Rolling out the medical marijuana industry in the Black Hills

Since July 1, 2021 when medical cannabis became legal in South Dakota a new industry has begun to form in the Black Hills. The region boasts 33 dispensaries, eight cultivation farms and five manufacturing facilities despite the mere 8,700 cardholders across the state — a total of less than 1% of its population. With a limited customer base, companies are competing to assert themselves as lasting players in the fledgling industry.

Though current demand for medical marijuana is fairly low relative to supply, this is expected to change. At a rate of about 200 per week, the amount of medical cannabis cardholders is growing fast. This is even more true considering the Monday news that Governor Kristi Noem signed Senate Bill 1 into law. The bill increases the qualifying medical conditions for a cannabis card to include cancer, epilepsy, multiple sclerosis, AIDS, HIV, PTSD, Crohn’s disease and ALS.

Brett Johnson, a Physician Assistant Specialist at High Pines Medical Marijuana Clinic says the passing of SB 1 is great news and that he hopes to get as many cards out as he can. He predicts tens of thousands of cards need to be issued to qualified residents considering the population of South Dakota.

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“Compared to other states there are still a lot of cards that need to be issued and most everyone I see has legit chronic pain histories. Generally, patients are 30 or above and these people aren’t seeking to use it recreationally,” Johnson said. “They legitimately want some relief from their debilitating conditions, and this is a great alternative treatment.”

A majority of people who are issued medical cannabis cards already use cannabis to treat their medical conditions so the expansion of qualifying conditions is helpful to protect people from potential criminal charges, Johnson said. The only aspect that is missing is transparent communication to patients’ primary care doctors. 

“These people have already been incorporating marijuana into their medical regimen. Now we can protect those people from getting a ticket,” Johnson said. “We just need to coordinate that with their medical and pain management team to make it a core part of their program since they’re already using (it) anyway.”

Despite a limited customer base, Black Hills entrepreneurs see an opportunity to deliver medical cannabis, a product they see as beneficial to patients. That is the motivation of the workers of Northern Hills Alternative Health, Sturgis’ newest medical marijuana dispensary. 

What was previously the city’s convention center, the 5,000 square foot dispensary will be one of the largest dispensaries in the state. It is operated by three employees that are longtime friends who share a passion for medical cannabis. And though the marijuana industry is difficult to enter, the three are determined to grow amid fierce competition.

Northern Hills Alternative Health

Northern Hills Alternative CEO Dustin Popkes, left, COO Cameron Popkes, center, and CCO Matt Murraine, right, pose for a photo at their Sturgis location this week.

Locally grown

Northern Hills Alternative Health is owned by the Popkes family from Spearfish. Kim, Terry, Amber, Cameron and Dustin Popkes all own an equal share of the company and have worked together since 2006.

Eager for a new adventure, the family wanted to open their own hotel. At least everyone but Cameron Popkes, who wanted to open a smoke shop. After much debate, the other four eventually agreed, opening Smokes N’ Things in 2019. They have now expanded to four locations in Bell Fourche, Spearfish, Black Hawk and Sturgis.

Northern Hills Alternative Health

Cameron Popkes holds the branch of a harvested marijuana plant at Northern Hills Alternative Health this week. 

Their newest medical cannabis venture is operated by only three employees — Cameron Popkes as COO, Dustin Popkes as CEO, and Matt Murraine as the Chief Compliance Officer. They sell accessories, grinders, pipes, water pipes, concentrates and flower. They are excited to soon offer edibles which are preferred by their predominantly older clientele. 

At first impression, the easygoing men may seem like your carefree cannabis lovers, but they take their operation very seriously. As an infant industry, South Dakota medical marijuana has faced immense adversity thus far to draft bills, create adequate enforcement strategies, and foster South Dakota-based businesses in which Northern Hills Alternative Health has played an active role.

In a public statement, Noem mentioned other states have made mistakes in their drafting and enforcement of laws that South Dakota does not want to repeat. The owners at Alternative Health echoed her statements saying South Dakota has an opportunity to create an equitable, responsible and effective industry that can not only adequately deliver valuable medicine to patients but also be a safe and welcoming environment for customers and businesses alike.

Northern Hills Alternative Health

Product offered to medical marijuana patients by Northern Hills Alternative Health.

Tod Stephens

Cannabis laws

The new business is having a lasting impact on the state-wide industry by working with the state to critique current laws and enforcement protocols to create a more business-friendly environment, the three said.

Their contributions include the alteration of South Dakota codified law 34-20G-89 that disallowed medical cannabis establishments from storing any personal information of customers other than their cardholder registry identification number. 

