South Dakota Reports Fewer Cannabis Businesses—but Not Why Their Licenses Disappeared

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South Dakota Medical Cannabis Establishments Drop 11% as National License Counts Continue Multi-Year Decline

Why South Dakota’s Medical Cannabis Businesses Are Disappearing: The Pressures Behind a 24.5% License Decline

South Dakota’s medical cannabis industry has lost 34 certified establishments since reaching its reported peak in state fiscal year 2023.

The Department of Health reported 139 registered establishments in SFY 2023. That total fell to 124 in SFY 2024, 118 in FY 2025, and 105 on the Department’s public establishment list dated July 14, 2026.¹

The decline amounts to approximately 24.5% in three years.

The state tells the public how many establishments remain. It does not provide a complete public accounting of what happened to the establishments that disappeared.

The Department’s current website provides an active-establishment list, annual reports, monthly patient figures, inspection reports, program announcements, statutes, rules, application materials, and complaint forms.² Those materials provide important information about the businesses still participating in the program.

They do not provide a comprehensive establishment-by-establishment record identifying which certificates were:

• voluntarily surrendered;
• allowed to expire;
• not renewed;
• denied renewal;
• suspended and later closed;
• revoked;
• transferred to a new owner;
• consolidated into another operation;
• associated with a physical location that closed;
• or removed from the active list for another reason.

Those categories are not interchangeable.

A voluntary business closure is not the same as a license revocation. A certificate surrendered after a corporate merger is not the same as an independent operator going bankrupt. A temporary suspension is not the same as permanent removal. A company abandoning one facility while continuing to operate several others is not equivalent to an owner leaving the industry entirely.

Yet all of those events can produce the same visible result: one fewer establishment on the Department’s active list.

That means South Dakota is publicly reporting the contraction without publicly explaining its composition.

The Public Can See the Result but Not the Process

The Department’s establishment list allows patients and members of the public to identify currently registered dispensaries, cultivation facilities, manufacturers, and testing facilities. As of July 14, 2026, that list reflected:

• 60 dispensaries;
• 30 cultivation facilities;
• 14 manufacturing facilities; and
• one testing facility.³

The list is useful for verifying that an establishment currently holds a certificate. It is not a historical database.

A reader cannot use the current list alone to determine:

• which establishments appeared on the FY 2025 list but not the July 2026 list;
• the exact date each establishment became inactive;
• whether the establishment closed before or after its certificate expired;
• whether the certificate was surrendered voluntarily;
• whether the Department declined to renew it;
• whether enforcement played a role;
• whether the business was sold;
• whether ownership changed while the establishment continued operating;
• or whether the business still exists under another licensed entity.

The Department’s annual reports provide aggregate totals, but aggregate totals erase the individual events that produced them.

The difference is fundamental.

A total tells the public that the market declined. An establishment-level history tells the public why it declined.

Thirty-Four Missing Establishments Can Represent Very Different Stories

The reduction from 139 establishments to 105 could reflect several very different market conditions.

Scenario One: Ordinary Market Correction

The missing establishments may primarily represent businesses that voluntarily declined to renew after discovering that revenue could not support rent, payroll, compliance expenses, inventory, security, testing, and the state’s annual licensing fee.

Under that scenario, the decline would largely reflect normal market maturation. Too many businesses entered during the early licensing period, and weaker operators later exited.

Scenario Two: Regulatory Attrition

Some establishments may have left because inspections, sanctions, corrective-action requirements, legal costs, or compliance expenses made continued operation impractical.

Under that scenario, the contraction would reflect not only competition but regulatory attrition.

Scenario Three: Consolidation Without Equivalent Business Failure

Some certificates may have disappeared because companies merged, transferred assets, closed redundant locations, or reorganized related entities.

Under that scenario, the number of certificates may have declined without an equivalent number of ownership groups leaving the industry.

Scenario Four: Growing Market Concentration

Independent operators may have closed while larger or vertically integrated businesses retained multiple cultivation, manufacturing, and retail certificates.

Under that scenario, South Dakota could have fewer establishments and fewer independent owners, increasing the market share and influence of the remaining companies.

Scenario Five: Geographic Loss of Patient Access

Closures may have been concentrated in smaller communities or rural areas rather than in markets with several competing dispensaries.

Under that scenario, the statewide decline could create serious access consequences even if the remaining businesses are economically stronger.

Each scenario demands a different policy response.

The Department’s current aggregate reporting does not allow the public to determine which scenario—or which combination of scenarios—best describes South Dakota.

