Guest Post by Emmett Reistroffer
Who wants a dispensary license? Step right up and buy your raffle tickets! No limit on how many tickets you can buy. That’s right folks. Just $75,000 Dollars, now who’s ready to test their odds?
All satire aside, this is a very serious issue and shows why policy details matter. Not only policy details – but how city attorney’s and bureaucrats interpret policies. The Sioux Falls cannabis licensing ordinance (#105-21) clearly states, under Section 121.003 (Licensing of Medical Cannabis Dispensary and Testing Facility), sub-section (a)(E)(2) “Only one application per location is allowed.“
At no time during council discussion did the City Attorney point out that this would be interpreted differently. According to the City Attorney, it’s only one application per location, per applicant. “Applicant” is not tied to the individual, but it’s tied to the ‘entity’ which applies. So, Mr. Monopoly can create 100 separate LLCs, and submit 100 separate applications, all listing the same location/address, and thus drastically increase the odds that Mr. Monopoly gets a license over his other less-funded competitors. It’s also not just a matter of who has the most funding at their disposal, but who genuinely follows the process according to the spirit of law versus those who are willing to exploit a “loophole”. Unfortunately, the way loopholes work, it doesn’t matter where you stand on it ethically – the outcome is based entirely on how it stands legally. If it’s legal to form the 100 LLCs and submit 100 applications – then at the end of the day that’s all that matter and the applicant willing to do that absolutely will have the greatest odds at getting a license.
This can be prevented and fixed. The path of least resistance would be for the administration to put its foot down and change its position. The administration should stick to, “only one application per location” per the plain meaning of the language of the ordinance. They could accept an application listing an address, and then deny all other subsequent applications that list the same address (first come first serve), OR the city could just simply deny all applications submitted which list the same address. Either way, if the city is very clear in its position and in the application instructions – then this issue can be easily preventable.
If this requires a policy change, then that’s more difficult. That would require Council to call an emergency meeting and get a majority of council to agree to an amendment. I’m not very optimistic, however I am grateful for Councilors Brekke, Neitzert and Erickson who have all responded to my concern with an open mind, and have indicated they’re all working in various ways to find a solution. However, like I said, an administrative fix would be the quickest and easiest path to a solution, and a legislative fix is up against a tight timeline and would require a majority of council to act in agreement.
Ultimately, if the city doesn’t fix the loophole – then I have no doubt this will end up in the courts and the city attorney’s interpretation will come into question. This will cost the city time and money and delay the opening of medical cannabis dispensaries in Sioux Falls.
Regardless, my group is working to draft an ordinance that is legally sound and based on fairness and gives the voters what they want. Our ordinance will not include a licensing cap or lottery, and it will generally allow a free market – balanced with common sense zoning requirements and setbacks (away from schools, parks, daycares etc.). We don’t want dispensaries to be open on every corner, and we also don’t want the city conducting lotteries or creating processes that allow big money unfair advantage over others.
Here are some links to demonstrate how licensing lotteries are riddled with problems: