Cannabis company buying historic town of Nipton to develop 420-friendly resort

Laura Cavaness boasted a new uniform as she set out for another day of tidying tented cabins, dusting antique trinkets and clearing the cobwebs that each night seem to emerge from the desert.

For seven months, the 53-year-old Indiana native has lived in Nipton – on the edge of San Bernardino County, a few miles from the Nevada border – with her husband, Carl, their two children and three grandchildren. Together, the couple serves as caretakers for the hundred-year-old Hotel Nipton.

Cavaness recently traded her cotton T-shirt for one made from hemp. Stamped in yellow across the pale green top was the logo for American Green, the cannabis company that wants to buy her entire town.

Carl and Laura Cavaness, both 53, stand outside the hotel they manage in Nipton, Calif. A cannabis company is in escrow to buy the desert town. (Photo by Rachel Luna, The Cannifornian/SCNG)

“They gave me this,” Cavaness said, grinning and pointing to the name on her shirt. “We’re hoping to be able to work for them.”

More than a century ago, a gold rush gave birth to what was then known as Nippeno Camp. Today, a green rush – spurred by the marijuana legalization movement – is stirring hopes of new life for Nipton.

American Green is in escrow to buy the 120-acre community, which is home to the Cavaness family and another dozen people, a handful of businesses and a tradition of dreaming big.

The Phoenix-based company wants to modernize Nipton’s five-room hotel and “eco-lodge” cabins. It would upgrade the quirky general store, one-room schoolhouse and RV park. It wants to reopen the Whistlestop Café, which has been shuttered since spring, and add more lodging, food options, a music venue and other amenities.

The goal is to convince visitors to venture 12 miles off the busy highway that connects Southern California with Las Vegas.

And American Green hopes to seal the deal with one key ingredient: marijuana.

The company aims to follow the lead of weed-friendly resorts in Colorado, with future Nipton guests invited to partake in their hotel rooms, attend cannabis-infused dinner parties and soak in medicated pools. And if American Green officials can find a way to loosen strict local bans on the industry, they eventually would like to dedicate the area’s more remote acreage to cultivating and processing marijuana products that can be loaded onto trains that rumble through Nipton each day.

American Green’s vision adds Nipton to a growing list of communities in the Mojave Desert and throughout California that are turning to cannabis to save them.

The Whistlestop Cafe in Nipton has been closed since April. Hotel guests have to drive to Primm, Nev. for hot food. (Photo by Rachel Luna, The Cannifornian/SCNG)

In 2014, Desert Hot Springs, about 200 miles south of Nipton, was on the verge of filing for bankruptcy for a second time. Instead, city leaders decided to welcome commercial cannabis cultivation. Today, the town with a yearly budget of $15 million is hoping to collect annual marijuana tax revenue of $50 million.

Another regional neighbor, Adelanto, in the high desert, staved off insolvency in 2010 by selling off a local prison. Five years later, as that one-time infusion of money was drying up, city officials lifted a ban on marijuana businesses. Thanks to revenue from the industry, the Daily Press reports that Adelanto is without a deficit for the first time in eight years.

With statewide projections for legal marijuana to be a nearly $3 billion industry this year – and likely to jump considerably next year, when full legalization kicks in – some version of this story is playing out in Lynwood, Perris and other communities that have long struggled with above-average unemployment and city revenues that haven’t matched expenses.

But Nipton would be the first community anywhere, it seems, entirely owned by a cannabis company. So when news of American Green’s plan to buy Nipton broke in early August, it drew international media attention to a town that’s otherwise best known for being a good spot to buy Lotto tickets.

Early headlines painted pictures of a coming cannabis utopia. But as reporters started digging into the company’s financial records and county policies banning marijuana businesses, the scheme was soon cast as doomed to fail or, worse, a media stunt aimed at artificially boosting share prices for the penny stock company.

While cannabis definitely has a role in American Green’s plans, spokesman Michael Rosati said company leaders are confident they can make the venture work even if they can never grow weed in Nipton. And while financial records show American Green is thin on assets and cash flow, Rosati insists it has the resources lined up to close escrow and carry the project forward.

“There will be other investors coming to the table,” Rosati said. “They’ll be announced as things get unrolled.”

