10.1 SR 01-21-2025The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
10.1
Meeting Date
January 21, 2025
Prepared By
Joe Stremcha, Business Services Director/Assistant
City Administrator
Item Description
Cannabis Business Plan
Reviewed by
Cal Portner
Tina Allard
Action Requested
Review the municipal cannabis business plan and provide direction to staff.
Background/Discussion
The licensing application window opens on February 18 and closes March 14.
Financial Impact
The business plan includes a financial overview for projections and a 2026 budget.
Mission/Policy/Goal
Meet changing needs - agile.
Attachments
1. Cannabis Business Plan FINAL (January 21, 2025)
2. 2025 Cannabis Licensing Timeline
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Elk River Municipal Cannabis
Business Plan
[January 21, 2025]
City of Elk River
DBA: Cannabound
13065 Orono Parkway Northwest
Elk River, MN 55330
763-635-1000
www.elkrivermn.gov
cannabis@elkrivermn.gov
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Table of Contents
I. Executive Summary ....................................................................................................... 3
II. Products & Services ..................................................................................................... 5
III. Marketing Plan ........................................................................................................... 5
IV. Operational Plan ......................................................................................................... 7
V. Financial Plan ............................................................................................................. 10
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I. Executive Summary
Business Concept:
The City of Elk River proposes the establishment of a municipal cannabis retail operation dedicated to
delivering high-quality, safe, and compliant cannabis products to consumers. Our operations will 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.
The municipal store will adhere to Minnesta Office of Cannabis Management regulations with high standards
for quality controls, transparency in sourcing, and position the city as a leader in responsible municipal
cannabis operations. By fostering a culture of trust and transparency, the city aims to address public concerns
around cannabis consumption, safety, and legal compliance, ultimately driving consumer loyalty and
increasing sales.
Strategic Goals:
▪ Enhanced Trust & Product Safety:
We will implement best-in-class standards for testing, storage, and sales practices, ensuring that all
products sold meet or exceed local regulatory guidelines. This includes:
o Independent lab testing for potency, purity, and contaminants.
o Transparent labeling with clear, accessible product information.
o Employee training on safe consumption practices and compliance with laws.
▪ Consumer Confidence:
Our focus on safety and transparency will be central to building long-term consumer trust. By
offering high-quality products and professional customer service, we will not only attract repeat
customers but also elevate the community's perception of cannabis as a safe, regulated, and
responsible product category.
▪ Reinvesting in the Community:
A portion of the profits from the cannabis retail operation will be allocated to the General Fund to
support key local initiatives, including:
o Community parks and recreational facilities: Enhancing public spaces for health and
wellness.
o Local infrastructure: Contributing to road improvements, public transportation, and
neighborhood development.
o Public safety programs: Supporting law enforcement, fire departments, and emergency
response teams.
This commitment to reinvestment ensures that the business directly benefits the local community
while fostering a sense of shared ownership and civic responsibility.
Market Opportunity: The legal cannabis market is experiencing rapid growth, with increasing acceptance
and demand for regulated, high-quality products. Our operation will meet the growing consumer demand for
trusted, safe, and locally available cannabis products while also contributing to the community's social and
economic development.
Competitive Advantage:
• Commitment to safety and quality sets us apart from competitors, ensuring that customers feel
confident in their purchases.
• Community reinvestment aligns with municipal goals and increases public support, creating a
positive public relations narrative.
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• Compliance-first approach minimizes legal and regulatory risks, ensuring a smooth and sustainable
operation.
Financial Projections:
Gross profits from product sales will be reinvested into the community through our governmental fund
transfers to the General and Park Improvement Funds. We anticipate strong sales growth, driven by the
increasing consumer preference for regulated cannabis and the added value of supporting community-focused
initiatives. The cannabis business financial feasibility study presented by Morem & Waller and Point Seven
LLC 2024 provided a template for staff to project the local market projections. Staff conservatively estimated
the local market share for the potential revenues and are confident in the 6-year forecast for market stability.
