When it comes the defining exactly what 'freedom' means, each one of us has our own criteria.

For the CATO Institute, it's a 23-step process to determine which states, in their opinion are the 'freest' in America.

The Washington DC-based public policy research group that bills itself as an organization to 'create a presence for and promotes libertarian ideas in policy debates' has South Dakota ranked at number five on its annual Freedom in the 50 States report.

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The rankings are based on state laws as of January 1, 2020, and state budgets through FY 2020.

The Mount Rushmore State landed in the top ten in:

  • ASSET FORFEITURE – 2nd
    (The extent to which a state’s asset forfeiture rules encourage revenue-sharing with the Department of Justice)
  • FISCAL POLICY – 4th
    (Taxes, government employment, spending, debt, and fiscal decentralization)
  • ECONOMIC FREEDOM – 4th
    (Fiscal and regulatory policy)
  • LAWSUIT FREEDOM – 5th
    (How plaintiff-friendly each state's civil liability system is)
  • REGULATORY POLICY – 6th
    (The liability system, property rights, health insurance, and the labor market)
  • HEALTH INSURANCE – 6th
    (State-level mandates and other health insurance regulations)
  • GAMBLING – 7th
    (An estimated cost of gambling restrictions and whether social or online gaming is allowed)
  • ALCOHOL – 8th
    (Restrictions on distribution, taxes, blue laws, keg registrations, and “happy hour” bans)
  • GUN CONTROL – 10th
    (The direct costs of gun laws to gun owners and dealers)

The study called the state's fiscal policies 'excellent' and the regulatory policies 'well above average'

South Dakota did not fare as well in a trio of other categories with bottom ten rankings in:

  • CANNABIS – 43rd
    (Medical marijuana policies and other policy variables)
  • VICTIMLESS – 44th
    (Variables that relate to individual actions that harm no one)
  • INCARCERATION – 47th
    (Incarceration rates, non-drug crime arrests, and drug enforcement)

The study called South Dakota's incarceration policies 'excessively strict' saying the state imprisons 'more than it should', with drug arrests 'well above the norm'.

The rest of South Dakota's rankings:

  • CAMPAIGN FINANCE – 13th
    (Public financing of campaigns and contribution limits)
  • LAND USE FREEDOM – 14th
    (Eminent domain reform and land-use regulations)
  • PERSONAL FREEDOM – 18th
    (Victimless crimes, guns, tobacco, and education)
  • TOBACCO – 19th
    (Taxes on tobacco, smoking bans, Internet bans, and vending machine regulations)
  • LABOR MARKET – 20th
    (Right-to-work laws, disability insurance requirements, and workers' compensation)
  • OCCUPATIONAL FREEDOM – 22nd
    (Licensing, education, and experience requirements)
  • MISCELLANEOUS – 24th
    (Regulations governing hospitals, auto insurance, and homeowners’ insurance)
  • EDUCATION – 24th
    (Requirements and restrictions for private and homeschools)
  • MARRIAGE – 28th
    (The ability for couples to enter into private contracts, both civil unions or marriage)
  • CABLE – 34th
    (Telecommunications deregulation and cable franchising)
  • TRAVEL – 35th
    (Seat belt laws, helmet laws, mandatory insurance coverage, and cell phone usage laws)

South Dakota Governor Kristi Noem issued a statement on the state's ranking:

“South Dakota has freedom in abundance. In the few short years since I took office as governor, we’ve already propelled South Dakota from a top-10 freest state status to a top-five status. I believe that we respect freedom more than any state in America, but this ranking indicates that we have more work to do. I look forward to working with the legislature to advance policies that protect freedom, cut red tape, and promote continued growth for our state.”

The state hasn't always fared so well on the CATO Institute list, especially when it comes to personal freedom.

South Dakota ranked as low as 42nd in 2014.

The other top states for freedom, according to the 2021 report:

  1. New Hampshire
  2. Florida
  3. Nevada
  4. Tennessee

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