HIGH TIME FOR DHS: The Cannabis Cultivation Capital

By | May 28, 2016 at 2:07 am | No comments | Cannabis Corner, Columns, Community, Feature Stories

By Heidi Simmons

There is a buzz in Desert Hot Springs and the locals are high on the possibilities, potential and positive changes coming to their community with cannabis cultivation.

(Throughout this story, in bold font, residents respond to what they think of the city’s new industry and what they want done with the tax revenue.)

The city on the hill with its great views and award winning water has taken the prescient move to become a leader in the quickly evolving marijuana industry.  With forethought and research, city officials and leaders looked into the future and acted.

“The Desert Hot Springs Chamber of Commerce is very excited to welcome the growers,” said Heather Coladonato, President and CEO of the Desert Hot Springs Chamber and founder of the newly formed California CANNA Coalition. “It’s good for the businesses here as well as for the entire Coachella Valley.  It’s bringing jobs to the community, tax revenue and a renewed sense of identity.”

“If the money is spent responsibly and there’s oversight, it’s a good thing. As long as the city is safe and there are more police, then it should be fine.  I’d like to see improved roads, sidewalks and more recreation for the kids.” Fernando Guerrero, owner South of the Boarder restaurant, 18 yrs.

The CANNA Coalition (CCC) was established to represent and aid its members in the legal marijuana industry not only in Desert Hot Springs but also throughout the entire state.

“The coalition is here to expertly and professionally manage the cultivation boom and all that comes with it, so the industry can thrive,” said Coladonato.  “Our goal is to be leaders, consultants and advocates.  The coalition will serve as an independent agency representing its members at all levels of government.”

Twenty applications for cultivation have been submitted and 11 have been approved.

“We have been able to process the applications in less than three months,” said City Manager Martín Magaña.  “It’s not complicated.  The entitlements require approval of a Conditional Use Permit by the Planning Commission, approval of a Development Agreement by the City Council and approval of a Regulatory Permit by the City Manager.”

Magaña credits city attorney Steve Quintanilla for his legal guidance and advise.  “It was very important that we were doing what the State of California required,” said Magaña.  “His input has been invaluable.”  Community Development Director Nathan Bouvet is managing applications and Magaña is in the process of hiring a Project Manager to specifically oversee the cultivation projects.

“I have concerns because the city has had difficulty managing money in the past.  I want to see accountability and transparency.  I don’t want to see them use the money to build a monument to themselves in the form of a municipal building.” David Himmler, retired professional dancer, DHS resident, 12 yrs

When Magaña became City Manager in 2014, he saw an opportunity for the city to capitalize on the burgeoning marijuana industry.  “I knew there were many people who could benefit from medical marijuana to treat illness,” Magaña said.

“I saw the medical marijuana industry as a catalyst to economic development.”   Magaña conferred with councilmembers, and the city put two measures on the November 2014 ballot, creating ordinance 552 and 553.

On the first measure, Desert Hot Springs residents voted in favor to allow medical marijuana dispensaries.  The city currently has five dispensaries doing business with another seven approved and four in planning.  Revenue generated from the dispensaries for the city, so far, is approximately $150,000.

Wonderful and needed as that money is, dispensaries are the end of the marijuana trail, where as cultivation is the beginning.  Industry professionals refer to the tracking of the marijuana business — the steps of growing to selling as — “seed to sale.”

“I’m okay with growing for medical use.  The city needs to invest in a safe haven home for women and children.”  Diana Hirst, fitness-trainer, DHS resident 40 yrs.

Many cities across the state have dispensaries, but Desert Hot Springs had the foresight to include the cultivation of marijuana as the second measure.  It passed with 73 percent of the vote.

The State of California, just this year, made recommendations regarding cannabis cultivation, but has yet to set down laws.  Recreational use is coming.  The Adult Use of Marijuana Act Initiative will likely be on the ballot this November.

A few California communities have prioritized the cultivation of marijuana with a legal set of guidelines and regulations.  Along with Desert Hot Springs, there’s the City of Los Angeles and San Diego County.