Conclusion:
This municipal cannabis retail operation not only promises to deliver a trustworthy, safe, and compliant
cannabis shopping experience, but also stand as a model for how the industry can contribute positively to the
community. With an unwavering focus on consumer safety, public trust, and reinvestment in local initiatives,
the city municipal operation will thrive financially while improving the well-being of the community.
Municipal Cannabis Timeline
January 2025 - March 2025:
▪ Advertise, interview, and hire a Cannabis Store Manager.
▪ Initiate store site selection, acquisition, and design with an architect.
▪ Onboarding training and municipal process orientation.
▪ Develop a cannabis division budget.
▪ Networking with suppliers.
▪ Conceptual branding and marketing strategy (elkrivercannabis.com).
April 2025 - June 2025:
▪ Obtain cannabis licensure.
▪ Establish store policies/procedures.
▪ Marketing plan development.
▪ Vendor partnership and product ordering.
▪ Store location:
A) Finalize store design and construction bidding process.
B) Short term lease agreement for retail space.
July 2025 - September 2025:
▪ Marketing launch and direct messaging/campaign.
▪ Store location:
A) Store construction.
B) Move into leased space.
▪ Advertise, interview, and hire a cannabis staff leveraging hemp-based THC and Northbound Liquor
for retail training environment.
October 2025 - December 2025:
▪ Complete store construction.
▪ Marketing grand opening campaign.
▪ Soft launch cannabis operations.
January 1, 2026:
▪ Store grand opening.
April 20, 2026:
▪ Store wide sale.
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II. Products & Services
Products and/or service categories:
▪ Consumables (edibles, beverages, flower, etc.)
▪ General merchandise (accessories)
▪ Educational classes/trainings/sampling events
III. Marketing Plan
Cannabis Marketing Overview
▪ Market Research and Analysis
o Identify demographics and target audiences.
o Identify competitors for geofencing marketing.
o Build on tourism or individuals who do not have an accessible cannabis retailer.
▪ Branding and Positioning
o Define unique products, sustainability, local suppliers, and other individual elements to add to
the brand.
o Establish the official brand while taking the current THC brand and Elk River Liquor Store
brands into consideration.
▪ Digital Marketing Strategy
o Obtain domain and develop website plan.
o Research current SEO for cannabis retailers in Minnesota and set our SEO ranking goal.
o Incorporate email marketing in our current system.
o Create social media profile generation plan and content management plan.
o Utilize mobile ads and geofencing.
▪ In-Store Experience
o Work with staff to plan and market grand opening.
o Work with staff on campus and in-store signage and displays.
o Work with staff on a possible loyalty program.
o Work with staff on educational events, series, and tools.
o POV walkthroughs of what to expect, product information, and the experience.
▪ Local Advertising
o Discuss with staff attending local community events and sponsorships.
o Incorporate billboards, newspaper, guerilla marketing, direct mailers, and other avenues into
the general marketing plan.
▪ Public Relations
o Press release announcing the store opening to local media outlets.
o Work with community voices on reviews and influencer marketing.
▪ Promotions and Discounts
o Work with staff on any customer deals, loyalty points, coupons, special holidays (4/20) and
more opportunities.
▪ Compliance
o Stay up to date with local laws, regulations, and online laws for cannabis advertising (Meta,
Google, YouTube, etc.)
▪ Staffing
o Make decisions on these additions with the status of the communications staff and their
workload.
▪ Current Hemp-Derived THC Brand
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SWOT Analysis
▪ Strengths
o Joe Audette obtaining Ganjier Certification (February 2025).
o Strong leadership and proven retail management resources.
o Familiar municipal brand and community trust.
o Enhanced consumer safety through municipal sourcing of products.
o Hemp-based THC experience launching new category/market.
o Back-office support with finance, human resources, IT, marketing, etc.
o Inventory management experience.
▪ Weaknesses
o Regulatory Challenges and changes related to adaptability.
o Public product knowledge in cannabis and education related to proper usage.
o Limitations for on premise sampling to obtain relevant and timely feedback.
o Inventory selection unknowns and supply chain vulnerabilities.
