Photo via Stan Shebs

Late last year, an Arizona canna-business made headlines by buying an entire California ghost town, with plans to transform it into a booming cannabis resort. But the attempt to create a massive marijuana farm in the middle of the desert proved to be too much of a financial risk, leading the company to recently sell the town of Nipton, California to an oil drilling firm.

Nipton, a one-horse town on the edge of the Mojave Desert, was once a booming mining town during the California gold rush, but was eventually abandoned once its mineral deposits were tapped out. In the 1980s, a Los Angeles geologist bought the town up and gradually restored a handful of businesses and homes. Then last year, Arizona canna-business American Green purchased Nipton, including over 120 acres and all of the town's properties, for $5 million.

American Green's plans for Nipton were ambitious, including a fully-functional cannabis cultivation operation, a marijuana-themed resort complete with hotels and a Western-style dispensary, and a side business creating cannabis-infused bottled water. The company intended to power the town and its operations via solar power, an energy source in great supply in the desert.

Water, on the other hand, is scarce, creating a major challenge for American Green from the beginning. The company intended to supply all of their operations using an ancient aquifer located beneath the town, but California's recent Sustainable Groundwater Management law requires that all groundwater users must prove to the state that they are not irreversibly damaging aquifer levels. While the company was confident that they could meet this goal, geologists warned that there was too little rain in the area to replenish the aquifer.

American Green worked hard to raise the capital necessary to get their plans rolling, but the potential risks involved kept investors at bay. "Buying and building towns is very cash intensive,” the company said in a statement reported by the Los Angeles Times. “Up until now, the cost of attracting capital has been very expensive for our company." The business finally decided to sell the town to exploratory drilling company Delta International Oil & Gas for $7.7 million.

The goal of transforming Nipton into a destination for canna-tourists isn’t quite dead yet, though. The sale includes the provision that American Green be allowed to continue with its plans to turn the town into a cannabis resort, and the company has signed a contract to continue developing Nipton over the next five to ten years.