Can a South Dakota city-owned liquor store sell THC beverages or other THC-infused products?

Plain-English summary

The City of Brookings runs its own liquor store. The Finance Director saw THC-infused beverages becoming a fast-growing product category and wondered whether the store could legally stock them, and if so, which ones. She asked the AG.

AG Marty Jackley's answer was technical but came down to a clear practical rule: most THC drinks on the U.S. market today are illegal to sell in South Dakota, and the legality of any specific product turns on lab analysis the retailer needs to demand from the supplier before stocking it.

Three statutory bans do most of the work.

First, the synthetic cannabinoid ban. SDCL 34-20B-14(47) puts synthetic cannabinoids on Schedule I. SDCL 22-42-2 and 22-42-5 make it criminal to manufacture, distribute, possess, or sell Schedule I substances. So any synthetically produced cannabinoid (THC analog, novel cannabinoid made in a lab) is out, full stop.

Second, the over-0.3% Delta-9 THC ban. SDCL 22-42-1(7) defines marijuana to include any product with more than 0.3% Delta-9 THC. SDCL 34-20B-14(20) puts that on Schedule I. The only people who can legally possess or distribute over-0.3% Delta-9 in South Dakota are licensed medical cannabis program participants. A municipal liquor store is not in the medical cannabis program.

Third, the chemically-derived cannabinoid ban. This is the biggest one for the beverage market. SDCL 34-20B-118 makes it illegal to "sell or distribute industrial hemp or an industrial hemp product that contains chemically derived cannabinoids or cannabinoids created by chemically modifying or converting a hemp extract." Most "hemp-derived" Delta-8 and Delta-9 drinks on the market are made by taking legal hemp-CBD and using acids or alcohols to convert it into Delta-8 THC, Delta-9 THC, Delta-10 THC, or other isomers. That conversion process is exactly what SDCL 34-20B-118 bans. SDCL 38-35-1(7) also strips Delta-8, Delta-10, THC-O, HHC, and THCP from the definition of "industrial hemp product," so even calling a product "hemp-derived" doesn't save it.

What's left? Naturally-occurring CBD at hemp levels (under 0.3% Delta-9), genuinely produced without a chemical catalyst, can be legal. Some non-psychoactive cannabinoids may qualify. And industrial hemp seed has no criminal penalty for unlicensed possession (SDCL 38-35-2). But once a product has been chemically engineered to deliver a psychoactive THC dose, the SD bans apply.

The AG didn't go beyond that to certify any specific product. He told Brookings the answer is "fact-specific" and the city would need a "reputable laboratory report" on the chemical makeup, the extraction method, and any post-extraction conversion to determine legality before stocking.

What this means for you

For Brookings and other municipal liquor stores

Do not stock THC-infused beverages without a documented chain of evidence proving the product was produced without chemical derivation, conversion, or modification of cannabinoids, contains less than 0.3% Delta-9 THC, and contains no synthetic cannabinoids. A vendor's promotional sheet is not enough. Insist on a Certificate of Analysis from an independent lab, with a clear extraction-method statement. If the vendor can't produce that, don't stock the product. Your store's exposure includes criminal liability under SDCL 22-42-2 and 22-42-5, civil forfeiture of the inventory, and the political fallout of a city store being raided.

For private liquor and convenience-store retailers

The same rules apply to private stores. SDCL 34-20B-118 bans the sale; it doesn't carve out private sellers. If you're stocking Delta-8 or Delta-9 drinks made by CBD conversion (which is most of the market), you're at risk. The "but it's available everywhere" defense is not a legal defense. Demand lab documentation from your suppliers.

For consumers who have been buying these products

The AG opinion doesn't criminalize personal possession of a beverage someone already bought at a gas station, but it does flag that many products on the shelf right now are not lawfully sold in SD. If you experience product harm (mislabeled potency, contamination), you may have civil claims, but you may also have purchased a product that the seller could not legally sell you in the first place. The AG notes that laboratory testing has shown many of these products "don't contain what's claimed on the label."

For city attorneys advising municipal stores

Build a vendor-vetting checklist into the procurement process. At minimum: COA from independent lab; extraction method (CO2 extraction of natural cannabinoids is in a different posture than CBD-to-THC conversion); Delta-9 THC content with the 0.3% threshold; cannabinoid profile listing Delta-8, Delta-10, THC-O, HHC, THCP (any presence of these is disqualifying for an industrial hemp product under SDCL 38-35-1(7)); explicit certification that no chemical conversion or modification was used to produce the cannabinoid content. Document the review.

For law enforcement

SDCL 34-20B-118 is the operative statute for most product-level enforcement. The 2024 amendment closed the chemical-conversion loophole. The AG opinion essentially provides probable cause guidance: most marketed Delta-8 and Delta-9 drinks are produced by chemical conversion, which is criminal regardless of the per-dose THC content.

