The first article counted the amendments. This one reads the two enforcement sections together.
South Dakota’s Department of Health is proposing to replace the first-offense dollar amounts for two categories of medical-cannabis violations with corrective-action plans.¹
That sounds straightforward until the Department’s proposed enforcement provisions are read together.
Proposed § 44:90:12:11 says a first Category 4 violation and a first Category 5 violation receive a “Corrective Action Plan to be submitted and approved” instead of the listed monetary fine.²
Proposed § 44:90:12:03 separately says: “Nothing in this section prevents the department from imposing a fine as provided in § 44:90:12:10 and 44:90:12:11 in addition to requiring an establishment to provide and comply with a corrective action plan.”³
So what happens to a first Category 4 or Category 5 violation?
Is the corrective-action plan the first-offense remedy—or can the Department impose a monetary fine alongside it? And if it can, what provision supplies the amount?
The Department’s own regulatory-impact analysis does not answer that question. The Form 14 describes one outcome. The operative text leaves another outcome expressly available.⁴
That is the issue. Not whether corrective-action plans are good policy. Whether the Department’s explanatory paperwork and the Department’s proposed rule say the same thing.
The corrective-action plan is not new
The first story in this series treated the September package as a 38-section rewrite of Article 44:90.⁵ That count is still the right way to describe the size of the filing. It is the wrong way to describe the corrective-action plan.
The Department is not creating corrective-action plans from scratch. Article 44:90 already contains § 44:90:12:03. The current rule authorizes the Department, upon discovery of a suspected violation of the article or of SDCL chapter 34-20G, to order an establishment to comply with a corrective-action plan that may include modifying operating procedures, halting transfer of mislabeled or unsafe product, and destroying or remediating product that poses a threat to public health.⁶ That provision has been on the books since the original 2021 medical-cannabis rules and was amended in the 2025 package that also created the fine schedule.⁷
The June 26 draft—the text filed with the Legislative Research Council on August 21—rewrites the existing provision.⁸ The proposed text says that when the Department discovers a suspected violation, it may order the establishment to submit a corrective-action plan for Department review and approval; the establishment shall comply with the plan as approved; the Department may inspect, review records, or otherwise verify implementation; and failure to submit, implement, or comply “may result in a monetary penalty or other enforcement action.”⁹ A corrective-action plan may still include the same three operational items already in the current rule.¹⁰
Then the draft adds the sentence that creates the problem:
Nothing in this section prevents the department from imposing a fine as provided in § 44:90:12:10 and 44:90:12:11 in addition to requiring an establishment to provide and comply with a corrective action plan.¹¹
That sentence survived from the June 26 draft into the August 21 filing. A reader who stopped at proposed § 44:90:12:11 could conclude that a first Category 4 or Category 5 violation is now a plan, not a check. A reader who continues to proposed § 44:90:12:03 cannot be sure.
The 2025 fine schedule is just over a year old
The current schedule of fines is not a leftover from the original program. It is a 2025 rule.
Effective August 4, 2025, § 44:90:12:11 authorized the Department to assess:
• Category 1: $5,000 / $7,000 / $10,000;
• Category 2: $3,000 / $4,000 / $5,000;
• Category 3: $1,500 first offense, $2,500 second or subsequent;
• Category 4: $1,000; and
• Category 5: $500.¹²
The same section adopted a five-year lookback: the Department may not use a violation more than five years old when deciding whether a new violation is a second, third, or subsequent offense.¹³ Section 44:90:12:10 separately caps total fines per inspection at $10,000.¹⁴ Category 4 and Category 5 are the lower-gravity items on that schedule—standard-operating-procedure failures, website age-gating, unapproved ownership transfers, late management-change notices, missing agent badges, visitor-rule failures, inventory-tracking training, and scale requirements.¹⁵ They are also the categories that generate inspection volume.
The June 26 draft leaves Categories 1 through 3 essentially intact. It splits Categories 4 and 5 into first and subsequent offenses for the first time. A first offense becomes a corrective-action plan. A second or subsequent Category 4 offense remains $1,000. A second or subsequent Category 5 offense remains $500. The five-year lookback stays.¹⁶
That timing matters. The Department adopted the current fine schedule in August 2025, after its own stakeholder process and a June 17, 2025 public hearing.¹⁷ It is proposing to reopen part of that schedule just over a year later. This is not an abstract enforcement-philosophy exercise. It is a revision of a schedule the Department itself just wrote.
What “in addition to” means for a first offense
This is the centerpiece, and it is a question, not an answer.
There are at least three readings of the two proposed sections read together.
Reading 1 — The plan replaces the scheduled first-offense fine.
