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This California Town Wants to be the Next Marijuana Mecca

Community leaders asked themselves: Why not attract marijuana businesses and investors, and add needed revenue to the city's general fund?
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If California is the land of reinvention, the small desert city of Adelanto fits the bill.

Roughly a two-hour drive east from Los Angeles, Adelanto was founded in 1915 by an inventor who wanted to sell land to World War I veterans. His dream never materialized and the region was taken over by orchard farms, then poultry ranches.

The nearby George Air Force Base opened and eventually closed in the early 1990s. The city more recently made a solar play, but the energy market fizzled. City unemployment hovers at 14 percent, well above the national unemployment rate of under 5 percent. And the big employers in town include prisons and the local school district.

Then a year ago, community leaders and yet-to-be elected Adelanto City Council member John "Bug" Woodard started to mull the idea of transforming the city into a high-tech mecca for marijuana cultivation.

The high desert community already had massive industrial buildings that could house state-of-the-art growing spaces for commercial-scale cannabis farming. Why not attract marijuana businesses and investors, and add needed revenue to the city's general fund?

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Last November, after months of debate, Adelanto became among the first California cities to permit commercial cultivation of medical marijuana. Other desert cities in southern California are pursuing similar strategies, including Desert Hot Springs. It's not that the arid region lends itself to outdoor cannabis farming. The area just happens to have many large, indoor industrial spaces that are ideal for controlled medical marijuana cultivation. And Adelanto needed a new revenue stream.

Soon the flashy cars began peeling off Highway 395 into Adelanto. Population: roughly 32,000 residents.

"Our little town, a lot of people just drive by, going down 395, going up to Mammoth or heading up to Nevada, Reno," said city council member Woodard. "They wouldn't stop here."

But things have changed. "Every day I have to pinch myself because we're seeing Bentleys, Rolls-Royces coming to town," Woodard said. "These cars weren't coming here a year ago. They wouldn't even think about coming down this old crappy road over here," said Woodard, who moved to the city in 1998.

At the time, the local air force base had closed. Unemployed families packed up. Property was cheap. Adelanto is also about 40 miles south of Barstow. This area is the high desert. Think sparse Joshua trees. Motorcycles zooming down two-lane highways.

Decades later, modern Adelanto is reaching for its next act in marijuana production, entirely in indoor spaces. And there's potentially millions, if not billions, of dollars at stake for the entire state.

If California voters in November approve adult cannabis use through statewide ballot measures, analysts forecast California's total marijuana market for both medical and adult use could reach $4 billion by 2018 — more than double the size of the expected $2.5 billion Colorado market, according to ArcView Market Research and New Frontier. Both are cannabis research companies.

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The business impact of an approval would be "tremendous," Woodard said. "A lot of these folks, they've spent literally millions of dollars to move here, to set up business here."

Last year alone, medical marijuana sales in California reached $2.7 billion, nearly half the total $5.7 billion in sales for the entire country, according to the two research firms. (The 2015 annual figure was updated.)

Real estate spike

The potential for legalized, large-scale marijuana farming has already boosted local property values.

"The price of real estate shot up so fast," Woodard said.

Some local businesses not even in the cannabis market have realized their property is worth more than $1 million. The thinking is, "'Wait a minute. My property is worth a million and a half? What if I spent $250, $300 grand and move my business on the other side of town, I put a million in my pocket,' " Woodard said. "What we've seen is a lot of people becoming instant millionaires."

This, in a community where the median household income is around $39,200.

Cannabis celebrity tie-ins

Then the celebrity connections emerged.

Bob Marley's son, Ky-Mani Marley, has signed on to license a strain of cannabis that will be grown in Adelanto, said Freddy Sayegh, an attorney on the project.

Sayegh has advocated for defendants charged with marijuana violations, including dispensaries, co-ops, cultivators and patients.

Comedian Tommy Chong of Cheech and Chong fame — a longtime advocate for cannabis decriminalization — hopes to mass produce his brand of legal marijuana, "Chong's Choice," in Adelanto.

The city's warehouses for cannabis cultivation and research will mingle with other industries. Other regional employers include General Atomics, which manufactures unmanned aerial vehicles or drones in addition to other technology. Northwest Pipe Company makes large diameter, high-pressure steel pipes used primarily for water transmission.

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There was a yacht maker at one point. But the production of CABO Yachts was shuttered in 2010.

Some community leaders including Adelanto Mayor Richard Kerr want growers to plant their roots here. The end game is tax revenues, local job creation and an entire cannabis ecosystem centered on large-scale marijuana farming.

"We have jobs coming to town," said Woodard. "From logistics to shipping receiving, to producing products, manufacturing products. You got to have people fixing machines when they break down. You'll probably be hiring a trucking company." Details are being ironed out.

"A lot of this is brand new," said Woodard, who also organizes a local music festival.

Yet not every resident is thrilled with the idea of Adelanto's push into the pot business.

The cannabis ordinance to permit commercial cultivation wasn't a slam dunk among some local school and law enforcement officials. No one in town wanted to create a magnet for trouble. "We got bombarded by a lot of people that were against it," Woodard said.

All cannabis permitting includes a vetting process and background check. So far, under 30 companies have secured licenses to grow marijuana in Adelanto.

"The majority of applicants have been scientists, doctors, attorneys and other reputable professionals with extensive backgrounds as respectful leaders, teachers and honorable members of the community," the city said in a statement on the vote to allow cultivation of medical marijuana.

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Cannabis farming will be limited to an industrial park far from frequently visited residential and commercial areas. The ordinance does not allow for any retail sales, or point of contact with retail customers.

"The City Council thoroughly weighed the pros and cons of allowing marijuana cultivation, and only after careful and deliberate consideration, discussions and debate — chose to move forward believing that the positives outweighed the negatives, and, that steps would be taken to mitigate any potential negative consequences," according to the statement.

And don't expect every city in California to start chasing marijuana cultivation as a solution to budget shortfalls.

Adelanto was facing bankruptcy and needed revenue to run the local schools, police department and other community services. The city's annual general fund is roughly $12 million, and full-scale marijuana cultivation could bring in anywhere from $6 million to $10 million in yearly revenue, said attorney Sayegh.

For larger cities, a $6 million annual revenue gain is a drop in the bucket. But for Adelanto, cannabis cultivation offered a shot at a future. "It saves the city," Sayegh says.

Looking ahead, mayor Kerr and other cannabis business leaders have said Adelanto could produce more than 100 tons of marijuana annually. But that may just be the tip of the cannabis iceberg. "I don't think that's a lofty goal," Woodard said. "The more the better."

Across the U.S., legal marijuana market sales could surpass $22 billion, with adult use sales comprising about 53 percent of the total legal market, according ArcView and New Frontier.

Said John Kagia, director of industry analytics for New Frontier, "It's very difficult for people who live outside the state to truly understand the scale of what's happening."

And Adelanto is poised to be central to that state boom. Seems fitting as "adelanto" means "advancement" or "progress" in Spanish.