(Bloomberg) -- North Bonneville, Washington, has become the first U.S. town to open its own recreational marijuana store, in an experiment that could serve as a model for cash-strapped cities looking for ways to generate revenue.
The city of almost 1,000 on the Oregon border opened Cannabis Corner on Saturday to a line of about 30 people. Officials estimate the store will produce about $3.5 million in revenue in the first year, some of which will be steered to police and public-health expenses.
“This city has a hard time paying its bills and so this, if it turns out to be a good operation, will be a financial boon to our community,” said Steven Hasson, the city administrator. “If we’re successful, other cities here in Washington and around the country will look at it as a possible option.”
The city, nestled in a gorge surrounded by evergreen-lined cliffs, had a budget of $1.2 million last year and ran a shortfall ranging from $30,000 to $60,000, Hasson said.
The city used about $280,000 in private loans to renovate and stock the store without dipping into taxpayer dollars, said Tim Dudley, president and chairman of the five-member North Bonneville Public Development Authority, created by the city to run the business. Initial profits will go toward repaying the loans, with an estimated $100,000 in revenue steered to the city in its first year and double that in the second year, he said.
$108 MillionStatewide, recreational marijuana stores generated $108 million in marijuana sales and $27 million in taxes since they began operating in July, according to data from the Washington State Liquor Control Board, which regulates the industry.
North Bonneville was the only city in Washington to apply for an application to run its own store, according to board spokesman Mikhail Carpenter. The liquor board has issued 124 other licenses for privately run stores in Washington, he said.
The store, which is housed in a 1,400-square-foot renovated concrete company maintenance shop, has 11 employees who qualify for state retirement benefits, Dudley said.
About 60 percent of customers were locals and the rest tourists, Dudley said. The nearest marijuana stores are about 40 miles away, he said.
‘Constant Flow’“It’s been a constant flow of people,” Dudley said. “So far the sales have exceeded our initial expectations.”
If all goes as planned, marijuana-derived funds will pay for animal control and turning on street lights that were dimmed for budget reasons, said Hasson, the city administrator.
“There are just a variety of things that are basic services that people expect that they’re not getting that this will help pay for,” Hasson said.
Bob Bianchi, a North Bonneville city council member, said he opposed the store because it would encourage drug use. The five-member city council agreed, on a 3-1 vote, to create the Public Development Authority, with Bianchi on vacation and council member Mike Hamilton voting against it.
“I don’t believe we need another habitual drug added to society,” Bianchi said. “We already have alcohol, tobacco, cigarettes.”
Mayor Don Stevens backed the store and was met with applause when he became the first to buy marijuana there on Saturday.
The publicly run store isn’t subject to federal income taxes and Washington is an income tax-free state, allowing the store to charge less for marijuana, Hasson said.
“You have a quality product and you keep the cost down and you don’t have a lot of competition, which we don’t, then you’re pretty much in the financial driver’s seat,” he said.
Consumers visiting from other states, including Oregon, are required to consume their purchases in Washington, he said.
To contact the reporter on this story: Alison Vekshin in San Francisco at firstname.lastname@example.org