because we're not able to— So you're going to have to repeat a little bit of what you're saying.

Oh, I'm sorry. Okay. And so I can go back and talk with them about that. So again, that frustration of just the inconsistencies and is your inspect— you know, improvement inspection process going to help with that?

Madam Chair?

Sorry about the mic. Yes, absolutely. So when we look back, there's a reason we put all the work in that we did. There's a reason that we spent so much time implementing better training, creating these operating procedures, that type of thing, because we fully recognized that there was a problem in the past. Things were getting overlooked. And as we have improved that training and made our inspectors more observant, it really shines a light. Things are getting picked up this year that may not have been picked up last year. But again, it always goes back to that due diligence and being proactive. Certain citations will not happen if you are proactive. So for example, if you get cited for not having 90 days of storage footage on your camera, put in regular checks and let us know if you do one of those checks and you find that you don't have 90 days. That way, if an inspector was planning to come out in a couple days or a week, they will know where you started off. We're not going to cite you for that because by calling us, you're showing us that you're trying, you're doing your due diligence, you're doing those checks and you caught this. So that's great. We're not going to cite for that. But it does always come back though to establishments hold the primary responsibility for reading the rules, interpreting the rules, and ensuring that they are doing those regular checks on all of their systems. I always— I've probably said it a couple times, but I always say get ahead of that inspector. Don't wait until the inspector comes and finds it. Be prepared and have a solid argument if you do get cited for something that you disagree with. You know, maybe I shouldn't have been cited for this because I do those checks and this is what my logs are showing and this is what I know. If you come back and the only argument is, well, the department did this or the department did that, that's not going to be very helpful. We have to know what you have done to ensure your compliance. What did you do to avoid this citation in the first place? But yes, to answer your question, that is absolutely what we're hoping to do with our improved training because yes, we recognize that we had to take accountability as well. Absolutely. And so that's what we did with the improved training and operations.

Senator?

Thank you, Madam Chair. One last question. Oops, sorry. I feel like I'm doing something wrong here. Out of practice. One thing I was going to ask you, do you, when you're improving your inspections, you're doing these improvements, do you go to your businesses, go to the industry and say, hey, how can we improve? Do you go Go to them and say, hey, what can we do better for you? You know, because I know that's the best— that's the best way is when I was administrator to become a better administrator is asking my teachers, what can I do better to be a better administrator and help you? So I just was curious about that.

Madam Chair?

Yes, go ahead, please.

Absolutely. And that's a great point that you make. Some ways that we do this— so our inspection specialist is the supervisor over the inspectors, and I know she spends a great deal of time on the phone with establishments doing Yes. In fact, one thing that she says is, help me help you. How can I help you? We also send out memos if we see a citation that's just coming up repeatedly. We've done this before for scales, for inventory tracking, for that type of thing. We will send out a memo, hey, here's some clarification. Here is our stance. This is what we're looking for. So we do that as well. But no, that's a great point that you bring up, is that communication. Proactive on both Senator Carley.

Senator Carley, thank you, Ms. Brunner. A couple— I had 3 questions. 2 of them you already answered from some of these, so thank you. One was about the federal reclassification. Sounds like you're still waiting on that, so just continue to update us on as you hear about that. 2, following up on Senator Nelson's, other than allowed by law, it sounds like we can assume you're treating small and large establishments equally under law and you'd share with us otherwise. So thank you for that. Third question. We saw last year in the 20— actually this year, 2026 legislative session, we saw there was a lawmaker that tried to end this Medical Marijuana Oversight Committee. And actually the DOH testified in support of ending this committee. So unless In light of this fact that this committee was established with the law that the public voted in majority, and then seeing that the legislature actually affirmed this year by rejecting the committee termination and wanting to continue this oversight committee, the question here is, has the DOH changed their mind on whether this oversight should continue in light of the original requirements of this program that the majority of the public voted on.

Madam Chair?

Yes, go ahead.

Melissa Makes, the Secretary of Health.

Just because Whitney was not in the Capitol last session and I was, we did not take a stand on that bill at all. So I just want to make sure that that's corrected. The Department of Health had no testimony Regarding the Medical Marijuana Oversight Committee repeal, we did not weigh in on it or, or take a position.

Thank you. Senator Carley.

Yeah, I just want to clarify, you had, you had no one from the Department of H come testify at that committee in either the House or Senate committees on that repealing of the medical marijuana oversight?

Madam Chair, Melissa Manx, District Attorney of Health. 100% sure.

So then the follow-up, would you be in support of that terminating this committee or not?

Madam Chair, we would take a neutral position on this. This is really the legislative body who decides that.

Okay. And what position has the public taken in their vote with that? What, what was, what was in the original law?

Madam Chair, they have in this committee This committee was established by the original initiated measure.

Any further questions from the committee?

Madam Chair. Go ahead, Representative. Thank you, Madam Chair. Another quick question here. I'm so excited for this digital card thing to come out. You have no idea. This is something that this committee was fully in favor of. Now, with that That being said, a digital card is an opportunity for a lot of our law enforcement officials to be able to check real-time whether or not someone is a cardholder at the time of either being pulled over or whatever. Okay? And really, this is kind of more of a statement, you know, than a question. But initially, what we were doing is we were funneling people into this program, in my opinion, because when they would get pulled over, they would be able to go to court and then they would be able to prove that they had, you know, a condition, and then they could get approved for the card after the fact, which is the affirmative defense, right? But if the goal is to move people from unregulated position to legal medical cannabis systems, the focus should be on Education, which you guys have done a great job on, voluntary access, and clear pathways to compliance. So I just want to make that clear that we do not want to use enforcement to get people into this particular program. And access to medical cannabis should be based on medical need and eligibility, not on whether someone was pulled over and found in possession at the time of having that particular illegal substance. So I would really hope that the department would consider opening up those conversations to close that loop. Okay, thank you.

