Minnesota experiments with cannabis sales in a city-run store

The city of Anoka, a suburb north of Minneapolis-St. Paul, has opened Minnesota's first government-run cannabis dispensary, a model still rare in the United States.

Anoka Cannabis Company held a pre-opening event this week for industry professionals before welcoming walk-in customers, marking an important step in the rollout of recreational consumption in the state.

Located in a 300-square-meter building on East River Road, next to the city's municipal liquor store, the dispensary offers cannabis flowers, pre-rolls, gummies and drinks.

«This is truly a historic day,» said Mayor Erik Skogquist at the inauguration. «Our residents want safe, vibrant and well-maintained communities, while keeping taxes as low as possible. The Anoka Cannabis Company enables the City of Anoka to do just that.»

A municipal experiment in cannabis retailing

Unlike most legal markets, where private operators dominate, the City of Anoka runs the dispensary itself, from staffing to day-to-day operations. Kevin Morelli, the city manager in charge of overseeing alcohol and cannabis operations, said the store sources from the Prairie Island Indian Community and the Mille Lacs Band of Ojibwe. Minnesota's regulatory framework effectively enables tribal producers supply the state-regulated market through agreements.

Demand seems to be strong. Online bookings for the opening weekend quickly sold out, and city officials expect a strong turnout in the months ahead. «We expect to be very busy,» said Morelli. «There aren't many stores open and, again, we want people to come here and come back regularly. We want to build customer loyalty.»

For customers like Jeffrey Milford, who drove an hour from Dalbo, proximity is important. He describes legal cannabis as an alternative to prescription painkillers and alcohol, adding that access through a regulated, city-run store is reassuring.

Why do cities get involved?

Anoka is the first, but it won't be the only one. Twelve other Minnesota cities have applied for cannabis retail licenses with the state Office of Cannabis Management (OCM). The motivations are similar: to diversify municipal revenues, reduce tax pressure and reinvest profits in local services such as parks and infrastructure.

In Osseo, a municipal dispensary is planned in the former headquarters of a local newspaper. The model there is different. Osseo will hold the state license, but has partnered with Voyager Cannabis Services to handle staffing, training, compliance and inventory management. Mayor Duane Poppe presented the initiative as a pragmatic response to residents' concerns about funding municipal services without raising taxes.

A third city, St. Joseph, says its store is ready, but remains on hold pending final approval from the CMO. «We've already decided and planned everything,» said Mayor Adam Scepaniak. «We're just waiting for the CMO.»

Lessons learned from past attempts

Government cannabis retail isn't exactly new. A city-owned store operated in North Bonneville, Washington, from 2015 to 2021, but eventually closed its doors. Former mayor Brian Sabo later said sales never broke even, undermining hopes of a financial windfall.

This mixed track record partly explains why some Minnesota cities have backed down. Elk River and Buffalo both suspended or abandoned their projects, citing public health concerns, regulatory uncertainty or waning political interest once private operators entered the scene.

Still, supporters say Anoka's launch is a true life-size test. «They won't just be pioneers,» said Jacqara Jackson, an Elk River municipal employee, «but they'll kind of help see how cannabis thrives, but in an urban context.»

For now, Minnesota's experiment is just getting started, with Anoka setting the pace and other cities watching closely to see if municipal cannabis retail can really deliver on its promise.