For hemp businesses pursuing legal SD market entry

The path is naturally-occurring cannabinoid products, produced without chemical conversion, under 0.3% Delta-9, no synthetic content, and not in the excluded list (Delta-8, Delta-10, THC-O, HHC, THCP). That is a narrow lane, especially for psychoactive products. Most "hemp-derived intoxicant" business models are not legal in SD.

Common questions

Q: I see Delta-9 drinks at the gas station in South Dakota right now. How can that be illegal?
A: Widespread availability doesn't make a product legal. The AG opinion acknowledges that the market has moved ahead of the regulators, but it also confirms that current SD law makes most of these products illegal to sell. Enforcement priority is a separate question from legality.

Q: What about Delta-8 specifically?
A: SDCL 38-35-1(7) explicitly removes Delta-8 THC from the definition of "industrial hemp product," and SDCL 34-20B-117 bans selling Delta-8 to anyone under 21. Most Delta-8 is also produced by chemical conversion from CBD, which independently triggers SDCL 34-20B-118. Practically, Delta-8 sales in SD are illegal.

Q: What about naturally-occurring Delta-9 in hemp at very low concentrations?
A: Hemp by definition is under 0.3% Delta-9 THC by dry weight. A product that meets that threshold and was not chemically modified or converted may be legal. The dose math matters: a 12-ounce beverage with 0.29% Delta-9 by dry weight could still contain a psychoactive amount of Delta-9 per serving, but the regulatory test in SD's hemp statutes is the percentage, not the per-serving milligram count. The AG opinion didn't dive into per-serving math.

Q: Is medical cannabis a path for the store?
A: No. The medical cannabis program is for licensed dispensaries and certified patients. A municipal liquor store cannot become a dispensary, and a medical card holder can't lawfully buy from a non-dispensary.

Q: What about CBD products without THC?
A: Naturally-occurring CBD products under 0.3% Delta-9, produced without a chemical catalyst, are generally legal under SDCL 38-35-1(3). CBD products synthesized via chemical conversion may run into the SDCL 34-20B-118 ban. CBD beverages from a reputable producer with proper documentation are typically legal; verify before stocking.

Q: What's the penalty for a store that sells an illegal product?
A: Manufacturing, distribution, possession, or sale of Schedule I substances under SDCL 22-42-2 is a felony. The specific class depends on quantities. SDCL 34-20B-118 violations are criminal. Civil forfeiture of inventory and store liquor license issues are also real risks.

Q: Will this change soon?
A: The AG opinion says expressly that the Legislature has authority to revise these statutes. The 2024 legislative session already tightened the chemical-conversion rules. The Legislature could go either way: further restriction or selective authorization. Watch the next session.

Background and statutory framework

The 2018 federal Farm Bill legalized hemp at the federal level, defining hemp as Cannabis sativa with under 0.3% Delta-9 THC. That triggered a rapid product boom: CBD topicals, gummies, vape products, and most recently, intoxicating hemp-derived drinks.

The chemistry that made the intoxicant drinks possible is CBD-to-THC conversion. Starting with legal hemp-CBD, chemists use acids or alcohols to rearrange the molecule into Delta-8 THC or other psychoactive isomers. Federally, this was a gray area, with producers arguing that anything derived from legal hemp is itself legal under the Farm Bill.

South Dakota responded in stages. SDCL 38-35-1(3) carved natural CBD out of the chemically-derived cannabinoid category. SDCL 34-20B-117 (2023) banned Delta-8, THC-O, and HHC sales to under-21s. SDCL 34-20B-118 (2024) banned the production and sale of any industrial hemp product containing chemically derived or chemically converted cannabinoids; that statute is the key for beverage retailers. SDCL 38-35-1(7) (2024) excluded Delta-8, Delta-10, THC-O, HHC, and THCP from the definition of industrial hemp product, so even nominal "hemp" labeling does not legalize them.

The AG opinion is a clear statement of where this body of law lands in late 2025. It does not resolve every per-product question; the lab-report requirement remains a fact-by-fact analysis.