Well, I'll have the final comments and a few things. I want to commend you and the department because I was a big advocate for this program to We had to continue and really had to— the second meeting was— everyone knows about the second meeting. We really dove hard into all the issues, and there have been great, I would say, improvements throughout the whole— from the digital. I also like the fact that terminology— we went from marijuana to cannabis, which I know that was a big point of contention at one of the committee meetings, so I'm very happy about that. Maybe that should be looked at.

Thank you.

Giving you all the accolades for your hard work, I know it was a lot. I just want to address the things on the oversight committee. The ability— the biggest one I have, as from a medical point, is do we have enough access of highly qualified medical cannabis services available to the public, to the people? Because that is the big point. That's one. And I just want to make sure that we don't neglect the people Because that's our purpose, right? That was why this was developed, was the people and their needs, and there are needs for the medicinal. So could you tell me, do you feel in your opinion or believe in your opinion maybe that we have enough, or are we doing enough?

Yes, Madam Chair, may I answer that? Yes, what I can speak to here is simply from what I know, and that is that we haven't gotten gotten complaints regarding, I have a card and I have nowhere to go, that type of thing. Perhaps— I don't know if any of the establishments have heard that when patients come in, but we haven't heard that. I would hope that if that was a concern that we would be hearing that quite often. So I'm glad we don't hear that because I agree with you, we are all here for the patients and we want to make sure that they do have quality access or access to quality cannabis. So no, it's not something that we hear often or even at all, I would say that I don't know where to go. Yeah, that's really what I can say to that.

Well, thank you. Just for the record, so you believe we have enough access is what I'm saying, because I'm going by— I'm just meticulous with these 7 points of what the purpose of this committee is. I just want to make sure we're addressing that for the public. So you would say that you haven't had any complaints that they don't have access and they are getting proper access?

Right, absolutely. That's, that's what I can say today is we don't get a lot of complaints. So if there are patients out there who feel that they don't have adequate access, we would love to know about that.

Okay. Then if I could just follow up myself. I'll just keep going here because I'm addressing this item number 2, the effectiveness of the dispensaries. I've heard from Senator Nelson, Representative Andera on the inspections, the fines. Do we have anything or will we integrate anything on the platform for Like mock inspections for these dispensaries or cultivators. Do we have anything like that in motion, or is that something maybe with AI can be introduced? I'm not sure. I'm just wondering how that can work further going forward as it's fast and moving target.

Madam Chair, that is a really great idea. A mock inspection. That is pretty cool. I'm sure we could discuss with our vendor and see what we can do there. One thing I would stress though, again, is that our inspection templates are available online. So establishments could print those off and do their own mock inspections, walk through and check all the things that are on the list and make sure that they're in compliance. But that really is an interesting idea, doing it through the site or through the system. But yeah, they do have access to that and could conduct mock inspections Just 2 more.

Sorry to hold you here, but because I am interested always in the public safety, so thank you for considering that. The digital cards you mentioned, and I know that I made a compromise when I had proposed that digital card bill, do we have a date of when that will roll out or any type of expectations on that? Because I know that was from the police safety and pulling over like Representative Andera had discussed. Do we have any idea?

Madam Chair, absolutely.

We are still planning on next summer that rolling out. The reason I don't want to give a specific calendar date is because we know things can happen when developing a system, and I can't predict that. So I don't want to make a promise I can't keep on a specific date. But we are still on track to roll that out next summer. Absolutely. Okay.

My final question on your actual presentation. You said that most of the citations were simple ones like time of operation. What's wrong with that? That seems to be a simple fix. I know in the medical practice I get these things every 30 days from the facilities that I have to update. Do people get the same? And I don't know this for the cannabis. Do they have the same email coming to them or no?

So regarding the— oh, Madam Chair, may I answer that? Regarding the citation on operating hours, what would result in that is if you change your operating hours and you don't tell the department. That means that you have inaccurate records in your file, but— and which among a lot of things could cause problems. But one of the things that it really causes problems for, and this does happen and it happens more often than you would think, we would have an inspector who may drive hours out of their way in a state vehicle and show up during what should be your open hours only to find the place dark with a closed sign. And now we have an inspector standing outside on the phone trying to get a hold of somebody, trying to get a hold of the owner. Hey, where are you? You're supposed to be open right now. Oh, well, we changed that and we weren't made aware. And then we have to scramble on our end. Okay, what was the route the inspector took to get there? Can we have them stop anywhere in between to make this trip worthwhile? And then the worst part is once they get back home, they may have to turn around and drive hours out of their way again to now do the inspection under the hours that they were supposed to be open. Oh, but to answer your question, Madam Chair, the way you avoid this citation, like I said, is just, just send us an email and say, hey, I updated my operating hours. I'm going from, you know, 10 to 6 to 9 to 5. And that's all you have to do. And we don't even need to know why. You don't have to tell us why. Just tell us you changed them so that you have accurate records and so that should an inspector drive out there, they're going to find your place open when it is expected to be open.