The most obvious reading of proposed § 44:90:12:11 is that a first Category 4 violation is a corrective-action plan, and a first Category 5 violation is a corrective-action plan. The Form 14 reads the draft that way.¹⁸ If that is the intended result, the drafting problem is immediate: why does proposed § 44:90:12:03 expressly preserve the ability to impose a fine “in addition to” the plan? That language cannot simply be ignored in an enforcement rule. A later inspection report, a contested-case brief, or an Interim Rules Review Committee question will have to pick one section or the other.
Reading 2 — The plan plus another fine.
That reading is available on the face of proposed § 44:90:12:03. The section says a fine may be imposed “in addition to” requiring the plan. If that is what the Department means for a first Category 4 or Category 5 violation, the next question is the amount. Proposed § 44:90:12:11 no longer lists a dollar figure for those first offenses. It lists a plan.¹⁹ Proposed § 44:90:12:03 points back to §§ 44:90:12:10 and 44:90:12:11 as the source of any such fine. That is the precise drafting question: after § 44:90:12:11 removes the first-offense dollar amounts, what number does “as provided in § 44:90:12:10 and 44:90:12:11” supply?
That is an unresolved question about how the two sections interact. It is not a conclusion that an unscheduled fine would necessarily lack legal authority.
Reading 3 — Another provision supplies the fine.
If the Department believes another part of § 44:90:12:10, another subsection of chapter 44:90:12, or a sentence in SDCL chapter 34-20G supplies both the authority and the amount for a first-offense fine that accompanies a plan, the Department should identify it. That is a drafting request, not a policy demand.
Two different monetary-penalty concepts also sit inside proposed § 44:90:12:03, and they should not be collapsed. One is a fine “in addition to” the plan for the underlying violation. The other is a “monetary penalty” for failure to submit, implement, or comply with an approved plan.²⁰ Those can be different events. The draft does not say whether they use the same schedule, the same lookback, or the same per-inspection cap.
The Department does not have to choose Reading 1. It does have to say which reading it intends before the rule is adopted.
The Form 14 describes one outcome. The rule text leaves another available.
South Dakota requires a regulatory-impact analysis with a proposed permanent rule.²¹ The Department’s Form 14 for this package specifically identifies the § 44:90:12:11 change. Item 8 states:
The amendment to 44:90:12:11 changes the penalty for a first offense for a category 4 violation and category 5 violation from a fine to a corrective action plan. This saves businesses from paying a fine for the first offense in these categories.²²
That sentence is useful. The Department has identified a financial benefit and has tied that benefit to the first-offense treatment of two categories. The savings claim assumes Reading 1.
The same analysis then scores cost. Item 9, implementation and compliance: “N/A- There is no cost associated with these rule changes.” Item 10, secondary or indirect costs: the same sentence. Item 11, opportunity cost: “N/A.”²³
Compare that conclusion to what proposed § 44:90:12:03 actually requires. A regulated establishment ordered into the amended process potentially has to prepare and submit a corrective-action plan, obtain Department approval, implement the approved plan, maintain compliance with it, and undergo Department inspection or record review to verify implementation.²⁴ Failure to submit, implement, or comply can produce a monetary penalty or other enforcement.²⁵
Those steps are not cost-free as a matter of ordinary operations. They consume staff time and procedure revisions. They may consume product holds, delayed transfers, and follow-up inspections. The Form 14 does not quantify any of that. It scores the incremental burden at zero.
The point is not that the Department performed an erroneous economic analysis. The point is narrower: the Form 14 and the proposed text are internally inconsistent, and the inconsistency requires clarification. The impact analysis treats the first-offense fine as gone. Proposed § 44:90:12:03 keeps a fine “in addition to” the plan expressly available. A claimed savings from eliminating the first-offense fine holds only if that fine cannot still be assessed. The paperwork does not reconcile the two sentences.
“No alternative exists”
Form 14 Item 6 states: “No alternative exists. This rule change clarifies existing rules and amends them to match current practices and industry standards.”²⁶
An agency may conclude that no alternative is preferable. That is a legitimate judgment. What the Form 14 does not do is disclose what alternatives were considered or why they were rejected.
The question for the hearing, the written-comment file, and the Interim Rules Review Committee is what the Department actually weighed. The obvious list includes:
• retain the 2025 fine schedule without touching Categories 4 and 5;
• retain the existing § 44:90:12:03 without rewriting it;
• amend § 44:90:12:03 without changing § 44:90:12:11;
• amend § 44:90:12:11 without rewriting § 44:90:12:03;
• state expressly that a first Category 4 or Category 5 corrective-action plan is exclusive of a monetary fine; and
• state expressly the monetary fine that may accompany a first-offense plan, if one is intended.
