DESERT HOT SPRINGS, Calif. – Two years ago, in this desolate Coachella Valley town surrounded by scraggly mesquite, voters heartily endorsed marijuana as a cure for their ailing economy.
For decades, Desert Hot Springs had relied on its steaming mineral waters to lure tourists to local motels for healing baths and spa treatments. But the town of 28,000 mostly suffered. A third of residents lived in poverty, and the city filed for municipal bankruptcy in 2001. A housing bust seven years later deepened the fallout.
So in 2014, 68 percent of Desert Hot Springs voters approved California's first local initiative to authorize industrial cultivation of marijuana. With freeway connections to hundreds of dispensaries in Los Angeles, San Diego and Orange County, the town set out to lure pot entrepreneurs to revive industry.
Now Desert Hot Springs is home to a pot real-estate bonanza, with well-heeled outsiders snapping up land and buildings to develop massive city-sanctioned grow facilities capable of producing thousands of pounds of marijuana a year.
Near wind farms, a drab warehouse complex is being transformed into a marijuana production center called "Pineapple Park." Down the street, Santa Ana dispensary operators are readying a cathedral-like cannabis greenhouse. On a remote desert parcel, investors just secured a permit to build a million square feet of buildings to lease out to growers.
"Cultivation is going to explode in California," said Desert Hot Springs Mayor Scott Matas, a marketing consultant who championed marijuana development in the town near Palm Springs. "We're being proactive to what's coming down the pipeline. I'm a conservative. But I saw an opportunity for jobs and revenues. Is it bold? Absolutely. But I think it's promising."
Brown signs first-ever laws
Desert Hot Springs' pot boom is accelerating after Gov. Jerry Brown in October signed the first-ever California laws to allow local and state licenses for commercial growers of medical pot.
Brown's signature, and a soon-to-be-established state Bureau of Medical Marijuana Regulation, ushered in a new era for regulating marijuana as a for-profit industry, replacing California's nebulous rules that merely permitted medicinal users to collectively cultivate and share marijuana.
Wary of the new regulations, which are still to be fleshed out, hundreds of cities and counties have rushed to ban marijuana businesses even as secretive, unlicensed commercial grow rooms operate across the state. Other jurisdictions, such as Sacramento, have moved guardedly to permit limited commercial cultivation.
Desert Hot Springs wants to be an exception, as it counts on a fiscal windfall from a $25-per-square-foot tax on the first 3,000 square feet of marijuana plants and a $10-per-square-foot tax on additional plant space for each new business. The city, which in 2014 had a jobless rate of more than 10 percent, also has set goals for 20 percent of pot workers to be residents.
With a likely November ballot measure to legalize recreational use in the Golden State, the Riverside County town is one of at least four economically depressed Southern California cities now banking on a revival by licensing and taxing marijuana cultivation.
While state rules permit individual businesses to grow pot gardens of up to 22,000 square feet indoors, Desert Hot Springs last month approved plans that are expected to bring in up to 3 million square feet of production warehouses and greenhouses over the next five to 10 years.
Matas says five recently approved marijuana industrial developments — and half a dozen more in the pipeline — will lease out scores of "cultivation condos" for separate marijuana ventures. He predicts an eventual tax windfall of $20 million a year — $6 million more than Desert Hot Springs' entire current city budget.
Recently, Matthew Feinstein, CEO of Pineapple Express, a publicly traded marijuana marketing, consulting and business development firm, touted his $3 million Pineapple Park venture, a nearly 9-acre marijuana business and production facility.
"It's the first time it's legal. It's the green gold rush," said Feinstein, 46, a University of California, Berkeley political science graduate who used to be CEO of a DVD distribution company. He said he "got out of a dying industry and went into a growing industry."