Thank you for that. Again, I want to commend you. I also want to say thank you for putting in the information on the blood thinners and marijuana because that was a big point of contention too. So the patient education was imperative and you did that. So I appreciate that for the safety of the people because many do not know that. And that came up in last session. The last and final The other thing is we received an email from an individual with 4 or 5 questions, and I'm not sure if this is the appropriate time, can we address— they are addressed kind of towards the Department of Health. I don't know if you had time to look at them or not. Do you know? On the website.

I'm not sure what that's referring to.

Would you like time to look at these questions and then we could ask you? We could just take a break and move on from there. I just— there's 5. They're pretty lengthy.

Yes, absolutely. I don't believe I've seen that list of questions.

Okay, perfect. Thank you. At this time, I think we just take a 5-minute break here until we adjourn to the next speaker. Thank you very much. Appreciate it again. Okay, thank you everybody for that short recess. We are returning to the Medicinal Marijuana Oversight Committee, and now we have online with us—

and thank you for Hi, I think we had a PowerPoint and we're not sure how to share it or if it's going to be shared in the room. We sent it on Friday.

You could share your screen if you'd like.

We don't have permissions to share on Within the the system, sorry.

Nicole Ben said that has them up for that for us. Okay, great.

One moment for us to pass on our end. We are working on our end to give you presenting permission, so please be patient.

Thank you.

Okay, you have permission. Do you see it there?

Yes. Is it only me who has the permissions to share?

All 3 of you have it. All 3 of you have it.

Okay, cool. Give us one second to get it up.

Let's just go with Ben's version if he can, if they're sharing in the room already. I'm having screen issues trying to pull up the right screen to share. Sorry about that.

We see it now.

Is this coming up on the screen?

Yes.

Okay, perfect. All right, so give me one more second to see if I can get my notes on the screen at the same time. If not, that is okay. I can— I can do it from my phone. Give me just one more second. Okay. Sorry for the technical difficulties, everybody. So my name is Nicole Essa. I am Legislative Director for NCSL's Law and Public Safety Committee, and NCSL is the National Conference of State Legislatures. So for those of you who are unfamiliar with NCSL, we are the bipartisan membership organization that represents all of the state and territorial legislatures, legislators, and legislative staff across the country, and we also provide research and technical assistance to the states, as well as representing the state's interests, the state legislature's interests before Congress, the judiciary, and the administration. So I'm joined today by my 2 colleagues, Carmen Hanson and Megan Bland, and they'll introduce themselves further during their portions, but I will just get into mine real quick for the sake of time. So for today's meeting, NCSL staff was requested to provide an explanation of what the rescheduling of cannabis by the federal government might mean for the industry and for, and for the states with medical cannabis programs, as well as the program administrators. So a quick primer on the federal scheduling of cannabis. So cannabis has been part of the Controlled Substances Act since its Classification in 1970. Until April, most forms of THC were subject to Schedule 1 control, with some very small exceptions for certain cannabis-derived medications and cultivation for federally approved studies. So Schedule 1 substances by definition are drugs that have no accepted medical use and high abuse potential. So these Substances include LSD, MDMA, which street names known as Molly or ecstasy, and heroin. And then by comparison, Schedule 3 substances are drugs with moderate potential for substance abuse that have been accepted to have medical uses and are considered safe to take under the direction of a physician. So examples of those substances would include anabolic steroids. Steroids, ketamine, and low-dosage codeine products. So a quick rescheduling timeline to understand what's been going on at the federal level. So this has been a bipartisan effort. It was initiated by the Biden administration in 2022, and President Biden directed HHS and the DEA to reexamine cannabis reschedule— cannabis scheduling under the The CSA. So then in August of 2023, HHS recommended rescheduling cannabis to Schedule 3. Sorry, that's still a typo in my slides. Schedule 3, not 2. And then in April 2024, the DOJ issued its opinion affirming HHS's recommendation. Then there's kind of an administrative limbo from 2024 to 2020, the end of 2025. And then in December, President Trump issued an executive order instructing the Attorney General to expedite the rescheduling process. And that leads to April of this year where DOJ issued the order that placed FDA-approved cannabis products and products created under a state medical cannabis regulatory scheme to Schedule 3. So the DOJ's order does some things and doesn't do a lot of other things. So it does move certain cannabis products from Schedule 1 to Schedule 3. So that's FDA-approved drugs containing delta-9 THC specifically from the cannabis sativa plant and cannabis products subject to a state medical The order also imposed regulatory requirements on FDA-approved cannabis products, such as compliance with labeling, security, and package requirements, DEA registration of entities that would be handling approved products, and compliance with prescription requirements for dispensing products. The order also created a new registration pathway for state-licensed medical cannabis entities that are seeking federal DEA registration. So it allows— it will also allow state-licensed medical cannabis businesses to deduct business expenses on federal tax filings under the Internal Revenue Code Section 280E. And I'll get a little bit further into that on the next slide. But here, the order does not authorize or decriminalize adult use or recreational cannabis recreational recreational cannabis sales, it only applies to products in a state medical scheme. So all of the recreational states would still be in a kind of bifurcated system where some half of the the regulatory scheme that deals with the with medical cannabis products would be under Schedule Three, but then adult use products would be under Schedule. Ones though. It also would solve some banking issues for cannabis businesses, allowing cannabis, medical cannabis businesses to be able to access the banking system. It also outlined some of the effects of rescheduling that were, that happened on, outlined some of the effects rescheduling had on interstate travel with cannabis products. So it didn't actually do that. It just— but TSA did provide some guidance indicating that medical cannabis is permitted on carry-on and checked luggage in airports. So important to know. And it does not change the appropriation rider barring DOJ from using taxpayer funds to impede state medical cannabis regulation. So this change will still keep DOJ from using taxpayer funds funds to interfere with state regulatory schemes, both on the medical side and the recreational side. So here are just a few, a few more considerations for cannabis businesses and administrators. So there are definitely tax implications, like I said on the last slide. So interpretation of Section 280A ADE as it relates to cannabis businesses is going to have a really large impact on tax liability and business revenue. And while though there is no official guidance out yet, guidance is expected to be released at some point soon, and it will, according to the IRS, rescheduling will be considered to apply for, to first apply for a business's full taxable year that includes the effective date of the final order. So it would be the full taxable year including April 20— I actually don't remember the exact date, but the April date of 2026. So important to check for purposes of tax day because if it's— I'm not quite sure if it was before the 15th or not. And then just a little bit more about the bifurcation of the industry. So since medical products will be subject to Schedule 3, but recreational cannabis will still be subject to Schedule 1. Some states have allowed businesses to obtain different licenses for the different types of sales for ease of getting federal certification later. So that is something that states have considered, and my colleague Karben will get into a little bit more what states are looking at and considering right now. But that is about it from me on this subject, so I will turn it over to my colleague Megan, who will discuss some of the implications for hemp.