None of those alternatives had to be chosen. Each of them was available. Item 6 does not identify which existing rule was unclear, which industry standard is being aligned, or why the 2025 schedule—adopted after the Department’s own stakeholder process—required reopening a year later on this point.²⁷ SDCL 1-26-4.11 exists so that a Form 14 is more than a signature block.²⁸
The source consulted
Form 14 Item 12 identifies the source consulted in preparing the analysis: “Department of Health staff.”²⁹
That is the line the document gives. It is not a finding that nobody else was called. It is a finding that the Form 14 does not identify anyone else.
Item 4 does say the Department held an industry stakeholder meeting in October 2025 and conducted an internal review.³⁰ That meeting is not carried forward into Item 12. The document does not identify the meeting participants, economic data, enforcement data, historical Category 4 and Category 5 fine totals, inspection-volume figures, or any other source underlying its cost and savings conclusions.
A claimed savings from eliminating first-offense Category 4 and Category 5 fines is a quantitative claim. A quantitative savings claim is more meaningful when the underlying number of affected violations is disclosed: how many such first-offense fines were assessed, in what amounts, against how many establishments, over what period. That figure is not in the Form 14.
The small-business box
The Form 14 says the affected small-business universe includes cultivators, manufacturers, testing facilities, and dispensaries, and it checks the 100–499 range. It says those businesses are already complying and that the updates “do not add burden or costs as they are not additional requirements.” It also checks “No” for new recordkeeping or reporting requirements.³¹
The 100–499 checkbox is a range, not a census. South Dakota’s licensed-establishment count sits inside that range—the Department’s recent program data and the first article in this series put the market at 108 licensed establishments—but the interesting fact is not that the Department checked a box that happens to contain 108.³² The interesting fact is that the Department characterizes the rewrite as imposing no additional burden on essentially the entire regulated establishment population without quantifying the work associated with preparing, obtaining approval of, implementing, and verifying a corrective-action plan.
An establishment that is “already complying” with current § 44:90:12:03 is complying with the current rule. The draft rewrites that rule and then uses current compliance as proof that the rewrite costs nothing. That proof holds only if the two texts impose the same work. They do not.
Six questions for the Department
The September 23 hearing and the October 3 written-comment deadline are the places these questions belong in the administrative record.³³
1. For a first Category 4 violation, can the Department impose a monetary fine in addition to the corrective-action plan? If so, what amount?
2. For a first Category 5 violation, can the Department impose a monetary fine in addition to the corrective-action plan? If so, what amount?
3. What provision supplies the monetary amount for such a first-offense fine after proposed § 44:90:12:11 replaces the first-offense dollar amounts with a corrective-action plan?
4. What incremental compliance-cost analysis supports the Form 14’s conclusion that the amended corrective-action-plan process has no cost?
5. What alternatives did the Department consider before concluding that “No alternative exists,” and why were they rejected?
6. What data supports the Form 14’s claimed savings from eliminating first-offense Category 4 and Category 5 fines?
Question 3 is the mechanism question. It does not ask the Department to abandon the rule. It asks the Department to identify the legal and textual source it is relying on.
If the answer is that there is no first-offense fine, that answer should be written into § 44:90:12:03 or § 44:90:12:11. If the answer is that a fine can accompany the plan, the follow-up is where the first-offense amount lives. Either answer identifies what still needs to be fixed.
Those six questions are the payload. Everything else in the draft package can wait for a later comment. These two sections cannot. They decide whether a first low-category violation is a remediation file, a check, or both, and they decide whether the Department’s own impact analysis described the rule it actually proposed.
The important question is not whether corrective-action plans are good or bad.
Corrective-action plans can be useful enforcement tools. A regulator may reasonably decide that some violations are better addressed through remediation and compliance than through an immediate monetary penalty. South Dakota has had that tool since 2021.³⁴
The question is whether the rule says what the Department intends it to say.
In the June 26 draft filed on August 21, § 44:90:12:11 replaces the first-offense Category 4 and Category 5 dollar amounts with corrective-action plans. Section 44:90:12:03 simultaneously says that a fine may be imposed in addition to a corrective-action plan.³⁵ The Form 14 describes the first of those sentences. It does not account for the second.
That interaction deserves an answer before the rule is adopted.
If the Department’s answer is that first-offense Category 4 and Category 5 violations receive a corrective-action plan with no monetary fine, the cleanest solution is simple: say that in the rule.
If the Department’s answer is that a fine can accompany the plan, the Department should identify the authority and the amount.
That is not opposition to regulation.
That is reading the regulation.
