In Minnesota, some cities are reluctant about the new legal cannabis market, while others see a chance to benefit. Elk River is one of 13 cities thinking about opening city-owned cannabis stores, a move that’s new and rare in the U.S. City Administrator Cal Portner explains that although the city council isn’t thrilled about legal cannabis, they accept it as a reality and want to make the most of it.
Elk River hopes to use revenue from cannabis sales to help the community. They also want to keep tight control over compliance, like they do with their municipal liquor stores. These liquor stores have a strong record for following the rules with alcohol and tobacco sales, and officials believe they can apply the same standards to cannabis.
Minnesota’s experience with city-run liquor stores gives Elk River confidence. The state has 176 cities with liquor munis, which bring in solid revenue, nearly $1 million a year for Elk River alone. These profits stay local instead of going to big corporations. Portner noted that to match the money made from the city’s liquor stores, Elk River would need about 45 new businesses paying property taxes.
The idea of city-owned cannabis shops is new. Washington was the only state with a government-run cannabis store, which operated from 2015 to 2021. Minnesota law sets a clear path for cities to open their own cannabis munis, a feature that other states don’t have. While initial losses are expected—about $185,000 in the first year according to city estimates—there is hope the stores will eventually turn a profit.
Most cannabis muni applicants, seven out of 13, are in the Twin Cities area. Cities like St. Joseph and Elk River are still waiting for approval from the Office of Cannabis Management. Elk River is even considering a building that would house both a cannabis store named Cannabound and one of its existing liquor stores called Northbound.
Not every city is on board. Albert Lea recently voted against allowing a private cannabis store, putting it at odds with state law. The city cited concerns about enforcing the rules and liability issues. Many other cities have chosen to limit cannabis businesses through zoning and caps on how many can operate, seeking a middle ground.
Municipal liquor stores don’t face restrictions on competition the way cannabis ones do. While liquor munis don’t have to allow private liquor shops, cannabis munis don’t count toward the limits on total cannabis businesses.
As Minnesota’s legal cannabis market grows, cities like Elk River are putting their own spin on things. They’re leaning on their experience with municipal liquor stores while keeping a close eye on how cannabis sales will fit into their communities and budgets.