An Active List Is Not a Closure Database

Government agencies often maintain current-license directories because patients, consumers, law enforcement officers, and other businesses need to verify whether an entity is presently authorized to operate.

But a current-license directory answers only a narrow question:

Who is licensed today?

It does not answer:

Who left the program, when did they leave, and why?

That second group of questions becomes increasingly important when nearly one-quarter of a regulated industry disappears within three years.

A historical establishment dataset would not require the Department to speculate about private business motives. It could report objective administrative facts already likely reflected in agency records:

• certificate number;
• establishment name;
• license category;
• physical location;
• owner or controlling entity;
• original approval date;
• renewal dates;
• effective inactive date;
• final certificate status;
• and the administrative mechanism by which the certificate ended.

For example, the final-status field could distinguish among:

• expired without renewal;
• voluntarily surrendered;
• revoked;
• renewal denied;
• transferred;
• replaced;
• administratively closed;
• or other status.

That information would provide a factual foundation without requiring the state to decide whether a business failed because of competition, management, regulation, or another economic cause.

Inspection Transparency Is Better Than License-Exit Transparency

The Department deserves credit for publishing establishment inspection materials.

Its website organizes inspection reports by dispensary, manufacturing facility, cultivation facility, and testing facility. The Department describes those reports as providing facility survey results, compliance history, and oversight information.⁴

The SFY 2024 annual report stated that the state completed 74 on-site inspections during that fiscal year:

• 41 dispensary inspections;
• 21 cultivation inspections;
• 10 manufacturing inspections; and
• two testing-facility inspections.⁵

The report also identified frequently cited rule violations, including inventory-system training, inventory recordkeeping, camera placement and storage, certificates of analysis, transportation manifests, daily inventory records, and maximum batch sizes.⁶

That is meaningful transparency. It allows the public to examine how the Department oversees active establishments and what compliance problems inspectors commonly identify.

But the inspection system and the establishment list are not integrated into a clear historical record.

When a business disappears from the active list, a reader may have to search scattered inspection files, annual reports, meeting materials, court records, news reports, and archived webpages to reconstruct what occurred.

Even then, the public may not know whether the business:

• corrected the violations;
• paid a fine;
• served a suspension;
• surrendered its certificate;
• lost its renewal;
• changed ownership;
• closed for unrelated financial reasons;
• or continued under another registration.

A transparent inspection system should connect logically to a transparent license-status system.

If the Department publishes the beginning of an enforcement history, it should also make the final administrative disposition readily identifiable.

The Department Reports Patient Growth More Frequently Than Business Attrition

The Department now publishes monthly medical cannabis program data.

Its 2026 reports showed:

• 18,036 patients in February;
• 18,306 patients in March;
• 18,867 patients in April;
• 19,247 patients in May; and
• 19,383 patients in June.⁷

Those reports allow the public to follow patient participation with reasonable frequency.

No comparable monthly public report explains establishment entries and exits.

That imbalance matters because patient numbers and establishment numbers must be analyzed together.

A rising patient count alongside a falling establishment count may indicate:

• improving sales for surviving operators;
• consolidation of market share;
• declining competition;
• increased patient travel;
• improved business efficiency;
• or a combination of those effects.

Without establishment-level exit data, policymakers cannot determine whether increasing patient enrollment is supporting a healthier market or merely concentrating revenue among fewer companies.

The state currently gives the public enough information to observe divergence, but not enough information to diagnose it.

The Annual Report Does Not Fully Explain the Market

South Dakota law requires the Department to report annually to the Legislature regarding the medical cannabis program. The SFY 2024 report included patient information, practitioner information, establishment totals, inspection data, fee information, public-safety and public-health material, and agency recommendations.⁸

That report recorded 124 establishments:

• 68 dispensaries;
• 35 cultivation facilities;
• 19 manufacturers; and
• two testing facilities.⁹

It also reported that 74 inspections were conducted during the year.

Those figures reveal the scale of the program at a particular point in time. But they do not explain the movement from one year’s total to the next.

An annual report could state:

The number of establishments declined from 139 to 124.

That statement would still leave unanswered:

• How many new establishments were approved?
• How many existing establishments renewed?
• How many failed to renew?
• How many surrendered voluntarily?
• How many were suspended?
• How many were revoked?
• How many transferred ownership?
• How many changed names?
• How many moved locations?
• How many businesses controlled multiple registrations?
• How many separate ownership groups remained?

A net total conceals gross movement.

For example, a net decline of 15 establishments could result from:

• 15 departures and no new approvals;
• 25 departures and 10 new approvals;
• 40 departures and 25 new approvals;
• or a mixture of transfers, replacements, and true closures.

