By Mark Gutglueck
A decade after the marijuana meltdown in Adelanto which resulted in Adelanto’s mayor and one of its councilmen going into federal prison and a third councilman narrowly ducking the same fate, at least three of Adelanto’s current city leaders have latched onto a different political grift, but one which they will put into their own pockets untold millions of dollars, again believing they can sidestep the regulatory regime that is supposed to be applied to the controversial business they are now promoting.
In this go-round, it appears that the city’s current mayor and possibly three and more likely four of the council’s members believe that instead of devoting square miles of land within the city limits to growing, processing, refining and distributing marijuana and cannabis products, the city can allow dozens or maybe even scores of data centers to set up operation and flourish.
The sense of déjà vu is palpable to those who witnessed the Kerr-and-Wright-led debacle, which includes the recognition that the practical issues that felled the effort to turn Adelanto in the marijuana capital of the world – the lack of adequate electrical utility output and an insufficient supply of water – are equally applicable to the current pipedream. And just like a trio of former councilmen thought they could outsmart a team of FBI agents and a quarter dozen assistant U.S. Attorneys who were monitoring their moves, the current council comes across as believing they can take money from some deep-pocketed entrepreneurs and promise them shelter from federal, state and local regulations.
With the clean sweep that was effectuated in the 2014 election when Rich Kerr ousted Mayor Cari Thomas and John Woodard and Charles Glasper defeated Steve Baisden Charles Valvo, Kerr joined forces with incumbent Councilman Jermaine Wright and Woodard to embrace the long-in-coming liberalization of California’s marijuana laws that were fully effectuated with the passage of Proposition 64 in 2016. Presciently anticipating Proposition 64’s passage, the three spent 2015 acclimating the city’s populace to the concept of simply allowing a limited number of warehouses in the city industrial park zone to operate as indoor marijuana farms where medical marijuana was to be cultivated.
Glasper, a no-nonsense former Air Force chief master sergeant, who had progressed to become the first African American mayor of Adelanto before losing his place on the council and then making a political comeback in 2014, was adamantly opposed to permitting any kind of commercial activity in the city that involved marijuana, Kerr, Wright and Woodard rushed to assure him that 1) the marijuana to be produced in Adelanto would be for medicinal purposes only and that 2) there would be no marijuana sold in the city. Glasper, who was at that point in the early stage of dementia, was assuaged by the assurances he was given. That left Ed Camargo as the only member of the city council who was not on board with having Adelanto make the first step toward adopting a marijuana-based economy. One by one, Kerr and Wright primarily, but with the assistance of Woodard, pushed the lion’s share of city staff who were resistant to the concept of making Adelanto the first name in marijuana availability –  City Manager Jim Hart and his interim replacement, Tom Thornton, City Manager Gabriel Elliott, City Manager Brad Letner, City Manager Cindy Herrera, City Attorney Todd Litfin, City Attorney Curtis Wright, Public Works Supervisor Nan Moore, Senior Management Analyst Mike Borja, Conservation Specialist Belen Cordero, Public Works Employee Jose Figueroa, information technology division employees Ben Pina, Ibriham Abudluld and Adam Watkins, contract City Engineer Wilson So, Assistant City Engineer Aaron Mower, and Senior Planner Mark De Manincor – out the door. On the day in December 2015, when the city cleared the way and officially opened the application period for prospective marijuana entrepreneurs to file for a limited number of available cultivation permits, a line of people, many of them bearing briefcases stuffed full of cash to hand over to the city’s land use/planning division personnel to convince them to facilitate their applications before those of the other applicants. With Glasper sliding further and further into the dementia and Councilman Camargo entirely politically outmuscled on the council, Kerr, Wright and Woodard switched gears, and began openly planning for an expansion of the marijuana-related activity in the city from indoor cultivation operations to open-air farms, what were at first referred to as clinics and dispensaries and then called marijuana shops, followed by laboratories where marijuana was to be refined and concentrated along with what were essentially industrial production operations that manufactured cannabis-based products including liniments, oils and edibles.
