Can a South Dakota city-owned liquor store legally sell THC drinks and other THC-infused products?

Plain-English summary

The City of Brookings runs its own liquor store and wanted to know if it could legally add THC-infused drinks and other THC products to the shelf. The Finance Director, Ms. Rentsch, asked the AG because she couldn't get a straight answer from the Department of Health or the Department of Revenue.

AG Marty Jackley's answer depends on the product's ingredients, concentration, extraction method, and preparation. He says a reputable laboratory report is needed to assess a particular product. Three statutory rules drive the analysis:

1. 0.3% Delta-9 THC ceiling. Any product with naturally-occurring Delta-9 THC above 0.3% is "marijuana" under SDCL 22-42-1(7), which is Schedule I and illegal to sell outside the Medical Cannabis Program.
2. No synthetic cannabinoids, period. SDCL 34-20B-14(47) puts synthetic cannabinoids on Schedule I.
3. No chemically-converted hemp products. SDCL 34-20B-118 bans the sale of any "industrial hemp or industrial hemp product that contains chemically derived cannabinoids or cannabinoids created by chemically modifying or converting a hemp extract."

The opinion says most hemp-derived THC on the market is made through a chemical conversion or extraction process. It explains that CBD can be converted into Delta-8 THC and other derivatives using acids or alcohols, and quotes the ban on selling industrial hemp products containing chemically derived, modified, or converted cannabinoids regardless of the recipient's age.

The AG explicitly tells municipal liquor managers that the question can't be answered without a "reputable laboratory report" on the chemical makeup of a specific product. If a beverage's THC came from a chemical conversion of CBD, the city store can't sell it. If a product contains hash oil or any other resin extracted from cannabis, the city store can't sell it. If a product is a synthetic, the city store can't sell it.

The opinion also describes statutory exclusions for naturally occurring CBD made without a chemical catalyst, non-psychoactive cannabinoids, topical cream CBD, and hemp-derived Delta-9 THC below 0.3%. It does not approve the sale of a particular beverage; the AG says its legality cannot be answered without product-specific laboratory information.

What this means for you

Municipal liquor store managers

The opinion's holding for a city store: the AG could not give a yes-or-no answer without "a reputable laboratory report as to the chemical makeup, properties, and content" of the specific product. Three categories are illegal to sell under the statutes the opinion cites: all synthetic cannabinoids (SDCL 34-20B-14(47)), any naturally-occurring product over 0.3% Delta-9 THC (SDCL 22-42-1(7); 34-20B-14(20)), and any industrial hemp product containing chemically derived, modified, or converted cannabinoids (SDCL 34-20B-118). Products containing hash oil or other cannabis resin are Schedule I as well (SDCL 34-20B-14(10)). The opinion notes that most hemp-derived THC on the market is made through a chemical conversion process, and the AG tells the Finance Director she "was right to question the city's entry into this corner of the market."

Cities operating a liquor store

The opinion does not authorize any specific product or set out a compliance procedure for a city. It says a reputable laboratory report on a product's chemical makeup, properties, and content is needed to answer whether its sale is legal. It also states that the Legislature is "tasked with specifying what derivatives and processes are outside the law."

If you make or distribute THC-infused beverages and want to sell into South Dakota

The opinion says most hemp-derived THC on the market is made through chemical conversion or extraction, and SDCL 34-20B-118 prohibits sale or distribution of industrial hemp products containing chemically derived, modified, or converted cannabinoids. It does not prescribe a distributor's compliance procedure. The AG says a reputable laboratory report on a particular product's chemical makeup, properties, and content is needed before its sale can be assessed.

If you are a consumer in South Dakota wondering about hemp drinks at the gas station

The AG opinion notes that "laboratory testing also shows that many products don't contain what's claimed on the label." SDCL 34-20B-117 bars sales of products containing Delta-8 THC, THC-O, or HHC to people under twenty-one; the opinion does not treat that age limit as permission to sell to adults. It separately quotes SDCL 34-20B-118's ban on selling industrial hemp products containing chemically derived, modified, or converted cannabinoids, regardless of the buyer's age. A product's presence on a shelf does not establish its contents or how it was made.

If you advise a cannabis or hemp business

The South Dakota framework has shifted significantly in 2024-2025. Three updates to track:

1. SDCL 34-20B-118 (chemical-conversion ban) is the operative limit on hemp-derived THC products in South Dakota.
2. SDCL 38-35-1(7) was amended to explicitly exclude Delta-8, Delta-10, THC-O, HHC, and THCP from the "industrial hemp product" category.
3. The 0.3% Delta-9 line still controls the marijuana/hemp split.