Those are materially different market conditions, even though each produces the same net decline.

A meaningful annual report should therefore disclose both the year-end total and the underlying licensing activity that produced it.

License Counts Do Not Reveal Ownership Concentration

South Dakota licenses establishments rather than publishing a simple count of independent cannabis companies.

One ownership group may control:

• multiple dispensaries;
• one or more cultivation facilities;
• manufacturing operations;
• and affiliated companies using different legal names.

The July 2026 total of 105 establishments therefore does not mean South Dakota has 105 independent cannabis businesses.

The number of independent ownership groups may be much lower.

This distinction is essential when analyzing consolidation.

Suppose South Dakota loses ten establishments, but all ten were independently owned while a small number of vertically integrated companies retain dozens of certificates. The decline would represent more than a reduction in locations. It would represent a transfer of market power.

Alternatively, one large company might surrender several unused or redundant registrations while the number of independent competitors remains mostly unchanged.

The current public totals cannot distinguish between those outcomes.

The Department should publish an ownership-concentration report that identifies, subject to lawful privacy limitations:

• the legal owner of each establishment;
• parent companies;
• affiliated entities;
• controlling persons;
• the number and type of certificates held by each ownership group;
• and ownership transfers completed during the reporting period.

This information is especially important because vertically integrated companies may possess structural advantages over independent retailers, cultivators, or manufacturers.

Without ownership data, the public cannot determine whether South Dakota’s market is merely shrinking or also becoming substantially more concentrated.

The Geographic Effect of Closures Remains Unclear

Statewide totals also conceal geography.

The loss of one dispensary in a city with six competing stores is not equivalent to the loss of the only dispensary serving a rural region.

South Dakota’s population is dispersed across a large geographic area. Patients outside Sioux Falls and Rapid City may already travel significant distances for medical care and other essential services.

A medical cannabis establishment can be commercially marginal while remaining important to local patient access.

The Department should therefore identify:

• each community that lost an establishment;
• the establishment category;
• the closure or inactive date;
• the distance to the next nearest active dispensary;
• the number of registered patients in the surrounding region, reported in a privacy-protective aggregate;
• and whether the affected community retained another establishment of the same type.

A county-level or regional access map could show whether closures are:

• concentrated in urban markets;
• dispersed evenly;
• or disproportionately eliminating rural access.

Without that information, state officials cannot credibly determine whether consolidation is improving efficiency or creating medical-access deserts.

The Public Cannot Measure the Effect of the $9,000 Fee

South Dakota raised the annual medical cannabis establishment fee from $5,310 to $9,000, an increase of nearly 70%.¹⁰

The increase occurred while the number of establishments was already declining.

A fixed annual fee has a greater proportional effect on low-revenue businesses than on high-volume operators. It may be manageable for a large dispensary but decisive for a rural store, a small cultivator, or an independent manufacturer.

The state should therefore track and publish whether certificate surrender and nonrenewal increased after the fee change.

Relevant information would include:

• the number of renewals before and after the increase;
• the number of nonrenewals;
• the number of voluntary surrenders;
• the number of payment-related expirations;
• establishment exits by category;
• exits by community;
• and exits by annual sales range, reported in aggregated form.

Without that information, lawmakers cannot evaluate whether the fee successfully funded regulation without destabilizing the market.

The issue is not whether the Department may charge fees. The issue is whether policymakers have enough information to understand the consequences of the amount selected.

Litigation and Enforcement Costs Also Require Disclosure

The medical cannabis program has been involved in significant enforcement disputes, including litigation arising from Department inspections and sanctions.

Those disputes consume:

• agency staff time;
• administrative-hearing resources;
• Attorney General or outside-counsel time;
• document-production costs;
• expert expenses;
• and other public resources.

If the program is primarily financed through patient and establishment fees, extraordinary enforcement or litigation costs may ultimately be incorporated into the amount charged to the broader regulated community.

That possibility makes transparency important.

The Department should disclose annually:

• legal expenses associated with medical cannabis enforcement;
• outside-counsel payments;
• administrative-hearing costs;
• settlements or judgments;
• staff hours devoted to major disputes;
• and whether anticipated litigation expenses were considered in calculating establishment fees.

This does not mean enforcement should stop whenever a regulated company challenges the Department. Agencies must be able to enforce health and safety rules.

It means compliant operators and patients deserve to know whether their fees are financing unusually costly disputes involving other establishments.

