South Dakota unlikely to allow CBD oil even though it's in farm bill

Sharon Neva is the owner of GrassRoots smoke shop in Rapid City. Ryan Hermens / Rapid City Journal

RAPID CITY, S.D. - There's a jar in the GrassRoots smoke shop on Rapid City's north side collecting tips for a purpose.

"We're going to rent a bus and a driver and go all the way to Pierre," Sharon Neva, the shop's owner, said Thursday.

The farm bill awaiting President Trump's signature aims to legalizes industrial hemp and its offshoot products across the country — but not necessarily in South Dakota. With that in mind, South Dakota merchants who previously sold cannabidiol (CBD) oils and lotions, especially the hemp-extracted kind with cures reported for aches and pains to anxiety and seizures, want to be heard at the legislative session in January.

"They (legislators) can look us in the eye and tell us they don't care," said Neva, who believes the Legislature needs to overturn parts of a 2017 law that criminalized CBD by making it a schedule 4 illegal substance, the same as narcotics.

Leonard Vandermate, the owner of the Hemporium Boutique, was among those who sold CBD oils in Rapid City until law enforcement from the county and state told him to remove the products from the shelves of his store, which opened in 2017. Since then, he's felt the sting of the state's law.

"It's been deadly slow," he said last week. "We've been hanging on by a thread just trying to fight this thing."

How CBD — oils with very low to no tetrahydrocannabinol (THC) levels derived from the seeds of marijuana and its nonpsychoactive sibling hemp — have gone from "miracle drug" legalized for sale in several states, while still technically illegal at the federal level — to a narcotic in South Dakota is a long and winding road of state and federal lawmaking.

The 2014 Farm Bill's Section 7606 allowed universities to perform research on industrial hemp, which created an opening for manufacturers. Then, a small section in the 2016 federal Omnibus Bill went a step further and allowed hemp to cross state lines.

Vandermate started an online company in 2015, and sold CBD oil — which users can apply in lotion form to aches or take orally to reduce anxiousness — at a tent at the 2016 Sturgis Motorcycle Rally.

"The police van was sitting right there," he said. "The cops would come on in, check us out, and they were completely fine with it."

But then came Senate Bill 95 in the 2017 South Dakota Legislature. Proponents saw SB 95 a way to catch up with the rest of the country in legalizing some cannabis-derived medication. Critics called it a monopoly takeover.

"South Dakota has a tradition of being a petri dish for these big companies that come in and want to test legislation on us," said Pat Cromwell, of Rapid City, who promoted a change to SB 95 when she ran unsuccessfully for the state senate last fall. "What happened here was 'Big Pharma' came in and wrote themselves into the backdoor to be the only drug company able to lay claim to CBD products."

Sioux Falls Sen. Blake Curd, a Republican, authored SB 95, which sought to legalize a hemp-based version of CBD for medicinal purposes. Curd testified before a Senate committee about the lack of hallucinatory effects of CBD oils, especially those derived from hemp.

"You're more likely to drown in hemp than get high from it," Curd said.

The legislation cut CBD out of the criminal definition of marijuana. However, an early amendment sought and received by GW Pharmaceuticals, a British company that also goes by the name Greenwich Biosciences and had two lobbyists in Pierre, stipulated that only CBD with FDA approval should be decriminalized.

At the time, GW's product, Epidiolex, a medication that treats seizures in children, was proceeding through FDA trials. The amendment passed 4-3. The final text version of SB 95 as it passed into the House categorized CBD that did not receive FDA approval a schedule 4 of illegal substance. Suddenly, several distributors across the state, including Vandermate and Neva, were set to face a Class 4 felony, or 10 years in prison or a fine of $20,000 for selling CBD.

While other states paved and widened roads for hemp-derived products and supplements, South Dakota put up a one-lane tollway. When Gov. Dennis Daugaard signed the bill into law on March 27, he essentially legalized one product — Epidiolex — that wouldn't be sold in South Dakota pharmacies and shops for another year and made criminal the possession and sale of many hemp-derived, low-THC-containing products already on store shelves.

In April 2017, Neva removed CBD products — what she calls 65 percent of her business — from the inventory of her Rapid City store.

"It really hit us," she said. "Hopefully, CBD will be legal again, and we can start carrying it again. I had one gal in here crying, saying, 'My father has stage 4 cancer and before he started taking CBD he was just in bed, he was ready to die. Now, he's up again enjoying life.'"

A spokeswoman for Gov.-Elect Kristi Noem's incoming administration said the new governor would likely not be interested in touching the CBD stipulation as currently written in the law.

"Governor-elect Noem maintains that substances derived from cannabis should go through the proper FDA approval process, as other medications are required to do," Noem's Press Secretary Kristin Wileman said via email.