Tuesday, July 16, 2024

Kasson Liquor continues to churn profit from THC sales, city nixes municipal pot shop for now

One of the goals of having a municipal owned liquor store is to help drive revenue for the community, and thus, help to lower taxes, or help pay for projects that would otherwise go to the wayside.

Now, aside from just selling alcohol, some communities including Kasson, have opted to include the sale of THC products. THC is the psychoactive ingredient contained in cannabis.

In December, Liquor Manager Cathy Pletta made the decision to begin selling both hemp-derived THC edibles and drinks, after seeing the success other municipal liquor operations were having.

The products became legal in 2022, following the passage of the state’s Farm Bill, and then in 2023, legislators clarified the rules making it so the products would be limited to five milligrams of THC per serving and 50 milligrams per package. To be in compliance with federal law, the products also need to contain 0.3% THC or less.

‘End of Prohibition’

Pletta chalks up the new products sold in the store, as a new opportunity to increase revenue, by selling a product recently made legal.

“It’s just like a new prohibition ended,” Pletta said.

The success has been noticeable.

Pletta said since the store began selling the products, the store has seen a month over month increase on its profits with an average increase of 46% per month. Pletta declined to provide specifics on how much of a profit has been made through THC sales.

Pletta said while not every municipal liquor store across Minnesota is selling THC products, she said the number is increasing.

“If they weren’t initially they are gradually getting closer to it,” Pletta said. “There are some communities who have elected not to sell it. But…this is just like the end of prohibition all over again.”

She said when prohibition ended there were likely communities who were “afraid” to go into alcohol sales. She said the reality is, the money raised through the municipal sales helps to generate revenue without taxes.

“It’s a nice new revenue stream,” Pletta said. “It’s got a good margin on it and we’re controlling the sale of the substance just like we control the sale of other substances.”

Questions about how the funds have been used in recent years, were referred to City Administrator Tim Ibisch.

“Over the past couple of years profits from the Liquor Store have gone to resurfacing the tennis courts at Veteran’s Park, the skate park in Lions Park, the City Welcome signs on Hwy 14, downtown beautification, supporting economic development efforts, and sponsorships of various parts of events like Festival in the Park,” Ibisch wrote.As you can see, mostly it has gone to support the Parks system.”

He said in the past decade, approximately $350,000 has been allocated for various projects with $250,000 kept in the fund balance for operations.

Pletta said currently the THC drinks sell better than edibles.

The best-selling product so far? Blackberry Lemonade, made by the company Higher Vibes.

Meanwhile, not every city who is selling THC edibles and drinks at their stores, are seeing a lot of success.

According to West Concord City Administrator Paula Even Trenda, the store

“sell drinks and gummies but hardly any.” Based on a conversation with the Liquor Store Manager, the city’s Municipal Liquor Store sells maybe one to three a day, she said.

Not Only Business
In Town

Unlike some other communities, Kasson has no local licensing mechanism in place for THC edibles, and instead, the only requirement is to register with the state’s Office of Cannabis Management.

“The Kasson Kasson Store and Kasson Smoke Shop are licensed by the state, and sell hemp-derived THC products. Both Kwik Trip locations are licensed but are currently not selling products,” Police Chief Josh Hanson wrote in an email.

Hanson thus far, said there haven’t been any issues.

“We have done educational compliance checks and have not had any problems with the businesses selling THC products,” Hanson said.

Beginning in 2025 businesses are expected to be granted cannabis dispensary licenses through the State.

Despite the success so far, from selling THC at the liquor store, the City Council wasn’t in favor of expanding its operation, by selling joints.

“There are some cities I know who are looking into municipal dispensaries because [they] could be worth a lot of money,” Pletta said. “Our council chose not to pursue it and that’s fine. It’s their choice.”

Municipal Pot Shop Off Table For Now

While hemp-derived THC edibles and drinks have seen high revenue numbers, the City Council, during a work session in March, opted against looking into a municipal dispensary, a concept other communities across the State are doing research on.

Some communities, similar to municipal liquor operations, are debating whether or not to apply for cannabis licenses when they become available in 2025. Those licenses, unlike the current hemp-edible licenses, would allow businesses to sell flower, and other THC products.

“While State Statues provide a possibility for Minnesota cities to open municipal cannabis sales facilities, more research is needed to determine the legal ramifications of such an operation,” City Administrator Tim Ibisch wrote in an email.

“In addition, at this time, the Kasson City Council has chosen not pursue this option but rather it will take a measured approach to adopt ordinances with reasonable restrictions on the time, place, and manner of the operation of cannabis businesses.”


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