Sales Data Are Necessary to Understand Whether the Market Is Sustainable

License totals alone cannot reveal whether South Dakota’s cannabis market is economically healthy.

The state could have fewer establishments but rising total sales, meaning surviving businesses are becoming more sustainable.

It could have fewer establishments and declining total sales, suggesting broader demand or affordability problems.

It could have stable total sales but growing market concentration, meaning a smaller number of companies are capturing an increasing share of revenue.

South Dakota should publish aggregated sales data that protect individual businesses while allowing meaningful public analysis.

Useful measures would include:

• total monthly retail sales;
• total monthly wholesale transfers;
• transaction counts;
• average transaction value;
• sales by product category;
• average retail prices;
• average wholesale prices;
• sales by region;
• sales per active patient;
• and sales per active dispensary.

Because the state requires seed-to-sale inventory tracking, it likely possesses extensive data concerning regulated product movement.¹¹

The public does not need access to confidential transaction-level business records. Aggregated statistics could reveal market trends without exposing proprietary information.

Many public-health and economic programs publish aggregated data while suppressing small cells or personally identifying information. South Dakota could do the same.

Privacy Is Not a Complete Answer

Some medical cannabis information must remain confidential.

Patient identities, medical certifications, protected health information, personal addresses, and certain law-enforcement or investigative materials may be protected from disclosure.

But establishment-status transparency generally does not require disclosure of patient information.

The public questions concern licensed commercial entities:

• Was a certificate renewed?
• Was it surrendered?
• Was it revoked?
• Did ownership change?
• Did the physical location close?
• What was the effective date?
• What category of establishment was involved?

South Dakota’s public-records law generally authorizes interested persons to inspect and obtain copies of nonexempt government records.¹² Records specifically protected by statute may remain confidential, and other exemptions may apply.¹³

The existence of legitimate exemptions does not justify withholding every nonconfidential administrative fact surrounding establishment exits.

The Department should separate genuinely protected information from basic licensing history.

Transparency Would Benefit Regulators, Not Just Critics

Publishing a comprehensive license-status history would not merely serve journalists or cannabis businesses.

It would help the Department demonstrate whether the program is operating as intended.

Clear data could show:

• that most departures were voluntary business decisions;
• that relatively few licenses were revoked;
• that enforcement was consistent;
• that rural access remained adequate;
• that ownership concentration was limited;
• or that fees did not produce a measurable increase in nonrenewal.

Those findings could strengthen confidence in the program.

Conversely, if the data reveal serious access losses, excessive concentration, or widespread fee-related departures, lawmakers would have evidence supporting policy adjustments.

Transparency allows the state to replace speculation with documentation.

Without it, every side can create its own explanation:

• businesses can blame regulation;
• regulators can blame market forces;
• advocates can blame political resistance;
• competitors can blame poor management;
• and policymakers can claim the market is simply correcting itself.

The records can show which explanations are supported.

What the Department Should Publish Every Month

South Dakota should create a basic monthly licensing report containing:

1. Total active establishments by category.
2. New certificates approved.
3. Certificates renewed.
4. Voluntary surrenders.
5. Certificates expired without renewal.
6. Renewal applications denied.
7. Suspensions imposed.
8. Revocations entered.
9. Ownership transfers approved.
10. Establishments changing names or locations.
11. Physical locations opened.
12. Physical locations closed.
13. Net monthly change by establishment category.
14. Net monthly change by county or municipality.
15. The number of independent ownership groups.

This report could be published as a spreadsheet or downloadable data file.

A machine-readable format would allow researchers, journalists, legislators, patients, and industry participants to track trends without manually comparing changing PDF lists.

What the Annual Report Should Add

The annual report should include a more detailed market section providing:

• beginning-of-year and end-of-year establishment totals;
• gross approvals and gross departures;
• departure reasons;
• ownership concentration;
• statewide and regional sales;
• wholesale and retail price trends;
• patient-to-dispensary ratios;
• geographic access measures;
• enforcement outcomes;
• fee revenue;
• program expenses;
• litigation expenses;
• and a Department assessment of whether the market remains adequately competitive and geographically accessible.

The annual report should also explain significant year-over-year changes instead of merely presenting totals.

If 13 establishments disappear in one year, the report should say what administrative events produced that reduction.