Whether American Green’s grand plans for Nipton materialize remains to be seen. But plenty of folks are cheering for the company to strike gold.

Pioneering spirit

Nipton has long lured pioneers willing to gamble on unusual dreams.

With its vast underground aquifer, Nipton became a camp in the late 1800s for miners pulling riches from nearby mountains, ranchers loading desert cattle onto local railroad lines and wagon trains in search of paradise out west.

British miner Harry Trehearne chased his dreams all the way to Nipton in 1913. At the time, the hotel was about 10 years old, though records are scarce. Trehearne decided to fix it up and open a general store, quickly becoming the unofficial patron of Nipton.

In 1940, President Franklin D. Roosevelt signed patent papers transferring Nipton to Trehearne. The community has been privately owned ever since, passing between another half-dozen owners before Gerald Freeman set his sights on it in 1984.

Nipton by then was just another desert ghost town. But Freeman, a geologist, had scouted area mining sites for big companies for years, and he viewed Nipton as an opportunity to make a gamble of his own.

Current Nipton owner Roxanne Lang discusses the history and future of the desert outpost from the lobby of its historic hotel. (Photo by Rachel Luna, The Cannifornian/SCNG)

Roxanne Lang was living in Malibu and dating Freeman at the time. When he mentioned his interest in buying Nipton, she thought he was kidding. Then she thought he was crazy. But eventually she recognized that his heart was set on this scheme, and her heart was set on him.

They spent $200,000 to buy the town, then began remodeling the hotel, fixing up the grounds and adding the RV park. After struggling to manage the venture from Los Angeles, the couple moved to Nipton with their kids in 1986.

By then, the new “Nipton Nugget” newspaper boasted the town’s population had swelled to 21. There were swap meets on weekends and Catholic Mass in the old schoolhouse each Sunday. Residents were providing salon services and offering hayrides. Plans called for a gas station, a shooting range, an airstrip and more.

Nearby gold mines were booming in those days. But big hauls slowed in the late 1980s, and so did Nipton. Eventually, Freeman and Lang moved their family to Henderson, Nev. while staff kept Hotel Nipton, the store and the restaurant going.

The first “green rush” came to Nipton at the end of the 2000s, as entrepreneurs chased dreams of renewable energy to the vast Mojave Desert.

Nipton owner Gerald Freeman built this solar plant in 2010 to supply power for the desert community. (Photo by Rachel Luna, The Cannifornian/SCNG)

BrightSource Energy built the solar plant near Primm, Nev. that can’t be missed from the I-15 and Nipton. Other commercial solar and wind projects popped up nearby. And Freeman built a solar farm to supply half of Nipton’s power, with dreams of one day taking the town completely off the grid.

By then, Freeman was about to turn 80. Lang said he had congestive heart failure and had already suffered one major heart attack. And, since he’d sunk $1 million into Nipton, he had no retirement stash. So in 2015, the couple asked their Realtor friend Tony Castrignano to sell the town for $5 million.

“It’s an opportunity you don’t always come across,” Castrignano said.

There’s been steady interest over the past two years, he said, from a San Francisco architecture school to a Hollywood festival promoter. But no one followed through.

A year ago, Freeman died.

Trying to maintain Nipton alone was too much for Lang, who still works as a speech pathologist in an area school district.

Then along came American Green.

Dealing in green

American Green started in 2009 as a technology company, Rosati said, initially dabbling in music products. Soon, they were developing the first iteration of a cannabis vending machine, grow lights and other gear for the emerging industry.

Today, the company is developing a marijuana cultivation facility in Phoenix. It sells CBD, a therapeutic compound in cannabis that doesn’t make people high. It’s also developing technology products, from apps to a new vending machine.

Some months ago, as a team from American Green drove from Arizona to Las Vegas, Rosati said someone spotted signs touting a town for sale. The notion made sense, he said, since they wanted to expand but were discouraged by the red tape required to open a marijuana business in most cities.

“We thought, wouldn’t it be great if we could have a little more control over this?” he recalled.

The more they learned about Nipton’s resources and history – including tales of silent film star Clara Bow staying at the hotel and Wyatt Earp’s brother mining land nearby – Rosati said the more they liked the idea.

“It’s like a Clint Eastwood movie,” he said. “The pioneering spirit swells up in you.”

