Marijuana sales may serve as model for US city revenue

NORTH Bonneville, Washington, has become the first US 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 (R42.17m) 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.”

North Bonneville, about 56km east of Portland, Oregon, opened the store three years after residents in Washington and Colorado voted to legalise recreational marijuana use. Oregon and Alaska followed last year.

The city, nestled in a gorge surrounded by evergreen-lined cliffs, had a budget of $1.2m last year and ran a shortfall ranging from $30 000 to $60 000, Hasson said.

Profits

The city used about $280 000 in private loans to renovate and stock the store without dipping into taxpayer dollars, said Tim Dudley, the president and chairman of the five-member North Bonneville Public Development Authority, created by the city to run the business. Initial profits would go towards 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.

Statewide, recreational marijuana stores generated $108m in marijuana sales and $27m in taxes since they be- gan 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 had issued 124 other licences for privately run stores in Washington, he said. The store, housed in a renovated concrete company maintenance shop, had 11 employees who qualify for state retirement benefits, Dudley said.

About 60 percent of customers were locals and the rest tourists, Dud- ley said. If all goes as planned, marijuana-derived funds would pay for animal control and turning on street lights that were dimmed for budget reasons, said Hasson, the city administrator.

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 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 was not subject to federal income taxes and Washington was an income tax-free state, allowing the store to charge less for marijuana, Hasson said. – Bloomberg

Statewide, recreational marijuana stores (in US) generated $108m in sales and $27m in taxes.