Records the Public Should Request Now

Until the Department voluntarily expands its reporting, the following records should be requested for July 1, 2023, through July 31, 2026:

1. A complete list of all medical cannabis establishment certificates active at any time during the period.
2. The certificate number, establishment type, business name, legal owner, and physical location for each.
3. The original issuance date and each renewal date.
4. The date each inactive certificate ended.
5. The final administrative status of each inactive certificate.
6. All voluntary-surrender notices.
7. All notices of nonrenewal.
8. All final renewal-denial decisions.
9. All final suspension and revocation orders.
10. All approved ownership-transfer records.
11. All approved establishment-name and location changes.
12. A list of establishments that ceased operating while a certificate remained technically active.
13. Monthly active-establishment totals by type.
14. Monthly applications, approvals, renewals, denials, withdrawals, surrenders, suspensions, and revocations.
15. Establishment-fee revenue by month and category.
16. Program expenses by major category.
17. Medical cannabis enforcement and litigation expenses.
18. Contracts and payments for outside legal services.
19. Aggregated monthly sales and transaction totals.
20. Aggregated wholesale transfer values and product quantities.
21. Records showing how the $9,000 annual fee was calculated.
22. Analyses of the fee increase’s effect on establishment renewal.
23. Records assessing rural patient access.
24. Records identifying communities that lost their only dispensary.
25. Records showing the number of independent ownership groups controlling active certificates.

Any confidential patient information could be redacted. Proprietary financial information could be aggregated where legally appropriate.

The remaining administrative history should be disclosed unless a specific statutory exemption applies.

The Department’s Transparency Mission Supports Greater Disclosure

The Department describes the Medical Cannabis Program’s mission as promoting public health and safety through regulatory compliance and a “transparent and accountable framework” for the industry.¹⁴

That mission supports broader disclosure.

Transparency is not satisfied merely by publishing the names of businesses currently authorized to operate.

Accountability requires a visible record of:

• who entered;
• who left;
• what administrative action occurred;
• where access was lost;
• how ownership changed;
• and how public policy affected the market.

A regulatory system should not become historically unreadable every time an active-license list is updated.

Conclusion

South Dakota’s medical cannabis establishment count has declined from 139 in SFY 2023 to 105 in July 2026.

The public knows 34 establishments disappeared from the reported total.

It does not have a complete public record explaining how.

That missing information prevents meaningful evaluation of:

• business failures;
• voluntary closures;
• enforcement outcomes;
• ownership consolidation;
• fee-related attrition;
• rural access;
• market concentration;
• and the overall sustainability of the program.

The Department already publishes active licenses, inspection reports, annual summaries, and patient statistics. The next step is straightforward: publish a historical establishment-status database and explain the gross licensing activity behind each annual total.

South Dakota should not force patients, lawmakers, businesses, and journalists to reconstruct the history of a regulated industry through archived webpages and scattered documents.

The state knows which certificates expired, which were surrendered, which were transferred, and which were removed through enforcement.

It should tell the public.

Footnotes

1. South Dakota Department of Health, Medical Cannabis Program Annual Reports, SFY 2023–FY 2025; South Dakota Department of Health, Medical Cannabis Establishments List (updated July 14, 2026); Jason Karimi, South Dakota Medical Cannabis Establishments Drop 11% as National License Counts Continue Multi-Year Decline, WeedPress (July 31, 2026).
2. South Dakota Department of Health, South Dakota Medical Cannabis Program (2026).
3. South Dakota Department of Health, Medical Cannabis Establishments List (updated July 14, 2026).
4. South Dakota Department of Health, Medical Cannabis Inspection Reports (2026).
5. South Dakota Department of Health, SFY 2024 Medical Cannabis Annual Report 9 (Nov. 2024).
6. Id.
7. South Dakota Department of Health, Medical Cannabis Program Data Reports, Feb.–June 2026.
8. S.D. Codified Laws § 34-20G-94 (2026); South Dakota Department of Health, SFY 2024 Medical Cannabis Annual Report (Nov. 2024).
9. South Dakota Department of Health, SFY 2024 Medical Cannabis Annual Report 9 (Nov. 2024).
10. S.B. 43, 99th Leg., Reg. Sess. (S.D. 2024); John Hult, Lawmakers Make It Official: Annual Fees for Medical Marijuana Businesses Will Jump 70 Percent, S.D. Searchlight (Aug. 20, 2024).
11. South Dakota Department of Health, South Dakota Medical Cannabis Program (stating that South Dakota requires an official seed-to-sale tracking program); see also S.D. Admin. R. ch. 44:90.
12. S.D. Codified Laws §§ 1-27-1, 1-27-1.1 (2026).
13. See, e.g., S.D. Codified Laws §§ 1-27-1.5, 1-27-3 (2026).
14. South Dakota Department of Health, About Medical Cannabis (updated July 8, 2026).