Jim Zortman talks about initiative measure #5, a ballot measure that would eliminate North Sioux City’s cap on medical marijuana dispensary licenses. He and his business partners gathered enough signatures to have measure placed on in the November ballot after they lost a state lottery held to determine who would get a license for North Sioux City.
NORTH SIOUX CITY — Jim Zortman isn’t seeking a seat for a local office, but the North Sioux City native and businessman is campaigning, nonetheless, in the days leading up to the Nov. 8 election.
Zortman is a member of a group that garnered enough signatures to get the city of North Sioux City to set a special election so that residents can decide whether to cap on the number of licenses for medical marijuana establishments in the city.
“We’re doing mailers. We’re doing advertising in the local paper. We also have a few campaign signs out in the community,” Zortman said.
Zortman, of North Sioux City Specialty Retail, LLC, and his two partners want to open a medical cannabis dispensary at 107 South Derby Lane. He said they paid the $1,500 application fee, worked with a licensed engineer to develop a site plan and met all the other requirements, but ultimately lost out in a lottery conducted by the state of South Dakota.
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Currently, the city ordinance limits the number of establishments to four dispensary, two growing, two processing and two testing facilities. A “yes” vote on Initiative Measure No. 5 will remove all limits on the number of medical cannabis facilities. A “no” vote will leave the current restrictions in place.
“Just leave it open to the public,” Zortman said. “It’s not any different than a license for a hamburger stand or a taco place in town. Give everybody a chance. Some are going to make it and some aren’t. That’s just the reality.”
The South Dakota website “medcannabis.sd.gov” lists the four North Sioux City certified medical cannabis dispensaries as being Kind Care of South Dakota; Nirvana SD, LLC; Tru Essence, LLC; and True North Dispensary.
Those sites were chosen at a random drawing by the South Dakota Medical Cannabis Program on April 20, along with cultivation winners True Essence, LLC and Dakota Health & Wellness and processing winners Zaza 605 and Twisted Greens. No testing establishments were given licenses in North Sioux City, according to the website.
None of the winners have opened their establishments in the city, according to North Sioux City Administrator Eric Christensen.
“We’re aware of three facilities that are being remodeled for the purposes of their license. Of the eight who received approval to get a license, I’m only aware of three that are actively doing something,” he said. “I think some of these people were probably throwing in applications all over the state. I have no idea what the intentions are going to be for some of them. Some of them we have just not heard a word from.”
Fresh start
In November 2020, South Dakota voters passed Initiated Measure 26, which approved medical marijuana in the state. With the approval, local jurisdictions were given the ability to limit how many medical cannabis facilities can come into town. They were also allowed to enact ordinances governing the time, place and manner in which the establishments conduct business.
“We wanted four dispensaries, two growers and two manufacturers. If we didn’t make that choice, then, anyone could grow marijuana. We felt for a city our size, that was probably plenty,” City Councilman Gary Bogenrief said. “That’s how we made our decision. That’s what we went with. We thought we were doing the right thing. But, because of this public voting, it’s up for the taxpayers to decide.”
On Aug. 15, the North Sioux City Council approved the request from Christensen to set the special election. Christensen told The Journal the council “did not have a choice” but to put the local proposition on the ballot, since the group Zortman is a part of gathered enough valid signatures required by state law.
Christensen said 150 of the 190 signatures submitted were valid registered voters of North Sioux City. The petitioners needed only 5%, or 111, of the total number of registered voters in the city, he said.
According to a list of dispensary winners and losers, which Christensen provided, two of the dispensary winners, Nirvana SD, LLC and Tru Essence, LLC, have the same point of contact. That individual is also listed as the contact for four other proposed dispensaries that were not picked in the lottery.
“There were some things that just really weren’t quite, I thought, kosher, the way things went down,” Zortman said. “It would be nice if we could all be on the same playing field and start out fresh.”
Dave Watson, of Kindcare South Dakota, has been in the medical cannabis business since 2009 in Colorado. He received dispensary and manufacturing licenses in North Sioux City, but not a growing license.
“They offered up four dispensary licenses and they only offered two manufacturing and two grow licenses. I’d be for them guys bringing that all in line,” he said. “Without the grow license, it doesn’t make any of it work. I would be in favor of them going back to the drawing board and full integration. No one is going to survive in that town if they don’t let us grow cannabis.”
Economic boon?
Ben Nesselhuf, a former South Dakota state legislator, hopes to have True North Dispensary open in the 1300 block of River Drive around Christmastime.
Several years ago, the Union County native saw how homemade cookies containing cannabis helped alleviate the pain his late father was in while undergoing cancer treatment. Nesselhuf, however, does not support North Sioux City having an unlimited number of medical marijuana dispensaries.
“I believe the current number of licenses is more than enough to service the population of adults in North Sioux City. If, after the market is up and running, we need more dispensaries, the city can make that decision,” he said. “If this passes, the city can never put a limit on the number of licenses. This will ensure that only the largest operators can do business and drive out all local owners.”
If the measure wins approval, applicants who didn’t previously receive a license to operate a medical marijuana facility will be automatically eligible for one. As for what the city could gain from such a move, there could be an uptick in economic activity and an increase in license fees.
According to the South Dakota Department of Revenue’s website, sales or use tax does apply to the purchase of medical cannabis. That rate is 4.5% and a municipal tax can be added to it when “possession is taken, or the product is consumed or utilized within city limits.”
Since it’s illegal to take marijuana across state lines, Christensen said the medical cannabis facilities’ legal customers will be coming from North Sioux City and Dakota Dunes.
“There will obviously be people that will come from out of the state. They’ll take that risk,” he said. “I think that’s what people are hoping on — that that market is big enough to be a goldmine for everybody. I don’t know that there’s any evidence that that’s the case or not.”
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