Columbia River Gorge town gets into pot business

With the world’s second-largest monolith nearby and some of the best windsurfing conditions in the country, North Bonneville has long been a popular playground for outdoor enthusiasts.

Just west of the Bridge of the Gods, North Bonneville is a frequent stopover for truckers and a quiet base camp for hikers, bicyclists and ice climbers in the Columbia River Gorge. Now, the rural city of about 1,000 people is about to shift into a new kind of recreational hot spot.

This weekend, North Bonneville will become home to what is apparently the nation’s only city-owned pot shop, The Cannabis Corner. While most cities around the state have spent the past two years either banning marijuana businesses or reviewing applications for new private stores, the city of North Bonneville took a different route, diving right into the industry.

No other city in Washington has even attempted to open a pot shop, said Brian Smith, a spokesman for the Liquor Control Board.

After an unusually rough and lengthy application review, the city won approval for a license to sell marijuana last month. The store is set to open on Saturday at 484 Evergreen Drive, stocked with dozens of strains that run the gamut of pricing and THC levels.

As the rest of Washington’s cities wait for the Legislature to deal them some of the state’s pot tax revenue, North Bonneville’s leaders say they are already a step ahead of everyone else.

A lucrative novelty

Driving into town along Highway 14, The Cannabis Corner is impossible to miss. Just a couple miles from Beacon Rock, the tall blue sheet metal walls of the store stand out among the trees like a welcome sign amid the cliffs of the Columbia River Gorge.

City officials, such as Mayor Don Stevens, hope the store will be an inviting destination for tourists, and for good reason. The city operates with an annual budget of about $1.2 million. But North Bonneville is still working to recover from several years of severe budget cuts that hit timber-dependent counties, such as Skamania County, worse than most areas.

Less than a year after Washington voters legalized recreational marijuana in November 2012, the North Bonneville City Council began mulling the idea of getting into the business. In 2013, the city created the North Bonneville Public Development Authority — a government-owned corporation — to apply for a license to sell marijuana and oversee operations once the Liquor Control Board granted approval.

The setup gives the city more control over the local pot industry while adding a significant revenue source to its ailing budget, said Stevens, who’s a non-voting member of the store’s governing board. But even bigger than that, he noted, the move puts North Bonneville on the path toward making history with a novelty like no other.

Perhaps the most similar business model to The Cannabis Corner can be found all the way out in Minnesota, said Jerry Zhao, a University of Minnesota professor with expertise on how local governments generate more revenue under increasing budgetary pressures. Since the end of Prohibition, Minnesota law has allowed cities to own liquor stores.

“Originally, municipal liquor stores may be operated as a means of public control, or for local convenience,” Zhao said. “But they are used increasingly as a revenue generator, and may be closed when they incur losses.”

More than 200 cities throughout Minnesota own liquor stores today, he said. On an annual basis, the stores generate about $300 million in sales and roughly $20 million in net profits, according to the Minnesota Municipal Beverage Association. All profits go directly back into local municipal budgets.

“If the operation is authorized, the city — as an early adopter of city-run pot shops — may generate quite some revenues,” Zhao said. “It could also use the store for the good reason of better public control.”

John Spencer, a managing consultant with Camas-based Pulse Consulting, projects big financial returns for the city in the store’s first year in business. Spencer, who works with the store’s governing board, hopes The Cannabis Corner will sell pot to an average of 40 customers a day, or 1,200 each month.

Overall, he anticipates the store will generate about $2.7 million in the first year, with a profit of $225,000. Under the laws outlined for the store, all profits are to go back to the city for public health and safety expenses.

That could make a big difference for North Bonneville, Stevens said. The city contracts for police services with the Skamania County Sheriff’s Office at a cost of about $72,000 a year, but Stevens anticipates the new revenue could be enough for North Bonneville to create its own police department.

Natural location

In 2012, more than 53 percent of Skamania County’s voters supported Initiative 502, which legalized marijuana. But with greater location-based limitations in Stevenson and Carson — more parks and schools — it was much easier to find a spot to sell marijuana in North Bonneville. By law, marijuana stores can’t be too close to parks and schools.