While Kerr and Wright publicly asserted that what was taking place was something that was calculated to benefit the city and its residents by creating economic opportunity and generating tax revenue in a city in which the municipal government had long been teetering on the brink of bankruptcy, the reality was that graft was running rampant. Those who were getting in on the marijuana bonanza in Adelanto by securing permits and project approval were paying Kerr and Wright off directly in cash. In Kerr’s case, he set up a bribe-acceptance system that consisted of his wife being the head of a 503 1C charity so that people, in front of God, man and everyone else, could show up at the city council meetings and hand her envelopes stuffed full of cash. Wright was a bit more subtle about it, having people come into the restaurant he owned to hand over paper bags with money while no one was looking. Woodard had the most sophisticated way of operating. A real estate broker, he would inform potential investors and speculators far enough in advance to the city’s changing of zoning on property that would make it possible to grow marijuana on it or refine/derive or manufacture marijuana-based products or which could serve as a retail outlet selling marijuana for them to make a purchase of the property before the new zoning went into effect. He would then serve as the broker on those land sales, getting a commission on the sales transaction. Thereafter, with zoning on the property changed to allow for lucrative marijuana-related activity to take place there, the value of the property would escalate.
Kerr, Wright and Woodard were sitting on the top of the world when California’s voters in November 2016 passed Proposition 64, the Adult Use of Marijuana Act, which legalized the use of marijuana for recreational purposes, i.e., its intoxicative effect. Adelanto had gotten in on the ground floor of the commercial marijuana frenzy, as it and Needles had been the only two of San Bernardino County’s 24 municipalities and one of 47 cities or incorporated towns around the state that explicitly allowed legalized marijuana to be sold over-the-counter. The payoffs intensified.
Everything came crashing down in 2017, when Wright took $10,000 in marked $50 bills from an FBI agent masquerading as an applicant for a marijuana distribution operation permit, promising to protect his benefactor from city regulatory enforcement once the operation was in full swing. Thereafter, the FBI accumulated enough damning information about Kerr to send him up the river. Wright incarcerated, awaiting trial, at which point in early 2018 he was removed from the city council for missing four straight council meetings. Kerr was voted out of office in 2018, but not before he installed into elective office by appointment Joy Jeannette, who worked with him to hire into key city staff positions employees who would assist the cannabis-related businesses with their operations, including allowing them to shield the actual amount of product either being grown, refined, produced or sold to allow those operators to reduce or otherwise avoid conveying the fees and taxes owed to the city and the state.
With Kerr’s and Woodard’s departure from office in 2018, accompanied by the no longer compos mentis Glasper who simply did not seek reelection, they were replaced by a set of politicians who in some fashion touted themselves as reformists – Mayor Gabriel Reyes, Councilman Gerardo Hernandez and Stevevonna Evans. The reality was that Kerr & Company had established a regime that had purged those members of the city staff who had resisted what was going on during the heyday of the Kerr administration and put in their places new hires who were willing to go along with what their former political masters were engaged in, in at least some cases because they were being cut in on the action.
This was particularly true of the city manager Kerr had promoted and who remained after he was gone, Jessie Flores.
While a large segment of the population had anticipated that the city would close down the cannabis- and marijuana-related operations that had taken root in the city under Kerr, Wright and Woodard and then Kerr, Woodard and Jeannette, that did not occur. Rather, the operations persisted, while the previous pattern of the revenue the city was supposed to receive in conjunction with those businesses still did not manifest. The explanation or rationale given was that the businesses needed to mature beyond the stage where intensive investment was necessary in order for them to begin turning a profit or, in the alternative, that those operations were not profitable because the water and electricity necessary for them to prosper were not available. Meanwhile, issues with security and criminality were manifesting as a direct result of the presence or concentration of marijuana- and cannabis-related businesses in the city. The city council over the last several years, composed of Reyes, Hernandez, Evans, Jeannette Daniel Ramos, Keron Jones Angelo Meza and Amanda Uptergrove, has surfaced the same rationale for adhering to the blueprint for a cannabis-based economy as was propounded by Kerr, Wright and Woodard: It simply made economic sense for the cash-strapped city to find revenue wherever it could, and that while marijuana may not be physically addictive it may be psychologically addictive and a city can get financially addicted to it. The problem with that explication was that the revenue the city was supposed to be realizing was not coming in. During the 2022-23 fiscal year, Adelanto officials informed San Bernardino County that it was going to have to reduce the scope of the contract it had for the sheriff’s department’s provision of law enforcement services to the city. The city asked the county and the department to remove two deputy positions from the contract when it was to be renewed effective July 1, 2023. That service reduction was to save the city something on the order of half of a million dollars, as the city under the contract had to defray the annual $230,648 cost of salary and benefits for a single deputy as well as costs associated with the vehicles used by deputies in the performance of their work. In response, Sheriff Shannon Dicus, who said he understood as well as anyone the challenges not only Adelanto but the entire San Bernardino County community was dealing with in the effort to suppress crime, worked out an agreement with the San Bernardino County Board of Supervisors to have the county and the sheriff’s department fund the two deputy positions for one year, running from July 2023 to the end of June 2024.