To lock in a deal, Rosati said American Green put down $200,000. If escrow closes as planned in early October, he said the company will owe another $1.8 million. Then he said the Freeman trust will carry the note for the remaining $3 million.

As they clean up and modernize Nipton’s existing facilities, Rosati said they plan to keep the main structures intact, recognizing the town’s story will be a part of its attraction. And as they add lodging, like tiny homes and converted shipping containers, plus dining and other amenities, he said they aim to stick closely to Freeman’s vision for building a sustainable community.

American Green hasn’t previously worked in the renewable energy or hospitality industries. But Rosati said that’s where partners – such as PanPacific International, the firm managing the Nipton project – will come in.

Perhaps the biggest obstacle for American Green’s dream in Nipton is legal.

San Bernardino County currently bans all types of marijuana businesses. So the only way American Green could develop commercial cannabis enterprises in Nipton is if it either convinces the county Board of Supervisors to change those policies or if Nipton incorporates so they can make their own laws.

But Nipton is far from having the population it needs to become an official town, according to Kathleen Rollings-McDonald, executive director of the county’s governing land use agency. State law requires at least 500 registered voters, while San Bernardino County adds a requirement of 10,000 residents.

Rosati said all options are on the table, and he’s optimistic that cannabis eventually will be cultivated in Nipton. But if not, he said nothing should stop them from marketing Nipton as cannabis-friendly. And their plan for infusing aquifer water with CBD that they’d use to fill bathing pools and bottle off for sales should still be allowed to proceed, he argues, since they’d be using CBD derived from hemp. That’s sold now in stores such as Trader Joe’s.

Marijuana aside, the Mojave Desert is having a moment, with sometimes long waits to get into Joshua Tree National Park. Plus, there’s newfound demand for quirky accommodations, such as extreme “glamping” sites, that make for fun Instagram posts. In the right hands, Rosati said, Nipton seems poised to break through.

The Cavanesses are supportive of American Green’s plan, insisting media reports on the marijuana angle have been overblown.

“They think it’s going to be a big smoke-out town,” Cavaness said. “It’s not going to be anything like that.”

Other Nipton residents, who live in mobile home compounds scattered along the highway into town, seem mostly apathetic.

Oscar Talamantes, 53, shows off a fountain on his Nipton compound that’s home to cows, horses, pigs, peacocks and more. (Brooke Edwards Staggs, The Cannifornian/SCNG)

“It doesn’t make any difference to me,” Oscar Talamentes, 53, said.

He moved from Las Vegas to Nipton eight years ago seeking some peace. He leases the front half of his property to a towing business and has built a little oasis out back, with peacocks roaming free, horses to ride, cows to milk, chickens to eat and a deep well.

Talamentes does venture to Nipton Trading Post to get a cold beer. But he said he’s not worried about American Green’s plans.

“It’s not going to change my life,” he said. “I’ve got everything I need right here.”

Sharon McKeever has mixed feelings. She’s been stopping in Nipton with her family since the ’80s, as they drive from the San Fernando Valley to Lake Mojave, and likes the place as is.

“I just hope it doesn’t change too much,” she said, as she picked out a bobblehead turtle to bring home to her daughter.

When she recently showed American Green’s team around the property, Lang said she felt reassured, sensing the company’s executives appreciate Nipton’s history and what it might become.

And she feels certain her husband, Jerry, would’ve gotten a kick out of the marijuana part.

“When he passed away, I told him I would take care of it,” she said. “I think he would approve.”

Nipton: By the Numbers

$200,000: Amount Gerald Freeman paid for Nipton 33 years ago

$5 million: Selling price of Nipton’s 120 acres in 2017

20: Estimated residents in the town

$0.0019: American Green’s closing share price Friday, Sept. 8

$191,287: Cash American Green listed on hand as of March financial statements

$8 million: Liabilities American Green listed in March financial statements

$75: Price of a used spray tan kit for sale in the “thrift store” portion of Nipton Trading Post

5: Rooms in Hotel Nipton, plus four tented “eco-lodge” cabins

8: Individuals who’ve owned Nipton since 1940

27: Fixed stray cats that roam Nipton to control the rodent (and therefore snake) population

Sources: Historic records, Register reporting, OTCMarkets.com