Desert Hot Springs at front of pot cultivation boom

The corner of Two Bunch Palms Trail and Little Morongo Road doesn’t offer much to visitors.

A few nondescript warehouses dot the Desert Hot Springs land. Beer cans, broken glass and sand shift underfoot as the city of roughly 28,000 stretches out to the east.

Come back in a few years, though, and this tract of undeveloped desert could be Southern California’s marijuana Mecca. City leaders recently permitted three pot cultivation facilities for the area. Combined, they could generate more than $5 million in annual tax revenue for the city.

Desert Hot Springs leaders turned to marijuana last year to curb a budget deficit. But the city is among the first in California to permit large-scale grow operations. Adelanto in neighboring San Bernardino County is another. Humboldt and San Mateo counties and the city of Oakland have either recently enacted cultivation ordinances or are in the process of doing so.

The new grow operations could turn Desert Hot Springs into a regional hub for the growing marijuana industry.

“Desert Hot Springs has sort of taken the charge on this,” said Nate Bradley, executive director of the California Cannabis Industry Association. “They’re definitely going to set themselves up as a standard.”

A growing movement

California’s marijuana industry has made major strides since a ballot measure legalized the plant for medical use nearly 20 years ago. The state made up almost half of the $2.7 billion in U.S. marijuana sales last year, according to the market research firm ArcView.

Marijuana is illegal under federal law. But President Barack Obama’s administration in 2009 essentially said it would not prosecute medical marijuana users or distributors as long as they complied with applicable state laws.

That triggered an explosion in the marijuana industry, where the threat of federal prosecution had previously scared investors away. In California, Mendocino County began allowing growers to cultivate up to 99 plants in 2010, Bradley said. Cities such as Palm Springs and Desert Hot Springs later let marijuana dispensaries grow up to that 99-plant limit.

Nearly two dozen states have legalized medical marijuana, and activists are planning a statewide 2016 ballot measure to legalize the drug for recreational use in California. National opinion has tipped in favor of legalizing marijuana in recent years, according to the research firm Gallup.

A federal judge ruled late last month that the Justice Department can’t go after dispensaries complying with state laws. That sent a “resounding” message to the marijuana industry, Bradley said.

More cities may consider allowing large-scale marijuana grow operations following that ruling as well, Bradley said. Desert Hot Springs could serve as a model.

“What people do when they write ordinances is say, ‘Alright, who’s done this?’” He said. “They’re going to definitely be looked at across the state.”

In Desert Hot Springs, applicants need to give the city a site plan and floor plan of the facility as well as a detailed breakdown of how they’ll keep it secure. Applicants and any managers of the site must also undergo background checks.

Every cultivation facility then pays the city an annual tax of $25 per square foot for the first 3,000 square feet and $10 per square foot for every one above 3,000 square feet.

Drafting working marijuana rules isn’t easy. Cities have to make sure they leave no reason for the federal government to intervene, said Bob Selan, an attorney who works extensively with dispensaries and others in the industry.

Selan represents the Coachella Valley Patients Collective, which won Desert Hot Springs City Council approval earlier this month to erect about 380,000 square feet of cultivation space at the corner of Two Bunch Palms Trail and Little Morongo Road.

Selan hopes the group can start planting crop in the first of five planned buildings early next year. The collective has an extensive security plan and a large list of future clients in Los Angeles.

“We want to make sure that our project – if anybody looks at it, which they probably will – we’ve done everything and more that we could possibly do” to keep it safe and legitimate, Selan said. Desert Hot Springs is “very receptive to working together. They want to make sure it’s done right.”

More grow operations could come to Desert Hot Springs. Two are pending City Council hearings and the city has another two on file.

Indio leaders moved earlier this month to ban marijuana cultivation, citing a concern over the city’s reputation.

But Desert Hot Springs Planning Commissioner Dirk Voss and others in the city don’t worry about potential stigmas.

“It’s an industry. It’s no different than Silicon Valley,” Voss said. “When you look at what is being built — the revenue, the infrastructure — it’s all a huge plus for the community.”