To some, including some council members in the 11 other county cities and the two incorporated towns that contract with the sheriff’s department of their law enforcement service, that looked like a gift of public funds, particularly since Adelanto, which was on the cutting edge of the marijuana boon, was supposed to be flush with cash.
There are recurrent and overlapping whispers, ones that have grown into a deafening roar, that the current crop of elected officials in Adelanto and the top-ranking staff are being cut in on the marijuana profiteering in the same way that Kerr, Wright, Woodard and Jeannette had.
Common wisdom has it that this is California and there is no appetite on the part of state or local officials to involve themselves in an enforcement action relating to what can be construed as legitimate commercial marijuana activity. While there are yet law enforcement officers who were employed in their profession when it was open season on marijuana uses and traffickers, times have changed. Many, indeed most, municipalities in San Bernardino County have not opened up their jurisdictions to pot shops where the drug in many forms is available for purchase and consumption in a way that is intended for its intoxicative effect. Nevertheless, the attitude of officialdom is that those other officials who are bold enough to capitalize on the marijuana culture should be left alone to do as they will. That approach does not discount the belief by a fair cross section of those who are aware of what is going on in Adelanto that something is amiss, and graft has compromised Adelanto City Hall.
Quite recently, attention with regard to how inexplicably unproductive the commercial marijuana trade in Adelanto has proven in terms of tax revenue has shifted toward what now is being touted as the next big thing: artificial intelligence and densely-layered computing power.
Adelanto officials have become convinced, they say, that the wave of the future might not be marijuana, after all, but rather artificial intelligence and the data centers that are key to them.
A move is now on to have the city tweak its city code, development code and zoning maps to better accommodate energy and utility facilities, data centers, battery energy storage, and microchip, semiconductor and drone manufacturing.
On the table for discussion and further study are amendments to the city’s general plan and land use guidelines that will redo the language relating to the elements of production and actuation relating to artificial intelligence and super-high speed data processing.
The contemplated language changes in the various codes do not pertain to any specific proposals at this point, but rather laying out standards and perhaps protocols to allow those who in the future have plans that are either modest, moderate, large or grandiose and include data centers and the like will know where the city stands and how to get started in bring a proposal to City Hall to see if it will fly.
That is where the déjà vu comes in.
Like growing marijuana, data centers require massive amounts of electricity and a lot of water.
Data centers house thousands of servers operating 24 hours a day, seven days a week, utilizing electricity throughout literally thousands of miles of circuitry. The electricity produces heat, lots of it. High-density artificial intelligence and its necessarily accompanying computing racks can draw 30–80 kilowatts per rack, producing heat equivalent to dozens of homes per rack. Without effective cooling, processors overheat, throttle performance, and risk permanent damage, making water essential for maintaining safe operating temperatures and stable humidity levels, which typically stand at 40 percent to 60 percent relative humidity, to prevent static electricity and corrosion.
Data centers use massive quantities of water primarily to cool the thousands of servers that generate enormous heat, with water-based cooling systems being more efficient than air alone.
As has already been demonstrated when Kerr & Company sought to make Adelanto the marijuana capital of the world, Adelanto is located in the middle of an electricity-stressed and water-stressed region. Despite that, Adelanto’s elected officials, all five of them, are enthusiastically embracing the concept of clearing the way for large-scale, indeed massive, data centers being established in the city.