▪ Low market supply through licensing delays by Office of Cannabis Management
(OCM).
▪ High demand for product SKUs resulting in stockouts and low consumer satisfaction.
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▪ Opportunities
o Expanding consumer educational leveraging ganjier and public safety.
o Shifting public perception of cannabis.
o Reinvestment in local community programs through General Fund and Park Improvement
Funds.
o Technological advancements and innovation with data-driven insights leveraging Placer.ai:
▪ Compare establish market trends for optimal business hours of operation and trends.
▪ Recommend optimal site locations for operation.
▪ Threats
o Overcoming the cannabis consumption stigma
o Regulatory and political risk through changes made by state, and federal regulators/lawmakers.
o Safety concerns related to product consumption and cash handling.
o Pricing volatility of the market based on supply chain challenges.
o FIFO (first-in, first-out) processes as product has limited shelf life.
o Competition with black market.
IV. Operational Plan
1. Location
▪ Considerations:
o Located in a high-traffic shopping center with 10,000+ vehicles/day, ensuring visibility to
both commuters and local shoppers.
o Proximity to popular retailers like Walmart, Home Depot, Target, Coburns, and Downtown
businesses, fostering strong foot traffic and complementary shopping patterns.
o Ample parking availability and existing infrastructure ensure convenience for customers and
operational efficiency.
Range Population
1 Mile 5,128
3 Miles 24,337
5 Miles 45,236
10 Miles 163,927
U.S. Census Bureau
2023 American Community Survey
▪ Potential site locations for commercial establishments:
o Natures Edge Business Center Second Addition (or Specht Property):
▪ High visibility from HWY 169 and 10 (35,000 ADT 2021).
▪ Established supplier in proximity.
▪ Proximity to Walmart, Home Depot, Target, Coburns, and other retail establishments.
o 18100 Zane Street Northwest:
▪ High visibility from HWY 169 (24,000 ADT 2021).
▪ Established retail area and adjacent to Walmart, Home Depot, etc.
o 430 Main Street Northwest:
▪ Visibility from Main Street and proximity to HWY 169 and 10 (12,000 ADT 2023).
▪ Vibrant centralized area and proximity to downtown, Walmart, Home Depot, etc.
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EXAMPLE
Green Valley Dispensary
Approx. 5,000sqft
4650 Tower Rd #108
Denver, CO 80249
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II. Organization Chart
Retail Operations
Manager
Cannabis
Manager
Westbound
Manager
Northbound
Manager
Full Time Clerk(s)
Part Time Clerks
Full Time Clerks
Part Time Clerks
Full Time Clerks
Part Time Clerks
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V. Financial Plan
Cannabis Business Financial Feasibility, Presented by Morem & Waller & Point Seven LLC 2024
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Cannabis Business Financial Feasibility Applied to Elk River
Elk River Market Projections 2026 2027 2028 2029 2030 2031 2032
Potential local market - Elk River 19079 19379 19679 19979 20279 20579 20879
Population that consumes cannabis 10% 10% 11% 11% 12% 12% 13%
% of consumers that will use legal market 50% 50% 55% 55% 60% 60% 65%
Potential MN city residents market size 953.95 968.95 1190.5795 1208.7295 1460.088 1481.688 1764.2755
Individual Consumer Example 2026 2027 2028 2029 2030 2031 2032
Average visits per month 2 2 2 2 2 2 2
Average visits per year 24 24 24 24 24 24 24