Citations and references

Statutes:
- SDCL Title 22, Chapter 42 (controlled substance offenses; marijuana definitions)
- SDCL Title 34, Chapter 20B (controlled substances schedule; chemically derived cannabinoid ban)
- SDCL Title 38, Chapter 35 (industrial hemp; definitions and prohibitions)

Background materials referenced in opinion:
- Cannabis Law Deskbook (Bernstien et al. eds., 2021-2022)
- Dr. Peter Grinspoon, "CBD Products Are Everywhere. But Do They Work?" Harvard Health Publishing (2024)
- Atakan, "Cannabis, a complex plant," Ther. Adv. Psychopharmacol., Dec. 2012
- Golombek et al., "Conversion of Cannabidiol (CBD) into Psychotropic Cannabinoids" (2020)

Source

• Landing page: https://atg.sd.gov/OurOffice/OfficialOpinions/opinionhtml.aspx?id=1770
• Original PDF: https://atg.sd.gov/OfficialOpinions/Official%20Opinion%2025-04.pdf

Original opinion text

OFFICIAL OPINION No. 25-04

Re: Official Opinion Concerning Legality of Selling THC-Infused Beverages or Products in a Municipally-Owned Liquor Store

Dear Ms. Rentsch,

In your capacity as the Finance Director for the City of Brookings, you have requested an official opinion from the Attorney General's Office based on the following question:

QUESTION:

Can a municipally-owned liquor store sell THC-infused drinks or other THC-infused products under South Dakota law? If so, what specific concentrations or chemical processes are allowed?

ANSWER:

The legality of the sale of THC-infused and hemp-derived products is fact-specific and depends on the type of hemp derivative used, its concentration, the extraction method from the cannabis plant, and how the derivative was prepared. Currently the Legislature has declared it illegal to sell all synthetic cannabinoids, to sell naturally-occurring cannabinoids with more than 0.3% Delta-9 THC, and to sell industrial hemp or industrial hemp products that contain chemically-derived, chemically-modified, or chemically-converted cannabinoids.

FACTS:

The City of Brookings owns and operates a liquor store. As Finance Director for the City of Brookings, you oversee the liquor store. You have observed an opportunity to sell THC-infused beverages and do not want to deprive the city of a potential revenue stream. However, you are concerned that selling THC-infused beverages and products is illegal. You have indicated you have been unable to receive clear guidance from various state agencies including the Department of Health and Department of Revenue.

IN RE YOUR QUESTION:

Since the late 2010's, the consumables market has been flooded with hemp-based and hemp-derived products. As you stated in your request, this widespread availability suggests that these products are legal. But "[t]he only thing that is clear at this point" is that "the marketing of and enthusiasm for them has gone way ahead of the science." Dr. Peter Grinspoon, M.D., CBD Products are Everywhere. But Do They Work?, Harvard Health Publishing, (2024). At the outset, these "products aren't standardized and will vary." Id. On top of that, marketing schemes add to the confusion of the products' effectiveness and legality by using "egregious and unfounded claims" to market these products. Id. Worse yet, "laboratory testing also shows that many products don't contain what's claimed on the label." Id. You are right to question the city's entry into this corner of the market. Addressing your question requires a look at what these products are, and how the laws have changed over recent years.

Both marijuana and hemp come from the cannabis plant. SDCL 22-42-1(7) (defining "marijuana" as "all parts of any plant of the genus cannabis. . ."); SDCL 38-35-1(5) (defining "hemp" as "the plant Cannabis sativa L. . . ."). The definition of hemp embraces several parts of the Cannabis sativa L. plant, like seeds, derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers . . ." SDCL 38-35-1(5). There are more than sixty "cannabinoid compounds. . . ." Serrin Atakan, Cannabis, a complex plant: different compounds and different effects on individuals, Ther. Adv. Psychopharmacol, Dec. 2012, 241-254. "The two most well-known types of cannabinoids are tetrahydrocannabinol (THC) and the non-psychoactive cannabidiol (CBD)." Cannabis Law Deskbook, 24:3: Practical differences, pg. 694-95 (Bernstien et al. eds., 2021-2022). Both THC and CBD occur naturally and can be synthetically manufactured. See SDCL 34-20B-14(47) (listing synthetic cannabinoids as a Schedule I controlled substance when they are not listed in another controlled substances schedule, not an FDA-approved drug, and contain any quantity of various specifically listed substances).

Prior to 2018, it was illegal to possess, sell, or distribute all cannabis, including Delta-9 THC and its concentrations, under South Dakota and federal law. Since the passage of the 2018 Farm Bill, "hemp is increasingly being grown for its cannabinoid content . . ." Cannabis Law Deskbook, 24:3: Practical differences, pg. 695. "CBD products are primarily produced by extracting or concentrating the CBD from the cannabis flower." Cannabis Law Deskbook, 25:5: Cannabidiol, pg. 716. Along with using CBD in products, companies are "converting CBD into Delta-8 THC" and the other derivatives, like Delta-10 THC and THC-O. Cannabis Law Deskbook, 25:11 Regulatory challenge of new hemp products, Delta-8 THC and other cannabinoids, pg. 729. CBD is converted into these THC derivatives by using acids or alcohols to change the chemical structure of the CBD. Patricia Golombek, Maro Muller, Ines Barthlott, Constanze Sproll, & Dirk W. Lachenmeier, Conversion of Cannabidiol (CBD) into Psychotropic Cannabinoids Including Tetrahydrocannabinol (THC): A Controversy in the Scientific Literature (published June 3, 2020).