Those closely examining the situation see the current council members taking a somewhat more sophisticated approach to exploiting the outside world’s enthusiasm for a product that is suddenly all the rage to line their pockets than Kerr and Wright did, one that is decidedly closer to the way Woodard did. Woodard made off with a tidy profit for his one term in office and managed to avoid having to vacation in the Big House. Whereas Kerr and Wright insisted on payoffs or kickbacks, Woodard’s grift was more roundabout, convoluted and more difficult to prove, if not detect. His profiteering was done by osmosis, through his connection to the real estate industry, as he collected commissions for brokering the sales of property, absorbing a portion of the byproduct of the marijuana frenzy, that byproduct being the escalation in the value of the land where the commercial marijuana activity was to be permitted to take place. As one of the five people who voted to expand the zone where that commercial marijuana activity was permitted to take place, Woodard was privy to inside information. He used that inside information to assist his real estate clients select property for purchase that would very quickly double, triple or quadruple in value. The enforcement and regulatory agencies that were supposed to prevent that sort of pre-informed sales activity, which one might call insider trading or insider real estate trading, weren’t fast enough, or informed enough or slick enough to spot what was being done in time to stop it.
There were multiple beneficiaries as well as multiple casualties as a result of that activity.
The first round of beneficiaries were the original owners of the property, who sold it for more than it was worth. The second round of beneficiaries were the real estate brokers who realized a commission when the property sold. The third round of beneficiaries were the speculators, i.e., the informed speculators who purchased the property. Some of those speculators followed through and, while there was still electricity and water to be secured, set up what would become lucrative marijuana cultivation operations. Other speculators merely sold the property at a profit, in some cases at a fat profit, to other speculators or to entrepreneurs or would-be entrepreneurs who then sought to make a go of growing marijuana by the ton. In a few of those cases, those being the ones who got hold of the property early enough to be able to ensure they had adequate power and water, those entrepreneurs saw a benefit. In a few other cases, where those who had the money or access to the financing to purchase some land who were not intent on becoming indoor farmers but were pursuing operations that consisted of laboratories where marijuana was to be processed rather than grown and then refined and concentrated into a consumable product in many forms, they did alright for themselves.
There were just as many others, though, who missed being in place and ready to go early enough who ended up purchasing, at an exorbitant price, property that in the first round or second round or the third round had already been inflated beyond what it was worth. When, after finally obtaining a permit to operate, they would learn, much too late, that there was no electricity to power the lights to replicate the brightness of the sun and no water with which to irrigate their plants.
By far the most numerous set of casualties were the residents and citizens of Adelanto. They lived in a city which had crippled itself by seeing to it that properties, far too many properties, that might have otherwise been put to some form of useful purpose or enterprise was now being held and in some cases monopolized by failed entrepreneurs who had paid too much for the land they were squandering and were in no way prepared to put it on the market at a reasonable price which could be purchased by someone who had some legitimate, reasonable and realistic purpose for it. The malaise that had gripped Adelanto when Kerr & Company had first arrived on the scene and which they had seized upon to initiate what became the marijuana debacle had grown even worse.
In recent weeks, members of the city council have been traveling hundreds of miles to hobnob with large-scale data center moguls. It is unclear who is seducing whom. Are the operators of the data centers misleading Adelanto’s city fathers as to what their operations will entail? Or are Adelanto officials misleading the data center owners as to the actual availability of electrical power and water in Adelanto? Will the data center entrepreneurs actually make an investment, not just in purchasing real estate in Adelanto, but in creating operations that will create meaningful and enriching employment for those who live in the city? Or will they create enterprises that employ technicians from far away and which involve utility demands that will be so great that they will threaten the viability of traditional industrial and commercial enterprises? Are Adelanto public officials, both elected and at senior municipal administrative levels, tying up property with options in the hope of interesting AWS, Microsoft Azure, Digital Reality, Equinix, NTT Global, Google Cloud Platform, GDS Holdings, Alibaba Cloud, QTS Data, Oracle Cloud or some smaller companies in paying top dollar to secure a toehold in Adelanto before they learn that there are some real limitations on the availability of electricity and water in the region?
The way it looks is Adelanto’s mayor and council members are trying to court data center operators while simultaneously convincing Adelanto’s residents to hold still for an influx of data centers.
In a recent Instagram post, Councilman Daniel Ramos told his Adelanto constituents that they have nothing to fear from the water guzzling and energy intensive cybernetic plants.
“Don’t believe all the misconceptions and misinformation about new and improved data centers,” Ramos wrote. “It might be true for the old models and technology, but these are not the same.”
He encouraged Adelanto residents to go to whatever lengths needed to satisfy themselves that welcoming data centers to Adelanto is in the community’s best interest. “Get out, tour some and educate yourself,” Ramos recommended, in so doing including a photo of himself and Councilwoman Amanda Uptergrove on the grounds of ScaleMatrix’s data center in San Diego.