South Dakota Searchlight
The trouble signs started about a year in.
B.J. Olson had opened his medical cannabis dispensary, called “Unity Rd.,” in the summer of 2022, less than a month after medical pot sales became legal in South Dakota.
That first month or two, things were fine. Olson’s revenue lined up nicely with his projections.
Then came the competition. Dispensaries were popping up all over the Sioux Falls metro area, which Olson serviced from his location in Hartford.
“Every time a new dispensary opened, it would be a little less and a little less,” Olson told South Dakota Searchlight in a recent interview. “Then it was a race to the bottom on pricing.”
Unity Rd. is one of at least eight dispensary businesses that had a license from the state Department of Health last winter but no longer does. An archived version of the state’s medical pot website from February listed 78 dispensaries on its licensing page. The December figure, listed on the current version of that same page, lists 70.
Meanwhile, the number of patient cardholders in the state has also been declining, from nearly 14,000 last winter to fewer than 12,000 currently.
The negative cardholder trend and a too-fast expansion of dispensaries were part of the problem for Olson’s Hartford shop. He said regulations were another part.
The state’s medical cannabis rules prohibit advertising. Social media posts deemed too close to advertising drew warnings from the state, Olson said. The price of an annual dispensary license from the state went up. He had to pay specialty accountants to do his taxes and five times the price of the tax preparation bill he was used to paying in his other business ventures.
Cannabis businesses cannot deduct most business expenses like rent or employee wages, but can deduct cost-of-business expenses. Threading that needle takes a tax preparer versed in the frequently shifting regulations on cannabis business rules.
“It was all the little things that added up,” Olson said.
Beyond messages about errant social media posts, there was the warning about a steel door between Olson’s medical cannabis shop and the separate smoke shop business he owned on the other side of his building.
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Medical dispensaries are closing after SD’s rejection of recreational marijuana
