SD Governor and Legislators Disagree on Hemp Legalization Costs

On Tuesday, South Dakota Governor, Kristi Noem, and the state legislators differed on the cost estimates for legalizing industrial hemp as they discussed a final position to end their one year dispute over hemp.

Legalizing industrial hemp would significantly change the way the state enforces its marijuana laws and more staff would be required, and, drug testing facilities would have to be increased as well as law enforcement across the three state agencies, the governor’s office argued. But the legislators argued that the industrial hemp program should be treated like any other agricultural crop that would require oversight by one person and part-time testing by law enforcement.

The difference in opinion between the lawmakers and the governor could threaten her concession to go against her better judgment and sign the legislation legalizing industrial hemp in 2020, only if it meets Noem’s requirements, including the funding for the program.

Rep. Oren Lesmeister said that the governor’s office made a false presumption that the number of drug cases would skyrocket after the legalization of the industrial hemp program, and based on these assumptions, they inflated the budget. Lesmeister is a Democrat from Parade and a supporter of hemp. He further said that the governor is using the high budget estimates to veto the legislation. Lesmeister also noted that the governor’s goal is to kill hemp.

Noem told the legislative committee on Tuesday morning that the industrial hemp program would require a total of $3.5 million to cover the following expenses, 15 full-time employees, new testing equipment, four police dogs, an expanded drug warehouse for storing the drugs as well as a bigger lab for the state and Highway patrol.

Legislators’ budget estimates for the industrial hemp program were more frugal as they amounted to $250,000, with about $80,000 of the cost being covered by license and fees paid by hemp farmers and processors.

The lowers hemp budget suggested by the lawmakers did not meet the governor’s demands for the program, Noem’s staffers indicated.

Last year Noem vetoed a bill seeking to legalize hemp and said that even in the coming year, she would oppose the measure as it could act as a gateway to marijuana legalization. However, before the legislative session started, Noem changed her stand and said that she would allow industrial hemp legalization only if it is regulated by four guardrails that will provide for enforcement, regulation, transportation, and funding.

This year’s legislation was written with the help of the governor’s office, and it meets th first three requirements. According to the Secretary of Health, Kim Malsam-Rysdon, the legalization of hemp would require the state to expand its drug testing lab space as well as storage and equipment to determine if the THC levels in hemp rise above the stipulated threshold of 0.3%.

The lawmakers’ budget estimate is based on information gathered from the neighboring states that rely on tests that determine if hemp THC levels exceed 1%, such as Montana and Nebraska.

This year’s hemp legislation was introduced by the House Majority Leader Lee Qualm, and he said that he does not think that the governor will veto the bill. He also said that on Wednesday, hemp supporters would be meeting with the governor’s office to discuss and work on the numbers.

Qualm also noted that depending on the weather conditions and the time it takes for th USDA to approve their plan, farmers might not participate in this year’s planting season.

Legislative leaders in the Senate said that they hoped the funding issue should have been handled before the elections in November.

Analysts believe industry actors like MCTC Holdings Inc. (OTC: MCTC) may be wondering why the governor is making it so different for people in South Dakota to engage in the production of industrial hemp, a crop with immense benefits and applications.

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