First Municipal Pot Shop: A Panacea For Sagging Local Economies?

Robert Brand March 16, 2015 0

The first municipal-run marijuana dispensary in America, called The Cannabis Corner, opened this past weekend in Bonneville, a tiny town near Portland, Washington, populated by roughly 1,000 people. The pot shop is run by the town’s public development authority and is funded by private loans, which took out the initial $15,000 town loan. As the town’s economy is struggling with the demise of its timber industry, which was last strong in the 1990’s, “the city is on its knees, financially,” says John Spencer, the former city administrator turned consultant. Further, the town is bucking the trend of one-quarter of Washington’s states that still ban marijuana.

SMaybe other towns and cities with struggling industries could learn something from Bonneville. Municipalities with crashing shale oil businesses, perhaps? Indeed, collapsing crude prices are beginning to leave some towns cash strapped, and these towns were already suffering surges in crime and violence. Municipal financial pressures mean fewer resources to dedicate to basic necessities like deterring crime. Meanwhile, oil production isn’t slowing down (as oil producers make up for the lost revenue from collapsing oil prices), which means boom town populations aren’t declining alongside revenues. According to NPR, this dynamic is leaving some communities with a combination of decaying infrastructure, less money for public schools, and inadequate manpower to combat sharply higher crime rates. This comes as monthly expenses like rent skyrocket in the face of surging demand.

Similarly, formerly timber-dependent Bonneville “has run negative numbers in the general fund multiple months in a row because they have no retail sector here and in Washington State you’re dependent on a retail sector because of the sales tax,” says Spencer. “And this store could very well make a town that is otherwise going to fail.” The town’s objective is to pour the shop’s profits into the sagging local economy by partnering with the city on projects, which makes the model different from private-run dispensaries that are largely created to earn money for their owners, like any private business.

Taxes on marijuana-related sales still go straight to the State Government, but the expected profits are no mere rounding error for such a small town as Bonneville. Officials are forecasting 2015 profits of $225,000 and half a million in 2016. According to the North Bonneville’s Mayor Don Stevens, who embraces the title of “The Marijuana Mayor:”

“While (the shop) can’t just deposit its profit directly into our general fund, (it) can as a separate corporation, help us defray costs with law enforcement contracts, public health and safety programs, any number of things that will ultimately have a positive effect on our bottom line.”

The idea is to grow tourism, Bonneville’s major industry now that timber collapsed, and tourism will attract cannabis or other businesses to the area to jump start the local economy.

Hmm, sounds like a plan for cash-strapped former oil boom towns, like those in North Dakota and Montana, among many other oil-dependent states. Although Bonneville’s lead is probably a panacea for the ensuing crash in America’s shale oil localities, it is unclear whether marijuana legalization will come soon enough to these states.

 

By Robert Brand

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