Dec. 28, 2022

Black Friday was opening day for Sioux Falls’ latest medical marijuana dispensary – weeks after voters made a decision that could make it harder for the handful of dispensaries in the area to stay in the black.

Still, “every day seems to get better,” said Zack Winter, who owns East River Farms Medical Dispensary with Cameron Young and Joe Holler.

“We put our forecasting just off medical. We didn’t shoot for the stars aspirationally. We wanted to, but reality has to set in.”

And reality is that recreational marijuana can’t be part of their business model – at least not until July 2025 at the earliest. That’s if voters change their mind should another measure be brought forward in two years.

“The whole point why everyone got into this business was for recreational to happen,” Winter said. “We weren’t banking on it, but it would have helped our pro forma numbers out exponentially.”

The business at 69th Street and Louise Avenue is in a retail center next to Starbucks, drawn by public policy designed to limit the number of licenses.

“They didn’t want to be Colorado with dispensaries on every corner, so we knew they would keep the amount tight,” Winter said. “It’s a jagged pill to swallow, but the people voted, and it is what it is. Now, everyone needs to get the word out.”

That’s a similar message from more established dispensaries in and around the Sioux Falls area.

Unity Rd., the first to open in the Sioux Falls area, is located in Hartford. B.J. Olson and Adam Jorgensen opened the shop in late July.

“We’ve got regular customers, and it’s a real thing,” Olson said. “It’s beyond my expectations. The interaction with customers have been absolutely incredible. I didn’t really know what to expect.”

His average customer is in the late 50s, he said.

“We see all walks of life. We see people coming in with some of the worst medical conditions, people who literally have been sent home to die. And we see people coming in with other addictions issues, and they’re using cannabis to get off of it.”

When Unity Rd. started, the state had about 1,700 medical marijuana patient cards. As of the most recent weekly update Dec. 12, there were 6,166 approved patient cards, up from about 4,600 before the November election.

After the November vote, “our phone was ringing off the hook with people wondering how to go get their card,” Olson said. “Hopefully, we can educate people about the process. We have so many people suffering from ailments, and they have no idea where to go or what the first steps are.”

Without recreational marijuana, the Unity Rd. business model “can still work,” Olson said, but he added he’s “a little nervous” that there are 167 approved dispensary applications statewide.

“That’s a ton … but we’ve had an opportunity to build a little bit of a customer base. We have people coming in once a week, so that helps us, but if I were someone new entering the market or thinking of opening a dispensary … I would be thinking twice. It’s extremely expensive. Adam and I have spent a ton of money to get to this point, and you cannot finance anything, so it’s a long road ahead yet before we become profitable, but I do believe it will happen sooner than later.”

The owners of The Flower Shop Dispensary take a similar perspective. Peter and Marilyn Dikun got into the business because they owned a building at 2211 W. 49th St. and decided to put in a lottery application for a license. Theirs was the first drawn and became the first to open in Sioux Falls in early September.

“It’s been busy,” Peter Dikun said. “And we’re busy with a completely new business, so we’re just learning all of it, just like everybody else.”

So far, customer flow has not plateaued, Marilyn Dikun added.

“Every month, we’ve seen an increase in patients coming through the door,” she said. “I think it was an advantage to be the first to open in Sioux Falls because now all those people have gotten comfortable with our team and different programs we have here.”

While that helps, there still are “six dispensaries within a 20-minute drive,” she said.

Still, the central location, a solid team and their early arrival in the market all help, they said.

“People call us on a daily basis asking how to get a medical card,” Peter Dikun added. “We’re not allowed to refer patients directly to a doctor, so we refer them to the association website where they’re all listed, and we always tell them to start with their own doctor and see if they’re certified.”

The number of approved practitioners in the state is growing slowly, totaling 184, up from 162 at the start of October.

“Inventory at the beginning was tough, getting product, but now there are more cultivators on board,” Peter Dikun said. “They go through their challenges to get a building and a license and grow the product, but now we have a pretty good selection … we have more of a steady supply and more quality.”

Others in the industry also are continuing to develop products, despite the vote. The owners of Intoxibakes are proceeding with their edible business, Intoxibaked, in partnership with Dakota Herb.

“We were not counting on recreational and will just be supporting the medical marijuana dispensaries for now,” they said. “Brownies for sure! We don’t want to give out too much information until we are closer to opening.”

The hope is to have products in area dispensaries by the end of the first quarter in the new year.

Back at East River Farms, “everyone keeps asking about how do I get a card,” Winter said. “I would love to educate the community and public better so they can choose.”

Dispensaries typically refer patients to the Cannabis Industry Association of South Dakota website.

He said he thinks the state needs more than 10,000 patients to support the current dispensaries.

“The patient count is low compared to what our pro forma needs to be at,” he said. “It’s going to take time, and we have to be patient, and we know that.”