§ 121.003 LICENSING OF MEDICAL CANNABIS DISPENSARY AND TESTING FACILITY.
   (A)   Applications.
      (1)   To operate as a medical cannabis dispensary or testing facility in the city, the prospective licensee must obtain a license from the city, a current state registration certificate issued by the South Dakota Department of Health, and a certificate of occupancy from the city. A city license to operate a medical cannabis dispensary or testing facility can only be issued by the city and is transferable only under the following criteria:
         (a)   The transferee shall, with the exception of the application and license fees set forth in this chapter, comply with the application, license and zoning requirements that have been previously met by the current license holder as set forth in this chapter.
         (b)   The license specialist shall review the transferee's application, verify that the provisions of this chapter have been met and, in the event the transfer is approved, report such transfer to the city council.
      (2)   License application procedures.
         (a)   A prospective medical cannabis dispensary or testing facility seeking to operate in the city must first obtain a license to operate from the city prior to seeking registration as a medical cannabis dispensary from the South Dakota Department of Health under the provisions of SDCL 34-20G-55.
         (b)   All license requests must be submitted to the city on forms prescribed by the city and contain all the information required by the city to determine the eligibility of the applicant, along with the application fee and initial annual fee.
         (c)   The city shall make a determination to reject or approve a license application within 60 days of application or end of lottery deadline, whichever is later. Said 60 days is tolled pending any applicant's appeal or application for conditional use permit.
         (d)   The licensee shall not begin operation or open its doors to the public until it receives from the city a certificate of occupancy. The city shall not issue a certificate of occupancy until the city has fully inspected the licensed premises and determined that the establishment satisfies all requirements of licensure as set forth in this chapter, all applicable zoning requirements, and all other applicable federal, state, and local laws and building codes, and that the licensed establishment is ready for occupancy with such equipment and security measures in place as may be necessary to comply with the applicable provisions of this Code of Ordinances and state law. The city shall not issue a certificate of occupancy until the licensee provides written evidence that the licensee has paid the fees set forth herein, and all registration application fees due to the state in connection with the Department's review of the application.
         (e)   A license application to operate as a medical cannabis dispensary or testing facility requires:
            1.   The legal name of the prospective medical cannabis dispensary or testing facility;
            2.   The location (legal description) of the prospective medical cannabis dispensary or testing facility and certification from property owner authorizing tenant to engage in business as a medical cannabis establishment. Only one application per location is allowed;
            3.   A certification that the location of the prospective medical cannabis dispensary or testing facility is not within 1,000 feet of a public or private school meets any other location requirements pursuant to SDCL ch. 34-20G and the administrative rules promulgated thereunder, in compliance with all city zoning and land use requirements and, if applicable, applicant will apply for any city conditional use permitting within ten days of notification of license eligibility and that the conditional use process will be completed within 60 days of the filing of the application for the conditional use permit unless extended by the city planning commission or city council;
            4.   The name, date of birth, and a photocopy of a valid form of identification issued in South Dakota, or its equivalent issued in another U.S. jurisdiction, for each principal officer and board member of the prospective medical cannabis dispensary or testing facility;
            5.   A certification that at least one officer or board member of the prospective medical cannabis dispensary or testing facility is a resident of the State of South Dakota;
            6.   A certification that none of the employees of the prospective medical cannabis dispensary or testing facility has been convicted of a disqualifying felony offense;
            7.   A certification that the employees of the prospective medical cannabis dispensary or testing facility are over the age of 21 years;
            8.   A confirmation of a completed current background check for each officer, board member, agent, volunteer, and employee associated with or working in the prospective medical cannabis dispensary or testing facility, which has been completed within 30 days prior to submission of the application;
            9.   A copy of the operating documents for the prospective medical cannabis dispensary or testing facility that detail oversight of the establishment and procedures to ensure accurate recordkeeping;
            10.   A description of appropriate security measures designed to deter and prevent theft of cannabis and unauthorized entry into any area containing cannabis;
            11.   The application fee and applicable license fee;
            12.   Any other information required by the city.
         (f)   The city shall reject an application for a medical cannabis dispensary or testing facility if:
            1.   The application is incomplete or insufficient regarding the information required pursuant to this chapter;
            2.   The city determines the applicant has failed to comply with SDCL ch. 34-20G or has a history of violating state or city rules governing medical cannabis establishments or county ordinances;
            3.   The applicant or any officer, board member, agent, volunteer, or employee fails to pass a background check;
            4.   Any applicable conditional use permit is not obtained as certified in the application.
         (g)   Any medical cannabis dispensary licensee under this chapter shall be the owner or actual lessee of the premises where the business is conducted, and the sole owner of the business operated under the license.
         (h)   Any application for the reissuance of a medical cannabis dispensary or testing facility license shall be processed by the city in the same manner as required by this chapter for initial applications.
      (3)   Special procedure for initial issuance of dispensary license by the city. In addition to the requirements of division (A)(2), these special procedures will apply any time new licenses to operate a medical cannabis dispensary become available from the city:
         (a)   When licenses to operate a medical cannabis dispensary become available from the city, the city shall publish an invitation for applications on the city's website stating the deadline to apply and the location(s) applications may be submitted. No applications will be accepted prior to publication of the invitation nor after the deadline established in the published invitation.
         (b)   Applications must otherwise adhere to the requirements of division (A)(2) of this section but must also be sealed. No supplementing of an application may be done after the deadline has passed.
