Our liquor stores have never failed compliance tests for either tobacco or alcohol. “We feel that we can achieve the same results within the cannabis sector.”
While some Minnesota municipalities fret about regulating the newly normalized and legalized marijuana sales in their cities, others see a business opportunity.
Elk River, Minnesota is one of 13 cities that are considering municipally-owned cannabis shops. In this respect, they would be breaking new ground as there are no government-run cannabis shops in place anywhere in the United States. Cal Portner, Elk River City Administrator, describes Elk River as making the best of its situation.
“I sense our council’s lack of enthusiasm for the legalization law, but that they are accepting reality”, he stated.
Part of what makes cannabis so appealing is the potential revenue from sales and the way it could be used in communities. It is important to ensure compliance.
Portner said, “Our stores always pass compliance checks for both tobacco and liquor.” We feel that we can achieve the same results in the cannabis industry.
The Office of Cannabis Management of the State has released a list of all cities that are interested in running municipal cannabis stores.
- Anoka
- Blaine
- Buffalo
- Byron
- Elk River
- Grand Rapids
- Lauderdale
- Mounds View
- St. Anthony Village
- St. Joseph
- Osseo
- Owatonna
- Wyoming
Model for a liquor munis
Washington is the only state that has a track record for a cannabis store run by government. A North Bonneville shop opened in 2015, and it operated through 2021. Minnesota’s approach to cannabis munis was what set it apart from Washington and the other states with legalized marijuana.
Portner is confident that the concept will work, despite being new. The established Minnesota muni model, which was also new nationally, provides Portner with confidence. He said that cities have extensive entrepreneurial experience, and already sell hemp-based products containing THC in their liquor stores.
“Portner explained that we’ve spent a lot of time in practice to get to know the products, and also the side dealing with customers.
Elk River’s budget is nearly $1,000,000 higher because of municipal liquor sales.
Portner stated that the city’s liquor munis kept profits in-town, instead of going to companies based outside of town.
He added, “We pride ourselves on being among Minnesota’s top liquor store operators.” The money is put back into the community.
Minnesota’s Office of the State Auditor released its latest report annually on liquor munis. As of 2023 there were 176 municipalities that operated them. In 2023, the combined net profit of most munis was $31.6 million. Elk River generated 962,190. Buffalo brought in $710 505. St. Anthony Village is $426,385 positive.
Paul Kaspszak is the executive director of Minnesota Municipal Beverage Association. He says that even modest net profit, such as $10,000 per annum, can be good for small towns.
The $10,000 was not going to be generated by anything else in the area, he explained.
In this hypothetical scenario, 100 homeowners within the community would be able to save up to $100 on their property tax. Portner, a resident of Elk River said that an extra 45 businesses would be needed to raise enough property taxes in the town to equal profits generated by city liquor sales.
Portner says that cannabis sales forecasts are speculative and will likely not be profitable for a few years. An estimate for the city prepared in January estimated that first-year losses would be $184,698 between investments in inventory, capital, marketing, and education.
Greater Minnesota is home to all but 18. Seven of 13 cannabis muni applications are located in the Twin Cities metropolitan area.
Adam Scepaniak (St. Joseph mayor) and officials of other cities listed on the list have confirmed that they are still waiting for OCM approval in order to obtain their cannabis licenses. St. Joseph’s mayor, Adam Scepaniak, and other officials from cities on the list confirmed that they were still waiting for OCM approval to get their cannabis licenses as of last week.
Elk River may build a facility that will house its municipal liquor shop and cannabis store. Northbound will remain as the liquor muni’s name, while Cannabound is the new name for the cannabis side.
Deanna Weely, Owatonna’s manager of communications, confirmed in an e-mail that the city applied for its muni cannabis license on 13 March. It will not be decided until the entire license process has finished.
Al Roder, the City Administrator in Byron at the time, noted that the application was not binding on the city.
He said on a city Facebook post that “Asking for a license, or even getting one doesn’t make us commit to opening a dispensary.” The window for applying for a licence is extremely short.
The attitudes towards cannabis are diverse
Albert Lea is at the other end of the spectrum from the thirteen cities that are exploring cannabis munis. A City Council vote last week stopped a privately run cannabis store from opening—an apparent violation of state statute. The city’s update on Facebook described that vote as based upon “questions regarding enforcement, liability and responsible” which required further review.
A middle ground strategy is to adopt zoning restrictions that limit where cannabis businesses can operate. This lever, given by state law to the cities, allows them to do so. This approach was adopted by almost all major cities, along with caps on how many businesses can be allowed to operate.
There is a difference between state cannabis and liquor municipal regulations. The muni-liquor regulations do not require a city to have private alcohol stores in its borders, but they cannot monopolize the cannabis market. Muni stores of cannabis do not count against the cap.
This article first appeared on MinnPost and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Unsplash photo by davide Ragusa.
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