A Minnesota city’s plan to open a government-run cannabis store is stalled after residents questioned whether the venture can pay for itself.
The Osseo City Council took no action at a June 22 meeting on a proposed $4 million tax abatement bond meant to fund construction of the store, according to KSTP-TV.
The pause followed concerns from residents about the project’s financial viability and the wisdom of the city owning a cannabis business.
Why did the City Council deny funding for a city-run cannabis store?
Osseo, a town of about 2,700 people 15 miles northwest of Minneapolis, already spent $725,000 to buy a vacant former newspaper building to house the retail outlet, according to the TV station.
The store would be operated by a third party, Voyageur Cannabis Services, rather than run directly by the city.
Voyageur has estimated the dispensary’s annual cash flow at $350,000, with net income to the city by year two of operation of just under $700,000, according to the Press & News.
Not everyone opposes the idea.
Laurie Duffy, owner of Duffy’s Bar and Grill, told KSTP that any new business that draws foot traffic helps the local economy.
“I think any businesses that are coming into town that are going to bring in people are going to be good for Osseo,” Duffy said.
Others are more skeptical.
Phil Lutgen, owner of Dick’s Bar and Grill, questioned whether a municipality should own a cannabis operation.
“I just don’t know how they can separate the difference between a cannabis store and being the owner of that cannabis store,” he told KSTP.
Subscribe to the MJBiz Factbook
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
What you will get:
- Monthly and quarterly updates, with new data & insights
- Financial forecasts + capital investment trends
- State-by-state guide to regulations, taxes & market opportunities
- Annual survey of cannabis businesses
- Consumer insights
- And more!
Do city-owned cannabis stores work?
Osseo’s hesitation comes as another Minnesota city tests the same model – and successfully, according to a city official.
Anoka opened Anoka Cannabis Co. early this year, becoming the first city-run cannabis store in the state and one of the few in the country.
The Anoka store netted more than $200,000 in its first few months, with profits earmarked to help offset property taxes, Mayor Erik Skogquist told KSTP.