The evolution of these conversion processes and passage of these laws have resulted in the prevalence you see on shelves today: both natural and synthetic CBD- and THC-infused products widely available. Our communities have witnessed an explosion of products on the market, "including CBD concentrates and extracts, CBD vape products, CBD topicals (applied to hair or skin), CBD beverages, and CBD edibles (candies, gummies)." Cannabis Law Deskbook, 25:5: Cannabidiol, pg. 716. These CBD products "are sold through a variety of retailers including direct-to-consumer online sales, grocery stores, gas stations, farmers' markets, and large retailers." Id. Given the burst of hemp-derived products on the market and the overlap between those products and marijuana products, the Legislature has worked to ease the confusion.

Regarding hemp, the Legislature has specified "[n]o unlicensed person is subject to criminal penalties for possession or distribution of hemp seed." SDCL 38-35-2. In contrast, the Legislature made it illegal to sell or use industrial hemp for smoking or inhaling. SDCL 38-35-21.

Regarding cannabinoids in the hemp plant, the Legislature excluded naturally-occurring CBD, occurring without the use of a chemical catalyst, as well as non-psychoactive cannabinoids and topical cream CBD, from the definition of chemically-derived cannabinoids. SDCL 38-35-1(3). The Legislature also excluded hemp-derived Delta-9 THC with a concentration of less than 0.3% from the definition of marijuana. SDCL 22-42-1(7). That said, the Legislature made a host of cannabinoids and their variations illegal.

First, manufacturing, distributing, possessing, or selling products with a Delta-9 THC content of more than 0.3% is illegal unless done under the strict guidelines of the Medical Cannabis Program. That is because Delta-9 THC above that 0.3% threshold is a Schedule I controlled substance that is illegal for all persons, except those with a valid medical marijuana card from the Department of Health. SDCL 22-42-1(7); SDCL 34-20B-14 (20).

Second, the Legislature criminalized the sale or distribution of products that contain Delta-8 THC, THC-O, or hexahydrocannabinol ("HHC") to people under twenty-one years old. SDCL 34-20B-117. Last year, the Legislature also made it illegal to "chemically modify or convert industrial hemp . . . or engage in any process that converts" CBD into Delta-8 THC, Delta-9 THC, Delta-10 THC, "or any other tetrahydrocannabinol isomer, analog, or derivative[.]" SDCL 34-20B-118. In line with that move, the Legislature explicitly removed Delta-8 THC, Delta-10 THC, THC-O, HHC, and THCP [tetrahydrocannabiphorol] from the definition of authorized "industrial hemp product[s]." SDCL 38-35-1(7)(a)-(e).

Central to your concern, the Legislature made it illegal, regardless of the person receiving the product, to "sell or distribute industrial hemp or an industrial hemp product that contains chemically derived cannabinoids or cannabinoids created by chemically modifying or converting a hemp extract." SDCL 34-20B-118. Most hemp-derived THC on the market is made through a chemical conversion or extraction process, which means the South Dakota Legislature made it illegal to sell most THC products to any person of any age. Id. In that same vein, the Legislature prohibited the manufacture, distribution, possession, or sale of synthetic cannabinoids and named them Schedule I controlled substances. SDCL 34-20B-14(47); SDCL 22-42-2; SDCL 22-42-5. Similarly, THC products that contain any quantity of resin extracted from the cannabis plant, called "hashish and hash oil," are also considered Schedule I controlled substances. SDCL 34-20B-14(10). This Schedule I resin can also be used to make THC beverages and products.

CONCLUSION

Thus, I conclude the legality of the sale of THC-infused beverages cannot be answered without a reputable laboratory report as to the chemical makeup, properties, and content. The Legislature is tasked with specifying what derivatives and processes are outside the law, and as you can see in SDCL chs. 38-35, 34-20B, and 22-42, the complexities are many. The Legislature has determined it is currently illegal to sell all synthetic cannabinoids, to sell naturally-occurring cannabinoids with more than 0.3% Delta-9 THC, and to sell industrial hemp or industrial hemp products that contain chemically-derived, chemically-modified, or chemically-converted cannabinoids. For several products on the market, it remains unclear what hemp derivatives and concentrations they contain, how those derivatives were extracted, and how they were subsequently altered or prepared. The Legislature has the power to change statutes regarding these matters going forward.

Sincerely,

Marty J. Jackley

ATTORNEY GENERAL