Footnotes
¹ S.D. Dep’t of Health, Proposed Amendments to S.D. Admin. R. art. 44:90, proposed § 44:90:12:11 (last updated June 26, 2026) (filed with the Legislative Research Council Aug. 21, 2026), https://rules.sd.gov/Uploads/970_OrginalDraftRules.pdf [hereinafter June 26 Draft]; S.D. Dep’t of Health, Regulatory Impact Analysis, Form 14, Item 8 (filed Aug. 21, 2026), https://rules.sd.gov/Uploads/970_RegulatoryImpactAnalysis.pdf [hereinafter Form 14].
² June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:11(4)(a), (5)(a).
³ Id., proposed S.D. Admin. R. 44:90:12:03.
⁴ Form 14, supra note 1, Items 8–11; June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:03, 44:90:12:11.
⁵ Jason Karimi, 38 Rules, 19,821 Patients, 108 Licensed Establishments: South Dakota Rewrites Its Medical Cannabis Program, WeedPress (Sept. 9, 2026), https://weedpress.org/2026/09/09/38-rules-19821-patients-108-licensed-establishments-south-dakota-rewrites-its-medical-cannabis-program/; S.D. Dep’t of Health, Notice of Public Hearing to Adopt Rules, Form 6 (filed Aug. 21, 2026), https://rules.sd.gov/Uploads/970_PublicNotice.pdf (enumerating proposed amendments from § 44:90:01:01 through § 44:90:12:11, including §§ 44:90:12:03 and 44:90:12:11); S.D. Legislative Research Council, South Dakota Register, Vol. 53 (Aug. 31, 2026) (Dep’t of Health filing dated Aug. 21, 2026).
⁶ S.D. Admin. R. 44:90:12:03 (current).
⁷ Id. (Source: 48 S.D. Reg. 40 (effective Oct. 5, 2021); 52 S.D. Reg. 10 (effective Aug. 4, 2025)).
⁸ June 26 Draft, supra note 1 (header on the enforcement pages: “Last Updated June 26, 2026”); S.D. Legislative Research Council, supra note 5.
⁹ June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:03.
¹⁰ Id. (proposed subsections (1)–(3), tracking current S.D. Admin. R. 44:90:12:03).
¹¹ Id.
¹² S.D. Admin. R. 44:90:12:11 (Source: 52 S.D. Reg. 10 (effective Aug. 4, 2025)).
¹³ Id.
¹⁴ S.D. Admin. R. 44:90:12:10.
¹⁵ Id. §§ 44:90:12:10(4)–(5).
¹⁶ June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:11(4)–(5).
¹⁷ S.D. Dep’t of Health, Notice of Public Hearing to Adopt Rules (June 17, 2025 hearing on the 2025 Article 44:90 package, including §§ 44:90:12:10 to 44:90:12:12), https://rules.sd.gov/Uploads/882_PublicNotice.pdf; Letter from Med. Cannabis Program Adm’r, S.D. Dep’t of Health, to Med. Marijuana Oversight Comm. (2025), https://mylrc.sdlegislature.gov/api/Documents/Attachment/285696.pdf?Year=2025.
¹⁸ Form 14, supra note 1, Item 8.
¹⁹ June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:11(4)(a), (5)(a).
²⁰ Id., proposed S.D. Admin. R. 44:90:12:03.
²¹ S.D.C.L. § 1-26-4.11; see also S.D.C.L. § 1-26-4.
²² Form 14, supra note 1, Item 8.
²³ Id. Items 9–11.
²⁴ June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:03.
²⁵ Id.
²⁶ Form 14, supra note 1, Item 6.
²⁷ Id. Item 4 (October 2025 stakeholder meeting and internal review); see also sources cited supra note 17.
²⁸ S.D.C.L. § 1-26-4.11.
²⁹ Form 14, supra note 1, Item 12.
³⁰ Id. Item 4.
³¹ Id. Item 13.
³² S.D. Dep’t of Health, Medical Cannabis Data, August 2026 (released Sept. 2, 2026), https://doh.sd.gov/programs/medical-cannabis/; Karimi, supra note 5.
³³ Form 6, supra note 5 (hearing Sept. 23, 2026, 10:00 a.m. CT, Floyd Matthew Training Center, Foss Building, 523 East Capitol Avenue, Pierre; written comments due Oct. 3, 2026); S.D. Legislative Research Council, supra note 5 (Interim Rules Review Committee Oct. 14, 2026).
³⁴ S.D. Admin. R. 44:90:12:03 (Source: 48 S.D. Reg. 40 (effective Oct. 5, 2021)).
³⁵ June 26 Draft, supra note 1, proposed S.D. Admin. R. 44:90:12:03, 44:90:12:11.
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