Desert Hot Springs prepares for marijuana boom; Investors and entrepreneurs spending millions on budding industry

The city of Desert Hot Springs is on the verge of experiencing what could turn out to be the biggest economic boon in the history of the city.

Investors and entrepreneurs are spending millions of dollars, buying up land and drafting plans to build huge, indoor marijuana growing operations.

Tax revenues from the new businesses could put the long struggling city well on the road to economic recovery, and turn Desert Hot Spring into a leader for cannabis cultivation.

The western edge of the city is where the transformation is happening.

Old industrial buildings and huge, barren plots of open desert are quickly becoming ground zero for what is expected to be one of the greatest concentrations of indoor marijuana growing operations in the United States.

Information we obtained from a sub-contractor tipped us off on the scope and magnitude of what is now just beginning.

Like the gold rush, what is happening in the city, might be more accurately described as the “green rush”.

Mayor Scott Matas fully supports the emerging industry.

“People are watching the city of Desert Hot Springs. It’s national news now for what we are doing here, and we are following other states like Colorado and Washington,” said Matas.

The effort to turn Desert Hot Springs into what might be described as a “marijuana mecca” all began during the city’s financial crisis in 2013.

That’s when the city council decided to lay the groundwork for allowing cannabis to play a central role in the city’s economy.

The key hurdle was cleared in November, 2014, when voters overwhelmingly approved taxing the sale of medicinal marijuana and taxing marijuana cultivation.

“The cultivation is an opportunity to cultivate for the state of California. We’re not cultivating just to deliver within the city of Desert Hot Springs,” said Matas.

Among those who oppose the idea of the city becoming a hub for cultivation is Ronayne Shaw, the assistant minster at First Community Baptist Church.

She says she wishes the city council worked harder to attract other businesses.

“Well, there are developers that have come here, and for one reason or another, either they were denied, or took too long for permits, or they ran out of money because it took so long. So, its just those kinds of situations that Desert Hot Springs has battled for awhile,” said Shaw.

After voters in the city approved laws regulating marijuana, entrepreneurs and investors began buying up land, and existing buildings, all with an eye on becoming players in a budding market.

Currently, there are roughly 20 separate marijuana growing operations in various stages of planning and development near the intersection of Little Morongo Road and Two Bunch Palms Trail, and several have already received approval for conditional use permits.

Farther south on Little Morongo Road at Dillon road, is the site for a planned cannabis cultivation warehouse, which will cover one million square feet, the size of roughly 17 football fields.

We are told the facility will be built in phases over a ten year period.

“The developers are going to come where it is easy to develop and it is easy to regulate, so they’re looking at Desert Hot Springs where there is a lot of land available,” said Matas.

The venture which appears to be the furthest along in development, is called “Pineapple Park”.

We are told the facility which will rent out growing space to upwards of 18 tenants, who are expected to eventually produce roughly ten thousand pounds of marijuana a month.

While researching the parent company behind the project, Los Angeles-based Pineapple Express Inc., we discovered the Securities and Exchange Commission recently temporarily suspended trading of the company’s stock, citing “unusual and unexplained market activity”.

CEO Matthew Feinstein says the SEC took action because of a recent dramatic surge in the company’s stock price, after porn publisher Larry Flint invested in the company.

Feinstein says the company will continue moving forward with plans to expand to ten buildings on San Jacinto Lane. The one building they have now, they purchased from a church.

“Being able to set up this location in Desert Hot Springs with Desert Hot Springs being the first city in Southern California to have the rules and regulations to allow commercial cultivation of cannabis, we really just are pioneers in the industry, and really it is just the beginning of something that will be enormous,” said Feinstein.

Tenants at Pineapple Park, like all marijuana growers who receive permits to operate in the city, will be required to grow their product entirely indoors.

City officials say that will prevent the smell of marijuana from permeating the city, and will make it easier for growers to secure the plants.

If all goes according to plan, marijuana growers will play a key role in helping turn the city around, which has endured decades of financial struggle.

The mayor says he expects cannabis-related tax revenues to add about $10 million a year to city coffers by as early as 2021, and upwards of $25 million annually by 2026.

“The biggest excitement is again the possibilities of tax revenue for our community and what we can do with it,” said Matas.

All the players in the marijuana market in Desert Hot Springs will all be looking ahead to November, when its expected Californians will have the chance once again to vote on legalizing recreational pot use.

Many observers believe the “yes” vote will prevail.

Still, a couple challenges remain for some growers in the city.

The indoor farms require huge amounts of electricity, and the mayor says more power is needed.

The other issue is getting enough sewer lines built fast enough for all the new warehouses.

Assuming solutions are found, its expected the growers and the city will all be seeing green.

“This is kind of like a gold rush, a green gold rush,” said Feinstein.

The rush of investors and entrepreneurs into the city has also been a positive development for land owners.

In the areas where the growers are buying land, real estate agents say property values are tripling in some cases.