Not only does this provision limit establishments’ ability to participate in loyalty programs with customers, Dustin Popkes said, but also puts some establishments at risk. When a worker enters a medical marijuana cardholder’s identification number, the state’s verification website only tells if it is valid or not. It says nothing about who the card belongs to which opens the doors to forgery, Murraine said. Additionally, some point of sale systems further add to establishments’ risks.

“Just to ring up a customer you have to have that information,” Dustin Popkes said. “We knew that establishments, knowingly or not, were going against compliance, so we got in contact with the state to change the compliance for it.”

Northern Hills Alternative Health

Matt Murraine holds up a glass water pipe at Northern Hills Alternative Health this week. 

When Noem signed the amended act into law earlier last month, establishments were permitted to store personal information upon written consent of the cardholder. An emergency declaration was given to put the amended law into full effect at its approval.

They hope to further change the regulation of the industry by changing some medical cannabis administrative rules as well. Working with Mark Marshall, the Sturgis City Attorney, they hope to overturn Article 44:90:04:08 which prohibits establishments to use security cameras to record the entrance and exit of the building during operating hours to ensure patient privacy. Daylong recording using security cameras is allowed at all other areas of cannabis establishments.

Murraine said the article limits their ability to acquire valuable information about a perpetrator of a potential burglary. 

“We wouldn’t be able to capture what vehicle they were driving, how they left or which direction they went,” Murraine said. “We’d also be unable to coordinate with the Sturgis police if we had an event like that.”

There is still a substantial amount of legal gray area that the industry and state need to work out according to Murraine. He said the process of forming relationships with other dispensaries to ask the appropriate questions is important to refine the industry and to ensure it has a respectable public reputation.

‘Top notch’ security

To ensure Alternative Health is safe for its customers and workers, Murraine invited the Sturgis fire and police department to walk through the building and make suggestions on how to improve their establishment.

In addition to a police walkthrough, the business went through workplace violence training. This comes as dispensaries across the nation are experiencing an onslaught of burglaries. They are enticing targets to burglarize because most dispensaries only take cash and cash deposits. Since the cannabis industry is illegal at the federal level, many financial institutions refuse to let cannabis dispensaries use direct deposit payment options which limits them to a cash-only sales system. 

Additionally, the Sturgis police walked through the building to help pinpoint vulnerabilities the owners could improve such as push bars on back doors for quick evacuation, robust magnetic door locks on the sales floor, and sophisticated key card required entries to back offices that only top-ranking employees may access.

“They made a lot of suggestions and we did absolutely every single one of them,” Dustin Popkes said. “Our security is as top notch as you can get. I would say we’re the Fort Knox of dispensaries.”

Compliance is at the forefront of operations too, Murraine and the Popkes said, because it is vital for their existence. If an establishment is found to be in violation of South Dakota laws, the South Dakota Department of Health may revoke their establishment registration certificate and they could face prosecution.

Such an instance has already occurred in the state when last month, the South Dakota Department of Health alleged 605 Cannabis, a manufacturing and cultivation facility near Sioux Falls, of violating operating rules. The DOH alleged 19 violations of medical cannabis state laws and regulations that posed a risk to the health and safety of the public which was reason to initiate an emergency suspension of the company’s manufacturing and cultivation licenses.

In a statement released by 605 Cannabis, the DOH  notified the company of its intent to permanently revoke its cannabis licenses. Citing an inaccurate interpretation of medical cannabis laws and its enforcement thereof, 605 Cannabis has filed a civil suit against the DOH in Lincoln County Circuit Court claiming they have violated proper rulemaking procedures in contravention of the Administrative Procedures Act.

Northern Hills Alternative Health

Marijuana products on display at Northern Hills Alternative Health in Sturgis. 

Tod Stephens

With a highly competitive industry and a limited customer base, time spent not operating is tremendously detrimental to the longevity of a South Dakota marijuana business. To successfully grow their company, Alternative Health is taking necessary steps to avoid a situation similar to that of 605 Cannabis. They also hope to grow to a similar operation as From The Hills, a manufacturing, cultivation and dispensary in Lead, so they can create a high-quality product at an affordable price that is tailored to their customers’ needs. 

The three at Alternative Health view From The Hill’s CEO, Todd Smith, as a trail blazer in South Dakota’s fledgling marijuana industry, pointing to his expertise not only in the business sector but in the policy sector as well.

Smith has said the fate of medical marijuana depends on the DOH case against 605 Cannabis. He has no indication of whether what they allegedly did was wrong or not but said the situation points to major downfalls in other states where uncompliant companies are handed relatively miniscule fines that do little to deter future offenses. 

“If they are found to be guilty of violations it should be a severe enough punishment, to deter anybody else from wrongdoing,” Smith said. “If not, it will unleash a black market that the state will never be able to control.”

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