The opinion mentions the Medical Cannabis Program as an exception to its discussion of the prohibition on Delta-9 THC above 0.3%. It does not analyze licensing for a municipal liquor store under that program.

Common questions

Q: Is selling Delta-8 THC legal in South Dakota?
A: The opinion says SDCL 34-20B-118 prohibits selling industrial hemp products containing cannabinoids made by chemically converting a hemp extract, and notes that Delta-8 can be produced by converting CBD. It also notes Delta-8's exclusion from the statutory definition of an authorized "industrial hemp product." Whether a particular product may be sold depends on its contents and preparation.

Q: What about Delta-9 THC drinks at "0.3%" advertised concentration?
A: Two questions matter. First, is the Delta-9 naturally occurring or chemically derived? If derived through conversion of CBD or another extract, it's banned regardless of concentration. Second, is the 0.3% claim accurate? The AG opinion explicitly flags that product labels often misstate actual concentrations.

Q: Can South Dakota residents buy these products in Minnesota or Iowa and bring them home?
A: The opinion addresses sales by a South Dakota municipal liquor store, not purchases in another state or transport across state lines. It cites South Dakota restrictions on possession of Schedule I substances but does not resolve that travel scenario.

Q: Does this opinion apply to private liquor stores too?
A: The question came from a city-owned store in Brookings. The AG describes statutory prohibitions on selling several product categories, but does not separately analyze private liquor stores or their licensing.

Q: What happens if a city sells a banned product?
A: The opinion identifies categories of products whose sale is illegal under South Dakota law, but does not decide a city's potential liability or whether its employees or managers could be charged. It says the legality of a particular product's sale cannot be assessed without a reputable laboratory report.

Q: How did the Legislature define "synthetic cannabinoid"?
A: The opinion describes SDCL 34-20B-14(47) as listing synthetic cannabinoids as Schedule I when they are not in another controlled-substance schedule, are not an FDA-approved drug, and contain a listed substance. It does not classify every laboratory-made cannabinoid.

Q: Are CBD-only products still legal in South Dakota?
A: The opinion says SDCL 38-35-1(3) excludes naturally occurring CBD made without a chemical catalyst, non-psychoactive cannabinoids, and topical cream CBD from the definition of chemically derived cannabinoids. It does not approve the sale of a particular CBD product; the AG says product-specific laboratory information is needed.

Background and statutory framework

The opinion describes hemp-derived products that expanded after the 2018 Farm Bill and explains that companies convert CBD into derivatives such as Delta-8 THC, Delta-10 THC, and THC-O using acids or alcohols. It does not decide those products' status under federal law.

The opinion focuses on South Dakota's statutory categories, including SDCL 34-20B-118's prohibition on selling industrial hemp products containing chemically derived, modified, or converted cannabinoids.

The opinion documents three statutory layers:

1. Schedule I baseline (SDCL 34-20B-14): synthetic cannabinoids (47), Delta-9 THC over 0.3% (20), hash oil and other cannabis resin (10) are all Schedule I.
2. Hemp carve-outs (SDCL 38-35): legal hemp is defined narrowly. Industrial hemp for smoking or inhaling is banned (§ 38-35-21). Delta-8, Delta-10, THC-O, HHC, and THCP are explicitly excluded from the "industrial hemp product" category (§ 38-35-1(7)).
3. Chemical conversion ban (SDCL 34-20B-118): the operative practical limit. Selling or distributing any hemp product made by chemically modifying or converting a hemp extract is illegal regardless of the buyer's age.

The opinion cites industry and medical publications to explain the range of products on the market and the risk of inaccurate labels. The Finance Director told the AG she had not received clear guidance from the Departments of Health and Revenue. The opinion concludes that the Legislature has the power to change the relevant statutes.

Citations and references

Statutes:

• SDCL 22-42-1(7) (marijuana definition, 0.3% Delta-9 line)
• SDCL 34-20B-14 (Schedule I controlled substances, including hash oil, Delta-9 THC, synthetic cannabinoids)
• SDCL 34-20B-117 (age limits on Delta-8, THC-O, HHC distribution)
• SDCL 34-20B-118 (ban on sale of chemically-converted hemp products)
• SDCL 38-35-1 (definitions of hemp, chemically-derived cannabinoid, industrial hemp product)
• SDCL 38-35-2 (hemp seed possession)
• SDCL 38-35-21 (industrial hemp smoking/inhaling ban)

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

MJJ/MWT/SLT/dd