Ailing city bets on pot gold rush
In a plot of desert surrounded by Joshua trees and old factories, developer James Previti watches as construction workers build the roof of a concrete building that from afar looks like a future Costco.
Previti has spent years developing homes around the Inland Empire region. But this is something new for him: a 12-hectare industrial park in Adelanto divided into 21 units that will be sold to marijuana cultivators for $7.5 million (U.S.) each.
“We’ve always tried to be opportunistic, and we saw a place where we could fill a need,” Previti said.
As California moves toward issuing permits for large-scale medical marijuana cultivation next year, a number of struggling desert cities, such as Adelanto and Desert Hot Springs, have sought to establish themselves as destinations for growers.
Just by approving ordinances allowing industrial cultivation before state licences were issued, the cities set off land rushes — with dusty plots selling for many times their original value.
The question now is whether that speculation will turn into the cannabis boom officials have been hoping for. In Adelanto, people such as Previti — investors with backgrounds in real estate development, law, even the NBA, but little experience growing marijuana — have come to town saying they can make it happen.
They envision a town bustling with marijuana-related businesses — cultivation warehouses, cannabis-oil extraction facilities and associated projects to supply California’s huge market.
As Mayor Richard Kerr puts it, the city will be the “Silicon Valley of medical marijuana.”
But there is plenty of uncertainty about how this will play out in this long-struggling city, where 40 per cent of residents live in poverty.
Financing for cannabis projects is difficult because marijuana remains illegal at the federal level and the Trump administration has given mixed signals about how it will approach enforcement. The city also faces competition from communities throughout California that have legalized cultivation.
The real test of whether Adelanto can bank on long-term income from marijuana is whether the new ventures setting up here can operate within the law as stable, profitable businesses.
In April, California released a list of proposed regulations governing such things as plant labelling and managing waste. They are to be finalized before the state begins issuing licences to growers January 1.
Hezekiah Allen, executive director of the California Growers Association, said those rules have shown prospective investors that cashing in on marijuana won’t be simple.
Bryon Russell, a former NBA player, and Spencer Vodnoy, a lawyer who spent years representing clients accused of drug crimes, are among those who say they are ready to make cannabis cultivation work in the city. While they renovate a 20,000-square-foot former furniture factory for cultivation, they are growing marijuana in four trailers parked next door.