         (c)   Once the deadline has passed, all applications shall be placed into order by the licensing specialist or designee utilizing a lottery system to establish the order in which applications will be considered. Prior to conducting the lottery, the licensing specialist or designee shall publish notice of the lottery on the city's website a minimum of 24 hours in advance of the lottery being conducted and such lottery shall be open to the public.
         (d)   After placed in order, the licensing specialist or designee shall open all sealed applications received during the invitation submittal window and review each application for completeness and requirements of division (A)(2) and this division. Any application that is incomplete shall be rejected and ineligible for further consideration.
         (e)   After all eligible applications have been approved or denied, the time period for these special procedures will have deemed to have passed. All applications not drawn and approved for a new dispensary license are denied and a new application will be required when a new dispensary license next becomes available.
   (B)   Fees, expiration, and duration.
      (1)   Application fee. At the time an applicant files an initial application according to this section, applicant shall pay a fee for each application to the city in an amount of $25,000 for medical cannabis dispensaries and $1,500 for testing facilities. In the event the applicant is denied a registration certificate from the Department or the city, the application fee shall be refunded.
      (2)   Initial license fee. At the time an applicant files an application according to this section, the licensee shall tender to the city an initial license fee in the amount of $50,000 for medical cannabis dispensaries and $5,000 for testing facilities. The initial license fee shall cover the remainder of the calendar year in which it is issued and the full subsequent calendar year. The initial license fee is in addition to the application fee required pursuant to division (B)(1). In the event the applicant is denied a registration certificate from the Department or the city, the license fee shall be refunded.
      (3)   Renewal license fee. The license period shall be for a period of one year from the effective date on the renewal and in the amount of $25,000 for medical cannabis dispensaries and $1,500 for testing facilities. In the event the applicant is denied a registration certificate from the Department or the city, the renewal license fee shall be refunded.
   (C)   Violations as grounds for revocation or suspension of license. The city licensing specialist may recommend the revocation or suspension of any license issued under this chapter upon a violation(s) by the licensee, by the licensee's agents or employees, or by the manager or contractual operators of the medical cannabis dispensary or testing facility and their agents or employees operating under a city license, of any of the following:
      (1)   Any provision of SDCL ch. 34-20G or other state law relevant to medical cannabis dispensary or testing facility control;
      (2)   Any rule promulgated by the Department;
      (3)   Any rule promulgated by any applicable county ordinance;
      (4)   False material statements made by a licensee to the city or State of South Dakota during the application process;
      (5)   Failure to pay taxes owed to the State of South Dakota or any political subdivision of the State of South Dakota, including the city;
      (6)   Failure to prevent diversion or theft of medical cannabis;
      (7)   Failure to allow entry to the licensed premises to any law enforcement officers in the course and scope of their employment;
      (8)   Failure to maintain operational alarm systems and video surveillance systems;
      (9)   Failure to maintain or keep any record required by these rules or South Dakota law;
      (10)   Failure to comply with advertising and marketing restrictions;
      (11)   Failure to properly package or secure medical cannabis on the licensed premises or during transport;
      (12)   Failure to properly dispose of medical cannabis;
      (13)   Operating a testing facility or dispensary when a license has been suspended or revoked;
      (14)   Failure to comply with any rule or regulation promulgated by the Department or the city regarding medical cannabis;
      (15)   Failure to comply with any law of the State of South Dakota or the city concerning medical cannabis;
      (16)   Failure to comply with any local regulation regarding medical cannabis;
      (17)   Any violation of any municipal ordinance or regulation relevant to medical cannabis dispensary or testing facility control adopted by the city;
      (18)   Any violation of any county ordinance relevant to medical cannabis dispensary or testing facility control. For any licensee with multiple licenses, upon suspension or revocation of any license pursuant to this chapter, the licensee shall cease operation under all medical cannabis dispensary or testing facility licenses held by the licensee for the same period as the suspension or revocation.
   (D)   Suspension and revocation process.
      (1)   The license holder will receive a notice of the recommendation to suspend or notice of the recommendation to revoke informing the license holder of the violation and the licensing specialist's intent to suspend or revoke the license. The notice will be hand delivered to the license holder or an employee or agent of the license holder or sent by certified mail, return receipt requested to the physical address of the cannabis establishment.
      (2)   The license specialist shall report his or her findings to the city council. The city council shall conduct a public hearing to make a final determination on the recommendation for suspension or revocation.
      (3)   A suspension will be for 30 days.
      (4)   A revocation will be for one year.
      (5)   The license holder who has had the license revoked may not be issued any cannabis establishment license for one year from the date the revocation became effective and must reapply for a license at the end of that year.
   (E)   License to remain active. Any license issued under this chapter must remain in continuous, active use. A licensee shall have 60 days after issuance of the certificate of occupancy to begin active use of the license. Any license not actively used within those 60 days shall be deemed inactive. Once an initial annual license is in active use or any annual renewal license is issued, any license not actively used for a period of more than 60 cumulative days per calendar year may be deemed inactive by the city. Active use means times where the licensee is open and available to conduct business authorized by the license. However, days where the license is suspended by the city shall not be used for purposes of calculating inactivity. The city may not reissue or renew any medical cannabis establishment license issued pursuant to this chapter to the same licensee if the license has not been actively used by the licensee.
(Ord. 105-21, passed 9-7-2021)