Hi everyone, my name is Megan Bullion. I'm the Associate Legislative Director for NCSL's Natural Resources, Energy, and Environment Committee, and I lead our agriculture work, which is where hemp sits for us. So just as a— if we could go to the next slide, I'm just going to do a bit of a then and now and next steps. So previously hemp, which is obviously a variety of the cannabis plant, was considered marijuana under the Substances Act, and thus considered a Schedule 1 controlled substance up until 2018 with the Agriculture Improvement Act of 2018, which changed the federal definition of hemp, separating it from marijuana. Then last year, Congress passed the Continuing Appropriations and Extensions Act of 2026, which closed the so-called 2018 Farm Bill hemp loophole, and it did this by narrowing the federal definition of hemp, changing the definition definition from Delta-9 of not more than 3%— or sorry, of not more than 0.3% of a total tetrahydrocannabinoids concentration to no more than 0.03%. So very nuanced language there. But it does— so the new legalized hemp definition does explicitly include industrial hemp use not grown for cannabinoid purposes, such as paper and rope, and adds several specific include exclusions to prohibit the legalization of different things like seeds from the cannabis plant that exceed that total 0.3% of THC concentration and other products above the 0.3% of THC concentration. This new definition of hemp is supposed to go into effect on November 12th, 2026. However, the recent Continuing Appropriations and Extensions Act of 2023 which just passed in Congress, would delay that by 1 month. However, we're still waiting on the White House to sign that language into law. So while some proponents of this updated provision have said that changing the legal federal definition of hemp will help protect public health and counter unfair price competition and alleged undermining of the regulated cannabis market in states with regulated medical programs, opponents are concerned that it will definitely Underestimate the growing hemp industry, which is worth an estimated $28 billion in 2025, as well as harm hemp farmers and small businesses. So looking forward, questions remain about the actual impacts to the hemp industry and federal enforcement once the hemp-related provisions go into effect, as well as potential conflicts with state and federal laws. Some enforcement concerns include the lack of resources at the FDA and the USDA to enforce new prohibit— new prohibitions on certain hemp products. Shipping hemp and hemp-derived products are considered federally illegal across state lines. And then, of course, there is an IRS rule prohibiting federal tax deductions for businesses that partake in the trafficking of Schedule I and Schedule II controlled substances, which would apply to hemp as well. Well, so there is no current federal regulation around the age needed to purchase hemp and hemp-derived products or the sale or marketing of these products. However, Congress is looking at addressing hemp products through a number of new pieces of legislation. None of these have passed Congress yet; they've simply been introduced. But there's one called the Beverage Regulatory Parity Act, which proposes regulating hemp beverages under the same. Regulatory system used for alcohol. Other pieces of legislation include the Lawful Hemp Protection Act and the Hemp Planting Predictability Act. These are intended to help farmers kind of and small businesses prepare for the regulation change by delaying it even further. So it's unclear whether any of this proposed legislation would become law given the tight congressional calendar prior to the new Congress. But these are just So those are just a few things related to the hemp legislative changes, and I'm happy to, to discuss, um, or answer any questions.

