News and Best Practices

Benefits Abound in Public/Private Retail Partnerships

November 21, 2016

Washington state voters passed Initiative 502 to legalize cannabis in 2012, and city officials in the southwestern town of North Bonneville saw the writing on the wall. They figured that “we would end up with a store probably in our city limits,” said Mayor Don Stevens. “At least one, potentially two.”

But while some towns in rural Washington attempted to erect regulatory blockades against cannabis businesses, the North Bonneville City Council took a different approach: They created the nation’s first municipally owned retail shop. Thus, The Cannabis Corner was born.

The idea encountered some resistance at first. However, it’s been more than a year since The Cannabis Corner opened its doors, and some of that resistance has dissipated, Stevens said. What’s more, he’s expecting other rural municipalities to eventually follow suit.

Anatomy of a public utility district

The Cannabis Corner is a unique hybrid between private and public sectors. It’s an independently owned municipal corporation, not unlike a public utility district. “It’s not an extension of the city,” Stevens said. “It’s a separate municipal corporation of its own.”

Technically, The Cannabis Corner is overseen by a public development authority created by the North Bonneville City Council. Public development authorities are “special purpose quasi-municipal corporations” authorized under Washington state law, according to the Municipal Research and Services Center. Although these corporations can be used for a range of purposes, many municipal attorneys believe that they’re best suited for “unusual endeavors, which for a variety of reasons, the parent municipality would not want to undertake itself,” the MRSC’s website states.

The public development authority, which is governed by a five-member board, oversees The Cannabis Corner. The authority has final say on major decisions (such as moving to a new location) but doesn’t govern day-to-day details (such as deciding which products or strains the store carries), Stevens said.

On the state’s side of the equation, The Cannabis Corner is regulated the same as other cannabis stores in the state, said Brian Smith, spokesman for the Washington State Liquor and Cannabis Board.

Split opinions

So, why did this town of fewer than 1,000 people embark on such an experiment?

The answer lies in the 2012 passage of Initiative 502. In the wake of the vote that legalized cannabis in that state, North Bonneville officials were certain that cannabis businesses were headed their way. Just who would own and manage them, however, was less certain.

“Rather than just hoping that we got a good, honest, upstanding store owner to come into town and take a chance, we thought we would be better off to create our own public development authority and have a little more overall control over the store remaining in existence,” Stevens said.

The idea had its detractors. Initiative 502 passed with only a slender margin of support, with about 55 percent of state residents voting in favor of the measure and about 45 percent voting against it. The election results in North Bonneville mirrored that split. So, when the city floated the idea of creating a public development authority for a retail shop, public opinion was mixed.

“And so a little over half the people were in favor, and a little less than half the people didn’t think it was that good of an idea,” Stevens said. “There was a small, local group who thought it was a terrible idea.” Still, he added, many North Bonneville residents were willing to suspend judgment and see how the idea panned out.

The city’s experiment hasn’t invited the negative effects that its detractors feared it would. Stevens said that since The Cannabis Corner opened in March 2015, there hasn’t been an incident requiring local police presence. “We don’t see any increase in underage use or impaired driving or any of those kinds of negative impacts that people were concerned about.”

The store model works better for employees, too. The Cannabis Corner can offer better wages and benefits than privately owned retail shops, he said.

Although pockets of resistance remain, he believes most residents have become acclimated to the industry’s presence. “There are a few people who will probably always think that Reefer Madness is a documentary and pot’s terrible for everybody,” he said. “But the majority of people, I think, have kind of come to accept the fact that it’s a legal part of society and life here in Washington state.”

‘The first one and not the only one’

Smith said that, to his knowledge, there’s no other town in Washington that owns a cannabis retail shop. However, Stevens is expecting other communities to follow the path that North Bonneville has blazed. In fact, he’s hoping for it.

He believes the North Bonneville model is a viable option for rural towns in eastern Washington and Oregon. Many of them responded to cannabis legalization by creating moratoriums or enacting strict zoning regulations that make it nearly impossible for cannabis businesses to gain a foothold, Stevens said. But now, these communities are witnessing the tax revenues that businesses can generate. At the same time, the expected negative effects are noticeably absent. Given these factors, he thinks other small communities will adopt the North Bonneville way.

“We’ve been happy to be the first municipally owned cannabis store in the country,” Stevens said. “But we really want to be known as the first one and not the only one.”

By Bridget Manley
Dispensary Management Today articles are for informational purposes only and should not be considered legal guidance or advice on dispensary operations. You should contact an attorney or a qualified cannabis consultant for specific compliance and dispensary/retailing advice.
© 2016 CAN Performance Group, LLC. All rights reserved.
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