The California desert benefits from early cannabis investments


Gold Flora owns and operates five warehouse-sized buildings, some of which are rented to other cannabis companies. The extensive campus, which comprises around 23 city blocks, was built from scratch.

“Most people think when they think of the desert that they are going out in the middle of nowhere,” said Holcomb. “It made sense that they would come when you build it.”

A city brought back from the edge

Gold Flora and similar companies represent a big change for the desert economy. Matas, who was re-elected for a third term in November, recalls a period around 2011 when the city only had “$ 400 in the bank”. City officials have frozen salaries, cut programs and filed for bankruptcy protection, according to Reuters. The city had already filed for bankruptcy in 2001.

The tax revenue has already helped pay for a new town hall, library and streets, as well as more police officers. Property developers are watching the area as jobs draw more people to the desert. The residents also benefit from the boom – of around 29,000 residents, at least 2,300 work in the cannabis industry, said Wilms.

Desert Hot Springs, about two hours east of Los Angeles near Joshua Tree National Park, had more than 200 spas in the 1940s and 1950s that were fed by a natural aquifer that still forms much of Coachella Valley supplied with water. But the city had gotten into difficult financially over the past 20 years.

In 2013, the city declared a fiscal emergency to avoid filing Chapter 9 a second time, the Los Angeles Times reported. The city had emerged from its first bankruptcy filing in 2004, but less than 10 years later, its reserves began to decline after an economic downturn and decline.

Homes next to the desert in Desert Hot Springs, California.Maggie Shannon / for NBC NewsDesert Hot Springs, CaliforniaMaggie Shannon / for NBC NewsA city building in the city of Desert Hot Springs, California.Maggie Shannon / for NBC News

At the time, only medical marijuana was legal in California, but city officials decided to take a risk on what appeared to be a growing industry as states like Washington and Colorado legalized recreational cannabis. Recreational marijuana for adults became legal in 2016.

In 2014, Desert Hot Springs became the first city in Southern California to legalize the large-scale cultivation of medicinal cannabis. Palm Springs followed, as did other desert cities in the Coachella Valley. Marijuana growers and real estate developers rushed to buy dusty plots even when the plots came with no infrastructure, including roads and utilities, in hopes of fulfilling the state’s promise to become the country’s largest cannabis producer.

Business zones have been set up to quarantine large operations in an industrial area remote from residents. Much of the land remained barren and untouched until companies with a little sense of adventure decided to break new ground.

“There was really no reason to cross that [Interstate] 10, “said Matas.” People have ignored the north side of the freeway for so long. “

Cannatourism could be the future

Fast forward to 2021 and the side of the freeway connecting Southern California to the rest of the country is littered with hundreds of thousands of square feet of warehouses. There is no smell of cannabis and there are no retail stores in the industrial zone. Instead, warehouses remain inconspicuous except for suspicious cars and security guards outside the building.

In December the city council unanimously approved two measures to promote “Kannatourism” in the region. One enables cannabis “entertainment facilities” to be created and the other gives hotels the green light to sell cannabis within their properties. A House of Blues-style concert venue is already in the works, although state law does not allow companies to sell cannabis and alcohol at the same time.

“It’s been great working with the city,” said Holcomb of Gold Flora. “You have to remember that four to five years ago people didn’t want to touch [cannabis], but Desert Hot Springs had the foresight to get into the industry early. “

Neighboring Palm Springs, with its rows of modern homes and mid-century golf courses, has already benefited from the tourist side of cannabis. Retail stores and consumption places are dotted between clothing stores and spas. Last month, after a $ 1 million renovation, the newest cannabis dispensary and lounge opened in an old bank building. On Mother’s Day, the Four Twenty Bank – a pharmacy lounge, not a bank – offered free flowers to all mothers who visited, according to their website.

The idea of ​​profiting from cannatourism comes from “treating cannabis like anything else,” said Jocelyn Kane, vice president of the Coachella Valley Cannabis Alliance Network, which advocates for cannabis businesses in the desert.

“These rooms are not just a place to shine,” she said. “It’s a place to go out.”

Go green in the desert

Desert Hot Springs and Palm Springs are in some sort of cannabis tax war as they are now competing for new business. In February, Desert Hot Springs cut its cultivation tax – $ 25.50 per square foot for the first 3,000 square feet and $ 10.20 per square foot for every square foot over 3,000 square feet – to a flat rate of $ 10 per square foot. Palm Springs is already charging $ 10 per square foot and is offering a price of $ 5 per square foot in its “Cannabis Overlay Zone” north of the I-10 corridor.

King’s Garden, one of the first companies to gain a foothold in the otherwise irreconcilable landscape, operates a storage area of ​​300,000 square meters in the overlay zone between Palm Springs and Desert Hot Springs.