Thank you so much, Megan. Uh, thank you, Chair Garcia, Vice Chair Carley, and members of the Oversight Committee. It's a pleasure to be with you here today. I'm Carmen Hanson, a senior fellow in NCSL's health program. I'd like to thank my colleagues Nicole and Megan for their federal policy overviews. It really does take a village to track these very complicated issues at the federal and state levels. I cover the stateside of regulated cannabis policy for NCSL and have so for over 20 years. And I'd like to mention that NCSL takes no position on this or any state policy issues and provides this overview in response to requests for information on state actions, which remain in flux. As my colleagues Nicole and stated, NCSL represents state legislatures and therefore is not able to speak on behalf of cannabis-related industries. I'll provide a very brief overview of the federal cannabis and hemp policy changes and implications for states. And here's a snapshot of the current state of regulated cannabis in the states and territories. It's quite a colorful patchwork of laws, as you can see, and the vast majority of states regulate cannabis for medical and/or non-medical use. 41 states, 3 territories, and D.C. allow for medical use of cannabis products, which includes the yellow and green states. 24 states, 3 territories, and D.C. regulate cannabis for non-medical adult use, and those are the green states. And the remaining 7 states in orange allow the use of low THC or high CBD products to— or for medical reasons in limited situations. Idaho and Kansas do not regulate cannabis for any use. I'd like to note that even if the 2 states are the same colors, they will regulate cannabis products very differently. So if you've seen one state's cannabis regulatory structure, you have seen one state's cannabis regulatory structure. This next slide is a map on the regulatory product policies for intoxicating hemp as of last October. You can see that this is a bit more complicated than the regulatory cannabis map. The green on this map represents states with some regulatory of intoxicating hemp cannabinoids, and the red represents where intoxicating hemp cannabinoids are banned, and the blue states are where intoxicating hemp products are considered regulated along with their cannabis products in the state. Yellow states have neither banned or regulate intoxicating hemp, and purple is for Ohio, which is currently under litigation. This next map, same color scheme, but they represent slightly different things, is more specifically around the regulatory policies for hemp-derived THC beverages, which has been a really big issue in the hemp and cannabis product world in the last couple of years. As of October 25th, And, and I'd like to say these last 2 maps are, are provided by, uh, the Cannabis Association Regulators Association named CANRA. They are a wonderful resource for anything that your, uh, your regulating organ— uh, office or you might need. Um, we're happy to get you information through CANRA on what states are doing in, in certain specific scenarios. Uh, the state hemp beverage status ranges from prohibited, which are the red states, the pink states states, state laws allow the FDA prohibition of cannabinoids in food, and the blue states and DC consider intoxicating hemp and cannabis regulated accordingly in their, in their schemes. The yellow states are silent on hemp-derived THC beverages, and the green states regulate and allow those THC beverages. Many of these state policies would be affected by the pending hemp federal hemp policy changes that Megan shared. How exactly they might change would largely depend on the final federal rules and language, and if states take action before the November deadline and decide, you know, whether or not to regulate them within their regulated cannabis programs or under alcohol licensure, which some are starting to do. So as indicated by those colorful maps, how are these federal changes, how are they affecting states? Well, it could, it varies greatly. Currently, the states with medical use programs may align with federal scheduling, but the final details, as I mentioned, will matter for sure. State medical cannabis-related businesses may register with the DEA to become federally legal, and this will apply to manufacturers, distributors, dispensaries, and they would be subject to their state licensing rules as they currently are. This may be confusing for businesses in states that operate under one schedule for both, or one license for both medical and adult use or non-medical sales. And the rescheduling language currently states that the DEA must make every effort to process all applications submitted by by June 29th of 2026, giving them 6 months to federally license any medical-related businesses. The tax implications for these businesses are also a gray area because businesses operate in both types of markets, and the non-medical adult side of their businesses will remain federally illegal. States with regulated adult use programs remain non-compliant with federal scheduling, aka federally illegal, and the implications on interstate commerce and coordination is still Largely unknown, and for now, rescheduling does not apply to cannabis products sold as foods, supplements, or unapproved drugs related to the FDA. So stay tuned on that one because that could also change. Moving on to the federal changes for hemp: if Congress does not act to delay the current measure or have new new legislation like Megan mentioned, states may choose to move currently allowed hemp products into their regulated medical or adult use programs regardless of their intoxication. Classification or product origin, and states may choose to follow federal hemp product definitions, which would make most hemp products federally illegal and potentially negatively impact hemp producers and their states. And state actions will depend on those final federal rules, regulations, and details. There could be additional changes based on those final regulations. So without a crystal ball, it is really hard to say what this all means for any one particular state. So far, some states are taking a wait-and-see approach and others are considering actions before this upcoming November deadline, like they're moving their intoxicating hemp products under their medical or adult use regulated cannabis programs, or they're banning intoxicating hemp products to line up with the pending federal regulations. Texas is an example of that, and there aren't enough measures to decipher any patterns really at this point. There's a few examples of state actions, and that includes Georgia is studying the intoxicating cannabinoids in consumer hemp and consumable hemp products. And where's the other ones at? Maine is enacting legislation to prohibit sales of potentially intoxicating hemp products for people under 21. And Missouri, New Jersey, and Ohio enacted legislation to bring hemp-derived cannabinoid products under their cannabis regulatory framework and/or to license the their hemp products as separately from regular cannabis regulated products. So they're— they will be treated separately, not in their regular framework for their adult use or medical programs. Sorry about that. And I believe that is all we have. But speaking of enactments, I have a lovely database here linked under my contact information, and that does include hemp— state hemp product enactments. So I'm happy to answer any questions now, or if you'd like to email me later, there's my contact information. And thank you again for inviting NCSL to your hearing today, and it's been a pleasure joining you.

Thank you all very much. Are there any questions from the committee or anybody online? Okay, we'll reach out through your website there. Thank you so much. Very informative. We appreciate your time.

Thank you very much.

Madam Chair?

Yes. Are we able to get a copy of those slides? Yes, they are posted online. I've just been informed they're online. Perfect. Thank you. If you have any troubles, just let us know here at the LRC. Okay. So, Mrs. Berner, the Department of Health, could you come on back up and we can address some of these questions that we have before we move on to public comments? So then we can— And if there's anything you cannot, because I know it was sprung on you, we can it at the next meeting. So if that's okay. Just for everyone to know that I have a list of 5 questions that were submitted from an individual asking specific questions, and they do pertain to the Department of Health. So I'll go through one question at a time, and whatever we cannot answer, we will do at the next meeting. Does that sound fair to you, Mrs. Brunner? Okay, perfect. So the first one is, how much revenue did the medical cannabis program collect from patient, caregiver, nonresident, and established fees during the fiscal year of 2025 and 2026? And I know you mentioned it briefly in your slides, but could you elaborate, please?

