Complete guide to permits and licenses required to start a cannabis in Aberdeen, SD. Fees, renewal cycles, and agency contacts.
Pursuant to SDCL § 10-49B, a 15% excise tax is imposed on the sale of medical cannabis from dispensary to consumer. This tax is in addition to state and local sales taxes. Dispensaries must register with the Department of Revenue and file monthly excise tax returns. The tax was established under Initiated Measure 26 (2021) and became effective July 1, 2022.
Many South Dakota cities and counties require a local business license or privilege tax for all businesses, including cannabis. For example, Sioux Falls and Rapid City impose annual fees. Cannabis businesses must comply with both state and local licensing requirements. Local approval is mandatory under South Dakota’s medical cannabis program (SDCL § 34-49B-3).
South Dakota does not impose a corporate income tax or franchise tax on LLCs or other entities. However, all businesses must file an annual franchise tax return (Form 520) even if no tax is due. This is an informational return required of all registered businesses. The form confirms the business’s status and is used for compliance tracking.
Required for all businesses; cannabis establishments must also comply with state cannabis licensing. Fees as per 2024 schedule.
Applies to all businesses in unincorporated areas; cannabis-specific zoning restrictions apply per county ordinance 11.15.
Cannabis retail/establishment uses banned in city limits (Sioux Falls Rev. Ord. 11-1-1 et seq., updated 2023). No home occupation allowed.
Strict setbacks (1,000 ft from schools/residential); public hearing required.
Must comply with building code (2021 IBC); cannabis facilities require enhanced security plans.
Requires NFPA 1 compliance for flammable liquids/vapors.
Required for out-of-state LLCs to legally operate in SD. Annual report required separately.
Applies to ALL South Dakota LLCs (domestic and foreign). Online filing preferred.
Applies to ALL businesses using DBAs. Renewable every 5 years for $10.
Cannabis businesses in SD LIMITED TO MEDICAL MARIJUANA only (retail, cultivation, manufacturing, testing). Recreational banned despite voter amendments (SD Supreme Court ruled unconstitutional in 2021, 2024). Multiple license types required per facility.
Specific to dispensaries. Must comply with seed-to-sale tracking (Metrc system). Local zoning approval prerequisite.
Canopy limits apply (500 sq ft initial). Video surveillance and security required.
Strict product testing and labeling requirements. GMP standards apply.
Must be ISO 17025 accredited. Mandatory testing for all batches.
Applies to ALL retail businesses. File monthly/quarterly returns.
SD law requires local approval BEFORE state application. Many municipalities have moratoriums/bans.
Cannabis businesses in South Dakota must collect and remit sales tax on retail sales of legal cannabis products. As of July 1, 2023, recreational cannabis is not yet operational in South Dakota due to delays in rulemaking; however, medical cannabis sales began in 2022 under strict regulation. Sales tax applies to all taxable sales at the state rate of 4.5%. Local jurisdictions may impose additional sales taxes.
All employers in South Dakota must register for withholding tax, even if they are a single-member LLC with employees. This includes cannabis businesses. Employers must withhold state income tax from employee wages and remit it to the Department of Revenue.
Employers in South Dakota, including cannabis businesses, must register with the Department of Labor and Regulation and pay state unemployment insurance (UI) tax. The tax rate varies by employer experience rating, with a current taxable wage base of $14,000 per employee (as of 2023).
Businesses that sell cannabis cannot deduct ordinary business expenses, only cost of goods sold.
Cannabis cultivation facilities may have additional hazards (chemical exposure, heavy equipment).
Retail dispensaries are public accommodations and must be accessible.
Cannabis advertising restricted (Rev. Ord. 11-5-18); no product imagery allowed.
Required due to state-mandated security for cannabis businesses.
Issued after zoning, building, fire inspections passed.
Not typically required for pure retail; applies if edibles produced on-site.
600 ft buffer from schools/daycares; public hearing required.
Cultivation may use hazardous chemicals; must manage according to RCRA.
Cannabis businesses cannot make unsubstantiated health claims.
Even small dispensaries must comply with minimum wage, overtime, recordkeeping.
Must retain I‑9 for each employee.
Most small dispensaries may be exempt due to size.
Even though cannabis is illegal federally, FinCEN requires SARs for any marijuana‑related activity.
There is no federal permit to cultivate, process, or sell cannabis. Federal law supersedes state law.
License term is one year. Renewal requires updated ownership information and proof of compliance with all reporting/inspection requirements.
Must include current owners, managers, and any changes to the LLC’s operating agreement.
Courses must be approved by the Department of Health and cover state regulations, product safety, and patient confidentiality.
Inspection covers sanitation, product storage, security, and record‑keeping compliance.
Includes verification of fire suppression systems, emergency exits, and hazardous‑material storage.
Ensures the facility meets ADA, electrical, and structural codes.
Must report total sales, taxable amount, and excise tax due. Electronic filing through the SD Revenue portal is required.
Sales tax is filed on the same portal as the excise tax; both may be combined on a single return.
Report must include product type, quantity sold, patient ID (masked), and total revenue.
Summarizes all monthly reports, inspection outcomes, staff training records, and any corrective actions taken.
Records include purchase orders, inventory logs, sales receipts, patient verification, and tax filings.
Also required: state‑approved health warning signs and the “Medical Cannabis – Authorized Facility” poster.
South Dakota law requires *all* employers to provide workers’ compensation insurance for their employees, regardless of the industry. Because cannabis remains illegal in SD, no separate cannabis‑specific workers’ comp rules exist.
South Dakota does not mandate general liability insurance for any business type, including cannabis‑related enterprises (which are illegal). The coverage is strongly recommended to protect against third‑party bodily injury or property damage claims.
No South Dakota law requires professional liability insurance for cannabis operators (the activity is illegal). The coverage is advisable for any business providing advisory or consulting services.
South Dakota does not issue any cannabis cultivation, processing, or retail licenses; therefore, no cannabis‑specific surety bond requirements exist.
Applies to any business vehicle, including those used by a cannabis‑related operation (which would be illegal).
South Dakota does not require product liability insurance for any industry, including cannabis. Because cannabis products cannot be legally sold in the state, there is no cannabis‑specific product liability insurance requirement.
Required for all federal tax filings, payroll, and state tax registration.
Not applicable to cannabis operations because South Dakota does not permit cannabis sales.
All LLCs, even single‑member, must have an EIN if they have employees or elect to be taxed as a corporation.
LLCs are pass‑through entities unless they elect corporate taxation. Must also file Schedule K‑1 for members.
An EIN, or Employer Identification Number, is a unique tax ID assigned by the IRS to identify your business. It’s required for most business structures, including LLCs, and is essential for opening a bank account and filing taxes.
IRC Section 280E disallows standard business deductions for businesses trafficking in controlled substances, including cannabis, at the federal level. This significantly impacts your tax liability and requires careful recordkeeping.
The FTC requires cannabis businesses to adhere to truth-in-advertising laws and consumer protection regulations. This means your marketing materials must be accurate and not misleading to consumers.
The IRS does not charge a fee to obtain an EIN; it is a free service. You can apply for an EIN online through the IRS website.
Federal income taxes for cannabis businesses are typically filed annually using Form 1120 or 1065, depending on your business structure. Some businesses may also be required to make estimated tax payments quarterly.
Permit Finder asks follow-up questions to give you an exact list of permits.
Find Your Permits