Like many cities and towns across the U.S. who are revenue challenged, North Bonneville, Washington, has an aging population, a small commercial tax base and income challenged tax payers.
So, the city decided to take a creative approach when its home state of Washington recently adopted initiative 502, allowing for individuals to license and own/operate marijuana retail stores.
Incorporating Pot for Revenue Generation
North Bonneville’s city council decided to investigate forming a Public Development Authority (PDA) that would operate a city-owned marijuana retail store.
According to an article in Cityvision Magazine (awcnet.org), PDAs have been chartered around Washington state since 1972, allowing for legally separate entities that accomplish public purpose activities without assuming them into regular functions of government. The PDA is essentially a public corporation created to facilitate and manage municipal economic development projects, and governed by a volunteer council. There are currently more than 60 PDAs in Washington state.
Financing Public Safety
Initiative 502 will create 334 retail marijuana stores around the state, allotted on a per capita basis by county.
Utilizing $15,000 from its tourism fund for start-up capital (with an expected total cost of $150,000), the city will lease an existing barn at an old commercial site and convert it into a marijuana retail outlet.
Annual profits from the store are projected to be $65,000, however, the PDAs charter does not allow the city to take revenue directly from the operation. Instead, they will likely use profits to offset the $100,000 spent on its annual public safety contract with they county sheriff’s office. Any money saved from policing could then be used for to pay for other needs such as infrastructure.
Gov1 has covered the legalized marijuana movement and its impact on municipal finance numerous times including recent articles on the state of California’s efforts and sentencing reform in NY state.