average spend per visit $35.00 $35.00 $35.00 $35.00 $35.00 $35.00 $35.00
Average spend per year $840.00 $840.00 $840.00 $840.00 $840.00 $840.00 $840.00
Market Size x Average visits per year 2026 2027 2028 2029 2030 2031 2032
Annual foot traffic 22894.8 23254.8 28573.908 29009.508 35042.112 35560.512 42342.612
Sales projection from local market $801,318.00 $813,918.00 $1,000,086.78 $1,015,332.78 $1,226,473.92 $1,244,617.92 $1,481,991.42
Potential local market tourists 23848.75 24223.75 24598.75 24973.75 25348.75 25723.75 26098.75
Population that consumes cannabis 13% 13% 14% 14% 15% 15% 16%
% of visitors that will use legal market 50% 50% 55% 55% 60% 60% 65%
Potential visitors market size 1550.16875 1574.54375 1894.10375 1922.97875 2281.3875 2315.1375 2714.27
Average spend per visit $840.00 $840.00 $840.00 $840.00 $840.00 $840.00 $840.00
Total visitor sales $1,302,141.75 $1,322,616.75 $1,591,047.15 $1,615,302.15 $1,916,365.50 $1,944,715.50 $2,279,986.80
Total sales for cannabis local market $2,103,459.75 $2,136,534.75 $2,591,133.93 $2,630,634.93 $3,142,839.42 $3,189,333.42 $3,761,978.22
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Fund: Cannabis Retail Operation
Acct. Explanation/Detail of Supplies or Services 2026
No. Estimated
REVENUES:
SALES $1,051,730
Cannabis Vape/Smoke
Cannabis Edible
Cannabis Beverage
Cannabis Paraphernalia
COST OF SALES $525,865
Cannabis Vape/Smoke
Cannabis Edible
Cannabis Beverage
Cannabis Paraphernalia
TOTAL REVENUE
525,865
EXPENDITURES:
PERSONAL SERVICES
4101 Regular Pay $154,950
4102 Overtime Pay $0
4103 Part-time Pay $126,500
4104 PERA $21,109
4105 FICA $17,450
4106 Other Retirement Contributions $0
4107 Medicare $4,081
4108 Insurance $51,795
4109 Workers Comp $7,378
4110 Unemployment Benefits $0
TOTAL PERSONAL SERVICES
383,263
SUPPLIES
4212 Fuel & Lubes $0
Unleaded fuel - delivery service $0
4217 Uniform Allowance $5,000
Employee logo clothing $5,000
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4219 Operating Supplies $15,000
Supplies $15,000
TOTAL SUPPLIES
$20,000
SERVICES & CHARGES
4301 Audit Fees $3,000
4319 Professional Services $0
4321 Telephone $1,750
Phone line $1,200
Cell phone - WB liquor manager $550
4331 Conferences/Schools $2,000
Training/workshops/conferences $2,000
4349 Advertising/Marketing $30,000
Billboards, social media, mobile advertisements $30,000
4361 Insurance $5,000
Property/liability insurance $5,000
4389 Utilities $30,500
Garbage/recycling $2,000
Natural gas $2,500
Water/electric $26,000
4404 Repair & Maintenance $24,800
Misc repairs & maintenance (includes delivery vehicle) $10,000
refrigeration/Humidor maintenance contract $1,200
Lawn maintenance $1,600
Window cleaning $500
Security system monitoring $700
Point-of-Sale system subscription $6,000
Rug cleaning & maintenance $4,800
4420 Depreciation $0
4421 Amortization $0
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4433 Dues & Subscriptions $750
MCCG $500
Elk River Chamber $250
4437 Taxes/Licenses $4,000
Tobacco license & retailers card $4,000
4438 Credit Card/Service Fees $0
Credit card/gateway fees $0
TOTAL SERVICES & CHARGES
101,800
OTHER FINANCING SOURCES
3910 Disposal of Assets $0
CAPITAL OUTLAY
4530 Other Improvements $225,000
Bond Payments/Depreciation
$225,000 ($2.5M Store Construction, 20yr Loan/Bond @ 4%)
4600 Debt Service $250
Copier Lease $250
4720 TRANSFERS OUT $0
TOTAL OFS, CAPITAL OUTLAY, & DEBT
SERVICE $225,250
TOTAL CANNABIS EXPENDITURES
710,563
CHANGE IN NET POSITION
(184,698)
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