In Riverside County alone, there are hundreds of dispensaries, but Desert Hot Springs will now be the region’s leader on the seed to sale environment for efficient and professional cultivation, packaging and legal distribution.

For the first time in California, cannabis growers may not only legally grow marijuana under a controlled environment, but they can grow with the protection of the city and police department.  Desert Hot Springs has created a business-friendly environment in cooperation with local, State and Federal agencies.

“If they reinvest in the city, wonderful. With our beautiful views, I want the power poles put underground to enhance the city and increase property values.”  Peggy Allen, writer, DHS resident, 19 yrs.

The city has 1.6 million square feet approved for cultivation in an area zoned for light industrial.  The city charges an annual fee of $25 per square foot for the first 3,000 square feet, and $10 for every additional square foot there after.  The city only allows maximum lot coverage of 75 percent.

The City of Desert Hot Springs covers nearly 24 square miles.  Not even one percent of its land is developed, potentially allowing for more industrial growing area.

Many of the existing buildings in the approved grow zone along Little Morongo road and nearby area have been purchased and growers are in the process of getting permits to convert the structures to cultivation facilities.

The application fee for dispensary or cultivation is $5,935.00.  Applicants are required to have Articles of Incorporation, a fully drafted site plan and a security plan, which includes seven obligations.  The form itself is simple.

In the development process, is a one-acre parcel with designs for a 44,000 square foot greenhouse.  According to the CCC, the start-up costs associated with the project are an estimated $4 million.  That does not include the marijuana plants.

“I have no objection to growers. Hopefully it’ll bring a cool new vibe to the community and new jobs. I think something positive will come from the whole venture.” Armin Lies, care provider, DHS resident, 2 yrs.

The first cultivation groundbreaking will be held for a 70,000 square foot facility Thursday, June 2 at 9:00 on Little Morongo Road between Two Bunch Palms and Pierson.

Southern California Cultivation, LLC, owns the property.   The developer of the land is David Snider, a Santa Barbara real estate investor.  This is the first cannabis related commercial real estate development for Snider.  Phase one of the project has already been fully leased to four separate cultivation entities.

Snider’s project will begin after the building permit is granted, which should be in early June.  Construction is expected to take 120 days.   When the facility is in full operation it will create 100 jobs.  An armed security firm from Orange County has the contract to provide protection once cultivation begins – a city requirement.   Tax revenue will be paid by the end of the year, potentially amounting to $705,000.  And this is from just one facility!

“It’d be great if the city could provide free city-wide wi-fi.  I’m hoping to see more art and music venues in town.”  Pamela Manning, designer, DHS resident, 20 yrs. 

Last week, the police raided a grower who was already cultivating plants without obtaining city permits.  The message: Do it legally or get shut down.  Cultivating more than 99 plants must now be in the permitted industrial zone.

“It’s a privilege that the City of Desert Hot Springs allows growing,” said Matthew Haskin, CEO CannaSafe Analytics and member of the CCC.  “The proper propagation of cannabis is very sophisticated.  It requires a highly controlled environment that’s carefully regulated.  It’s far more advanced than growing wine grapes.  We intend to help develop consistent replicable products, create protocols and inspire improvements.  We’re looking forward to being an integral part of the city’s culture.”

The CCC also points to the wide range of ancillary businesses surrounding cultivation.  Entrepreneurs have approached the DHS chamber to see what jobs might be required to best serve the city’s newest industry.  From construction to security there are a myriad of business opportunities coming to Desert Hot Springs.

“They should have done this a long time ago.  I’m looking forward to major improvements, a better police force and new businesses.”  James McNaughton, custom carpentry, DHS resident, 33yrs.

“I want to thank the residents for supporting the measures,” said Magaña.  “And I’m grateful to the City Council for their efforts to make this happen.”

Desert Hot Springs is thoughtfully building an industry that may likely produce one of the nation’s most important agricultural crops.

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