Madam Chair? Yes. And I can probably make this a bit of a shorter process this morning. And you're correct, we did share the FY26 breakdown by those categories. But since a lot of these questions are involving revenue, program reserves, and some of them are fiscal year on fiscal year, the department would like to take some time here and pull this data to make sure that we provide accurate information to the committee. As we discussed earlier, perhaps we could discuss this at the next meeting after we've had some time to gather that information.

So just to be clear, you'd like to address these 5 questions at the next meeting?

Yes. The department would like some time to consult with our fiscal office and ensure that we get all this data pulled.

Okay. That sounds— I think that's fair. Just for people listening and those present, just for transparency, to let you know what the questions are, if you're okay, I'm just going to read through them so everyone has an idea of what we're asking here and what this person had submitted. Question number 2 was, what were the program's actual What were the total expenditures during each of those years broken into major categories of administration, personnel, software and contracts, inspections, testing, and/or laboratory support, and other significant expenses? Well, it's a lot to say, but that's question number 2. Number 3, what balance of medical cannabis fee revenue or program reserves remained at the end of each fiscal year, and what obligations or future costs are those balances intended to cover? Number 4, what current cost analysis supports the existing patient and establishment fee levels, particularly given the statutory requirement that establishment fees be sufficient to offset the costs of program implementation and administration? And question number 5 was, since the former statutory annual report included program expenses and revenues, and that reporting requirement has now been repealed, what recurring public accounting will allow legislators, patients, establishments, and citizens to compare fee collected with actual program costs and balances? I just want to put that this person who is a public person that actually submitted the questions has no argument for or against the medical cannabis but does want to have the interest be heard and questions answered. So that we can And I think post at the LRC— can we post this question so everyone can see that? But I just thought for transparency, and thank you for coming back up. Moving forward, we'll go to public comments. We can start with that. Anyone have public comments here online? This is your time.

Thank you.

Madam Chair, Representative Ismay. Representative Ismay, District 28B. I just had— I want to commend the Health Department. They've really stepped up their game since last year, and I really appreciate what they did. Although I do have one thing that is in 34-20G. In Section 53 of that law, that section actually kind of just makes this whole thing negligent. It doesn't it doesn't make any difference. This committee, the laws, anything like that. It states that a person is not required to possess a registry identification card to raise the affirmative defense. Set forth in 34-20G-51, which means you don't need a card anyway. If you get pulled over, all you got to do is say it's for my medical use and you go home. So I really appreciate all your guys' hard work, but until we get this section fixed, there's no enforcement. So that's all I had to say.

Thank you, Madam Chair.

I'm sorry, could you turn the mic off there, Representative? Yes, for Representative Ishmael. Yes, sure. Yes, go right ahead with your question. Representative Ishmael, you have a question?

The patients are the people of South Dakota don't need a card to get the illegal hemp products in every store either. So, and the cannabis laws on our books are very outdated. So I think that it'd be a great thing for legislators this year to help the patients of South Dakota and maybe change those laws, cannabis laws. We have veterans going into the hemp stores getting hemp because of the barriers they're receiving on the medical Cannabis side that's safe and regulated, and those guys could get federal felony charges. That's not right, especially when we're rescheduling at the government, and this plant is medicine that is great for our system. So just a comment, maybe we should do that on the legislative side. That would be amazing. And you've brought this up, I think, 4 or 5 years in a row. I think you guys have dealt with this. There needs to be some type of solution here. We have illegal hemp products all over our state that people have options to. And we're adults. The Department of Health said a huge majority of these patients in this program are over 40 years old. We're adults.

Madam Chair, you're correct. But if you have Section 53, 3, it doesn't matter if it's illegal or legal. You don't need a card. So what does it matter? That's what I'm saying. So, and another thing that I'd like to mention is how do you differentiate between medical marijuana and just illegal marijuana? The same way with hemp. THC is THC. It doesn't matter what, where you get it. So it's kind of hard to, you know, tell the difference. So all these different rules and regulations on separate, you know, medical, recreational, and hemp really doesn't matter. It all goes back to THC. So kind of think about that before you get I don't want to get too deep in the weeds, but thank you.

Madam Chair? Yes, follow-up? Go ahead, Ms. Aylward.

You're accurate. I've been scratching my head at this since the day I took this position for the patients of South Dakota because they don't need a card. They can go into the smoke shops and get an unregulated, untested, safe— not safe plant. And everything we heard last year in this committee, all the good, the bad, and the ugly things come from those stores. That's scary to me as a patient representative. We need safe regulated cannabis in this state under the Department of Health, and these people that are going into these illegal markets need to have access to our safe regulated program under the Department of Health, which has safe tested plants. It's the same plant. I know, I scratch my head all the time on it. It's crazy. But we continue to allow illegal activity in our cities all across the state of South Dakota for these illegal intoxicating hemp products. So you as legislators, that'd be a great thing for you guys to do is figure that out for the patients of South Dakota to have access to the safe regulated market.

Madam Chair, please go ahead. Okay. Yeah, I don't know how you do that though. The way the system is currently set up, that's impossible.

Senator Carley.

Thank you, Senator Carley. Thank you, Representative Ismay. Do you have a suggestion of How to fix that? You brought up the flaw with that. Is there a solution to it?

