Elk River Plans to Open Municipal Cannabis Business

Elk River plans to open a municipal cannabis store in 2026.

“I have had a lot of people come up to me and say, I don’t want marijuana sold in Elk River,” Dietz said. “I said, well, that’s great, but we don’t have a choice. You know, we have to have a license for every 12,500 people, whether we want to or not. So there’s no reason why we shouldn’t get involved in some of this and generate more revenue for our budget.”

If all those projections prove out, it’s estimated that 2026 sales in the community could top $800,000 — to be split between the number of retailers.

Over time, these same conservative estimates show the sales among Elk River residents could top $1 million by 2028 and be nearing $1.5 million by 2032. Those numbers do not even include visitors to the city who would also be consumers, according to a chart prepared by Elk River officials. Visitor sales were projected to top $1.3 million in the first year of operations.

Elk River officials based their projections on a conservative reading of a broader cannabis business financial feasibility study done by Morem & Walter & Point Seven in 2024.

As Dietz said, state law requires cities to allow at least one retailer per 12,500 residents, not including a municipal operation.

Given this criteria, Elk River has chosen to allow the minimum of three retail locations and one municipal retail location that does not count toward the minimum of three.

With a smaller population, Monticello, in contrast, is required to allow a minimum of two retail cannabis business registrations.

The licensing application window for such businesses opened this week, on Tuesday, Feb. 18 and closes March 14, with the Minnesota Office of Cannabis Management (OCM) serving as the regulatory agency that will issue final approval.

“They are not subject to a lottery, nor does it count against the total number of cannabis stores within the municipality,” said Jim Walker, a public information officer for OCM. “We really don’t have a position on the matter. We are intent on following the statute.”

Elk River city staff and the council have wasted little time preparing to make the city’s own run at acquiring a permit from the Office of Cannabis Management to have a municipal operation.

Assistant City Administrator and Director of Business Services Joe Stremcha presented a business plan at a Jan. 21 City Council work session.

He returned Monday, Feb. 3 with a resolution to solicit requests for proposals from vendors to ascertain site confirmation and construction costs as well as develop construction documents after the city approves preliminary design and cost estimates.

The store has been dubbed Cannabound. A site location has not been identified for the dispensary and the city is considering either a new standalone or conjoined construction and leasing opportunities. The expected project calls for a 5,000-square-foot space in a new facility or a remodel of an existing space it could lease.

Stremcha highlighted numerous advantages cities have over private operators who may seek a permit to open a retail dispensary. Many of the advantages stem from having an established municipal liquor operation.

Another advantage, Stremcha said, is the city has a great marketing team in place and ancillary services like human resources to shoulder some of the costs to running a retail business.

According to an executive summary, the operations would be built on a foundation of enhanced trust and product safety standards, with strict enforcement of regulatory compliance to ensure consumer confidence and well being.

Stremcha said the city would work on the educational component surrounding cannabis while at the same time try to remove some of the stigma around the product itself.

Elk River City Council members have expressed internal struggles with the legalization of marijuana that will allow for retail sales of the drug.

The newest council member, J. Brian Calva, who has been named a part of the beautification committee, has had questions about the location of such retail space and the look, with visions of head shops that emerged from the hippie counterculture in the late 1960s.

“I want new industry to come to the city, but I’m not excited about spreading around (this) industry,” he said.

City Administrator Cal Portner pointed out the city has sign ordinances and code enforcement to address issues like that and ensure businesses don’t look obnoxious.

“I think when you look at our business districts, our commercial districts, I think they come across as appealing,” Portner said. “And we see people upgrading other places quite often, too.”

Portner also pointed to existing CBD stores like Sacred Leaf and Minnesota Roots blending into their surroundings.

Calva also asked staff’s feelings about the potential for having retail locations in downtown Elk River.

Council Member Jennifer Wagner said she is trying to keep an open mind as the city adapts to changes on this front. “I’ll be honest, the cannabis industry is outside my personal purview, so I don’t have a lot of personal experience,” she said. “I’m trying to learn about it more and understand it in a broader sense.”

She said she also understands people have very strong feelings that come down on the side of both pros and cons, ranging from health and well being benefits to a belief that cannabis is a really bad drug.

“For me personally, I’m just trying to have an open mind and learn more about the industry,” she said.

Council Member Mike Beyer said he has his own personal views, too, and as unfortunate as it might be, “it’s coming,” he said of the changes on the horizon.

As for Monticello, city leaders haven’t ruled out the prospect of municipal cannabis altogether, and said they’re keeping an eye on the emerging industry in Minnesota.

“We continue to monitor industry trends, and the laws surrounding it, to gauge if and when we may enter the cannabis market,” said Stephanie Trottier, the city’s communications specialist.

— Monticello Times editor Lauren Flaum contributed to this report.