“We don’t have any schools in North Bonneville, and that’s huge,” Stevens said. “The city park is really the only official park. Everything else is just open space.”

And with the closest competition sitting dozens of miles away to the east in Bingen and to the west in Vancouver, city officials believe isolation works in The Cannabis Corner’s favor.

The store is just close enough for a drive from the Portland-Vancouver metro area. Yet it’s also far enough away for anyone afraid of being spotted by friends, family or co-workers to comfortably buy marijuana, said Tim Dudley, the chairman of the store’s governing board.

“We’ll get the east end of Clark County that will not want to have their reputations tarnished,” Dudley said, “(which is) my argument from day one why this will work here.”

After North Bonneville City Councilor Charles Pace pitched the idea to his colleagues in September 2013, the city held a series of public meetings about the plan. Few residents spoke out against it, and some are even excited about the possibilities of what the store could do for North Bonneville.

Zach Martin, the manager of the Dam Roadhouse Restaurant located just down the street from The Cannabis Corner, said he’s working out deals to package coupons for the restaurant with purchases from The Cannabis Corner.

“Most people around here are really excited about it,” Martin said. “We’re just looking forward to the proceeds to help build Bonneville back up.”

Of course, some local businesspeople are still wary of the idea.

For many reasons, Dave Hutchison, the manager of the Lewis & Clark Campground & RV Park, is uncomfortable about having a pot shop little more than a block from where he works.

Tourists driving high along the windy, tree-lined stretches of highway that run up to North Bonneville will put safety on the line, he said. And Hutchison expects the store to draw more crime to the city.

“It’s a place waiting to be robbed … .,” he said. “And being out in the middle of nowhere, like it is, it’s easy access off the freeway.”

Brad Andersen, a trial attorney from Stevenson, even tried to put a halt to the store. Citing the drug’s illegal status at the federal level, Andersen, a former Skamania County prosecutor, said the city should never get into the business of recreational marijuana.

“I threatened to file for recalls against the mayor and the city council members,” he said. “It’s still in violation of federal law.”

Early on, Andersen worked with a group of local opponents to the pot shop. In recent months, their voices have gone quiet as the community waits to see how the experiment plays out in its first year.

“If there are enough citizens that decide they want to challenge this, then I’ve offered to provide my services,” Andersen said.

Road to approval

When the city turned in its application to the state, it wasn’t the only one vying to convert the empty pole barn at 484 Evergreen Drive into a pot shop. Ryan Casper of Washougal also eyed the building for his own Tenth Amendment Trading Company and submitted an application soon after.

North Bonneville’s application baffled state officials, since no other city had even tried to get a license to sell marijuana. In the review process, a mix-up initially landed the city with a rejection letter from the state.

A state analyst turned down the city’s application after deeming it too close to a park. Meanwhile, Casper got the go-ahead to move forward on the same property.

That park happened to be Hutchison’s RV park, which shouldn’t have disqualified the city’s application. Once Mayor Stevens set the record straight with state analysts, the city’s application was back in the mix.

At the time, Liquor Control Board officials had no idea how to review North Bonneville’s application, agency spokesman Brian Smith said. In all, the state ended up conducting background checks on 14 people, including the city council, their spouses, Mayor Stevens and Dudley, the chairman of the store’s governing board.

The process itself was unprecedented, Dudley said.

“The rules that they had weren’t written for a group like us,” he said. “We were their largest group that they had to background check. It took a long time to get through that process.”

The Cannabis Corner’s board has spent about $283,000 to open the store, said Spencer, its managing consultant. All of that money comes from private loans, he said.

“No public money is at risk whatsoever,” Spencer said.

The business should be a boon for the city, Stevens said, and he wouldn’t be surprised to see others follow in North Bonneville’s footsteps. But the bottom line for the experiment, he said, is that if anything goes wrong, the store’s governing board has the authority to pull the plug.

“The council can pretty much at any time just have a vote and disband it,” Stevens said. “So, that gives the city a really nice safety valve.”