You actually have to regulate. If you're not going to regulate, you've got legalized marijuana. It's not— Section 53 is exactly what it says. You don't need a card. So until you start regulating and actually regulate or regulate the marijuana, then you're not going to have any kind of control over what it is. Honestly, it needs to be prescribed by a doctor and actually treated like a prescription. It's not. So, that's what I would do.

Any further questions from the committee? Okay. Thank you, sir. Is there anybody online or currently here that would like to get up for public comment? Sure. Come on up, sir. Are you registered in the back? Okay, perfect. You're good to go. Come on up. Thank you. Please state your name and you're representing yourself or—

Okay, thank you. My name is Rob Krogstad. I'm representing Bad River Cannabis over in Fort Pierre. Thank you for letting me speak. I think the program is running great and thank you all for helping. It's really, truly come a long ways. I do have one issue though, and that is the fines And they've mainly been taken care of. Like, we fixed the problems the inspectors found before they left the property, and we were still fined $3,000. And I totally understand that we have to do things correctly, but please understand there will be human error. We have like a 134-page book of regulations, and there will be some small human error. And I really appreciate Appreciated the DOH taking the 4 and 5 as in a different way. After our last inspection, there were some metric discrepancies, and what we have since implemented is a backup paper copy of all metric actions, and we have found discrepancies between our paper copies and the metric, mostly With plants disappearing out of metric, and so we'll have a plant here tagged totally legal. We'll go to metric, and it's not there anymore. But we there's no written documentation. So we do the the the written documentation besides metric, and we are finding some discrepancies in metric. Yeah, there will be. Human error in in some of the things we do, and this is already taken care of. I suggest a three strikes rule for the smaller clerical errors, but keep immediate fines for obvious egregious issues. And we really had to shuffle our work schedule around to pay our small three thousand dollar fine. And one was we had to move our old dirt balls, and we had some. Somebody hired to do that, but we had to stop them because we had to use that money for our fine. And those fines are— those issues are taken care of before the inspectors left our building. Those— it was 2 small clerical errors and it was $3,000, which I think is a little harsh for clerical errors. But I appreciate everything the committee does. Thank you, sir.

Appreciate it.

Madam Chair, I have a question.

We need you to shut your mic there. Yes, Representative Andera.

Thank you, Madam Chair. What is your name again, sir?

My name is Robert Krogstad with Bad River Cannabis.

Thank you, Mr. Krogstad. Thank you so much for coming up and speaking. This is exactly what I was bringing up last session, is that we need the facilities, the industry to come in and let us know what their concerns are. I am in 100% agreement with you that if it's a clerical error and it's fixed before leaving, there should not be a fine. It should be a citation, should be a warning. Don't do it again. That type of thing. This is where legislative. This is where legislation has to come into play. We are the ones that are to define what those fees are and under what conditions. So thank you so much for coming forward today. I'm in complete agreement with you. Thank you. All right. Thank you.

And I love the idea of mock inspections. I love that idea. And I bet every business in South Dakota would would absolutely love that. We're all trying to do our best. No one's trying to screw anything up, but there's a— there's just human error and small things that can go wrong. Thank you all. I appreciate all your time. Thank you.

Thank you, sir. Last call for public comments before we move on.

Madam Chairman, members of the committee, my name is Kitrick Jeffries. I'm the chairman of the Cannabis Industry Association of South Dakota. I just want to go out and say thank you to the Department of Health for all their hard work into putting this program up in front of us today. I also want to say that a lot of our establishments within our association are currently going through the DEA inspection process to become licensed under the DEA. As the members from the NCLA has stated, this is going to be months and months until we have real solid concrete licensing as well as a rules package that would be put forward by the DEA. The association looks forward to see what's implemented within that rules package, and we're looking forward to stay compliant with everything at the state level and the federal level. So thank you and have a good day.

I'm sorry, would you mind registering? Yes, ma'am. Thank you. If there's no further public comments, then we'll move on to committee discussion and directives. Madam Chair. Representative Andera.

I just cannot describe how impressed I am by everyone Thank you. I just want to thank everyone, the committee, everybody coming forward, the work of the Department of Health. This was absolutely amazing. And for everybody to be working together in order to bring a little bit more clarity, seamless processes, help, assistance, is truly a great work of art. And I'm so excited to have been part of this, and also that in this case government worked this one time. But thank you, everybody did a great job. Appreciate everyone.

Madam Chair, this is Christy Palmer. Yes, go right ahead, please. Oh, and I, I see that the Zoom just came on. I was just asking to see if there was any updates with our law enforcement. I know there was discussion last time we met last year, and I would just like to hear any— with all these changes, if they've seen any effects.

Yeah, I, uh, Madam Chair?

Yes, go ahead. Please just state your name for—

Sure. John Tum, Sioux Falls Police Chief. Recall last time we had these discussions, shortly about a month after there was a statewide press release from the Attorney Attorney General's Office where multiple smoke shop owners were indicted. And again, it equated to a lot of misdemeanor charges. And I think the Attorney General's Office took the lead on that and law enforcement watched closely as it moved forward. However, the presentation today regarding federal regulation changes came up and I found that very informative and I'm forwarding that on to our team here. And I know that'll spark a lot of discussion, but I think it continues to be what we've talked about. And I'll be very clear in my assessment that our dispensaries in town produce us no workload. They're well run, well regulated. They continue to be, again, with Department of Health oversight, just another functioning business within our community. But I think there's real opportunity in deciphering through these federal changes, but also at the state legislative level. I've been very clear from the start about prohibition of all these items from gas stations and smoke shops. But again, I get when we're making the sausage on this, it's hard to get done. But my hope is with this legislative session, we can make some headway there as well. Because I think if we look at the other— I'm just going to say vices within our state— alcohol felt was a very regimented program of what can be sold What can't be sold through distributors? It's tested. It's known. I can't just go anywhere and get it and sell it. Tobacco remains the same way where it can only be through licensed distributors, through tested approved sources, and distributed. However, this THC slash delta eight delta ten, I think the the presenter earlier did a good job just on the complexity of it and deciphering it continues to be an unregulated. Market, which cries for some sort of regulation or stipulation, is what exactly. And I know we can get into it. It's not the purpose of this committee. I think my statement basically is that I hope to have some real progress with legislature this year on narrowing this and creating more regulation or prohibition for some of these items. But I know that's challenging to do.

Thank you. Any questions for— amazing, a quiet group. I do have a question for you there, Mr.— I think it's Soon. I would like to know, is this more involvement of the AG at this level for what you're suggesting? Because I know we had discussed licensure and putting some more regulations on these products like we did alcohol and tobacco. Yes. But is that where legislators have to really work with the AG?

Yeah, I think it's the AG. We kind of went to Attorney General Jackley and said to unify some of our state-level approaches, and that's chiefs and sheriffs. So we were all pulling in the same direction. That was coordination with the state lab at one point too, with testing returns and results on how we can do that. And I think even just recently, if you look at, I believe, the Attorney General's Office, along with other attorneys general throughout the country are calling on some of these federal restrictions or federal guidelines on some of these products to clarify the scope for what states should be doing. And so I think we'll look to continue to collaborate with them and say, what's some opportunity at a state level? And again, go from there. But I, again, I appreciate the efforts of everybody in this area, and I know it becomes a common complaint. And really something that I feel that we have a real opportunity to address. And if looking at other states, I believe somebody cited Texas's maneuvers and some of the other states. I think there's some legislative things we can study from what other states have done and come up with what's right for South Dakota. But also, again, as clearly defined by this committee, protects the voter-approved and voted-for medical marijuana industry, which seeks to serve, again, legislatively Thank you.

It's a big public safety issue, and I think that always has to be in the forefront. So thank you very much for your update. Yes, go right ahead.

This is Andrew Schock. Putting this all together, I'm a medical provider. I prescribe medications, and I see, well, first from the regulations from the inspections. I work in assisted living facilities, memory care, nursing homes, and I feel like the inspections— both of these industries are going to be regulated kind of together in much the same way. The drop-in visits, you know, not scheduling it in advance, but making sure that they're on their toes all the time so that they are ready for an inspection At any time, it's like drug testing for a professional athlete, right? They just got to you know you stay clear, you stay clean. It's good. Representative Ismay said something about probably regulating it and prescribing. I feel like that's where this is heading. I just wanted to kind of put that out there. And you know, as we start to trend that direction, making sure it's a safety issue. issue, right? You know, if you go through medical school, you take the Hippocratic Oath, first do no harm. We want to make sure we're rolling this out well. The people have spoken, they want it. We should provide it in a very safe, available manner. But let's make sure that we have the right regulations, things that are going to help provide benefit without hurting our patients. That's kind of my 2 cents. Thank you.

Anybody else on the committee for comments?

Senator Carley? Yeah, I wouldn't mind if the sheriff from West River, if he's still available online, he could give us an update on, on how he's seeing this deployed across the west side of the state.

Yeah, good morning. Madam Chair. So, yeah, you know, I'll echo a lot of the same information that Chief Toone did as well. We are seeing an increase in the use of some of these, what we would call illegal products. Again, we're still having to deal with them. You know, some basic concerns are what exactly is being sold over the, over the counter. There's no testing requirements for these people and selling that type of stuff. So it's definitely an ongoing problem and a concern for us that we're seeing. As far as the medical marijuana itself, again, I would echo what everyone else has already said. I appreciate what the Department of Health has done and come forward with their information. We're still issues with trying to identify those that actually have a permit or a medical marijuana card and to be able to use that. So I'm really looking forward to the digital card development and what that's going to look like and how we're going to be able to at least use that to identify those that are actually using the medical marijuana the right way, and also to be able to determine what other things that we can add to that to help benefit that program. So really nothing else to add, but I appreciate what everybody's doing here.

Thank you, Sheriff. There's no other questions from the committee. I'm just going to do in closing, you know, I remember distinctly the 3 meetings we've had, and that was a big lift, and I've said that numerous times. And the industry also knows that as well. So I feel like there were— when I go back to my notes, there were 15 items that we addressed initially and went on with those 2 other meetings, and we've addressed today about 9. We've closed 9 of those gaps, which I think is very successful. I would like to thank also legislators that really fought hard for the people, because it was the people's voice We were representing despite a lot of pushback, to say the least. So yes, the Department of Health, but also the people giving us the opportunity to really uphold our end of the deal. Also for the legislators that really put endless time and hours into it. So I want to I want to say thank you to all of that. I think there's still work to be done, but like I said, we stick to the seven points and we have addressed quite a few. I think next meeting we would address. something more with the inspectors and medical updates, and if there's anything else anyone would like to add to it. But I do think we've accomplished a lot, so thank you, everybody. And I have nothing further to add, so I'd like to— at this point, unless there's anybody online, we can have a motion to adjourn.

Madam Chair, motion to adjourn.

Second.

Okay, medical— medicinal medical marijuana is now adjourned. Thank you all.