As pot has marched steadily toward legalization in California since the approval of medicinal use, the drug has ostensibly provided relief for countless ailing residents. Even so, marijuana has created headaches for many California cities. Most debates have centered on whether, and where, to allow dispensaries to operate. Many cities forbid them entirely and other cities, like Los Angeles, have had to figure out how to rein in as many as 450 un-permitted, quasi-legal facilities.

It’s a different story in the state’s northwest corner, along a woodsy coastal stretch known as the Emerald Triangle. There, the city of Arcata is addressing a different side of the marijuana economy. It has just become the first jurisdiction in the country to embrace not just the distribution of medical cannabis but also its production.

In May, the Arcata City Council tentatively approved, on a 5-0 vote, the creation of a “Medical Marijuana Innovation Zone,” pending further study and the drafting of a zoning ordinance by the city’s planning commission. City officials believe it would be the country’s first-ever land use designation specifically meant to promote and regulate the production of marijuana and cannabis-related products.

The city has identified several parcels in an industrial area on the edge of town, where an abandoned lumber processing facility may soon provide a city-sanctioned home for marijuana producers. The logic behind the zone hearkens back to the very origin of U.S. zoning when noxious industries were first segregated from residential areas.

In Arcata’s case, the nuisance isn’t from toxic smoke or noise but rather the sickly pungent aroma of some of the world’s most potent bud.

“The trial of this first site will be to control the smells,” says Arcata City Council Member Susan Ornelas. “We’ve all associated that smell with illegal activity for 70-something years.” The city has long been something of a pot destination thanks to its isolation, hippie spirit, and live-and-let-live attitude.

City officials say the power of zoning offers its best, and perhaps only, tool for regulating the marijuana industry, which otherwise depends on decisions at the state level. Arcata-based attorney Mark Harris, advisor to the National Organization for Reform of Marijuana Laws (NORML) says he considers the zone an “overwhelmingly positive” development. He sees this approach as a model not only for cities throughout California but also for those in other pot-friendly states.

“I think it’s the only thing [cities can do to regulate marijuana],” says Harris. “Court case after court case established that these larger decisions about legality relate to the state, but in terms of land use … health and safety and public good relate to the local jurisdictions.”

“We made some of the first land-use rules about [growing] and the dispensaries,” says Ornelas. “And we also controlled individuals’ growth through land use rather than control it as a drug.”

A huge share of Arcata’s economy is directly related to marijuana, with countless businesses — from hardware stores to law offices — as secondary beneficiaries. A 2011 report estimated that $415 million of Humboldt County’s $1.6 billion economy related to marijuana.

That number is sure to rise if the state legalizes (and taxes) recreational use. A group called ReformCA recently announced its intentions to get a legalization measure on the 2016 statewide ballot.

“It’s refreshing to see local authorities recognizing that their communities will benefit economically by welcoming the transition of this already lucrative cash crop from criminal hands to tax-paying, job-creating, law-abiding businesses,” says “Radical” Russ Belville, a Portland, Oregon-based radio host and marijuana activist.

Ornelas calls the marijuana boom the region’s “next green rush.”

“Our area has a highly skilled workforce that has many years of experience in this industry,” says Arcata Community Development Director Larry Oetker. “Because of that, we believe that we are uniquely qualified to expand our businesses in this area.”

Even as marijuana remains firmly in the gray market nationally, public officials in Arcata talk about marijuana the way their counterparts in Iowa talk about corn. They acknowledge the industry’s economic benefits, and they would prefer to regulate it sensibility rather than let the underground economy run amok. Ornelas says that even the police chief supports a version of the zone.

“If we do not have a place where people can do their business legitimately, then they will have no choice but to do it in an unregulated areas,” says Oetker.

Not that there hasn’t been tension between the city and growers. For the past few years, growers, particularly those who are new to the area, have been invading residential neighborhoods and setting up grows in single-family homes, much to the distress of residents. To encourage growers to move to industrial areas, the local utility instituted a surcharge on homes that were using 400 percent or more electricity than their neighbors (an amount thought to signal clandestine indoor growing). City officials say the number of houses guzzling electricity has fallen from around 400 to fewer than 100.

By giving growers and producers a designated, approved place to go, the Medical Marijuana Innovation Zone is the next step. The Arcata Planning Commission met recently to begin discussing its implementation and regulations. Of particular concern is that the zone not be confined to a single area. Ornelas said that it would be “undemocratic” for the zone to comprise the properties of only a single landlord, so the city is already looking at extending to additional parcels

Oetker says that the zoning regulations should be in place within six months. Thereafter, the city will expand or contract as it sees fit. However, the city’s planning commission recently voted to slow down the process to clarify the goals of the zone and review the geographic areas that it might include.

Many in the Emerald Triangle feel that 2016 will be a watershed year. Arcata wants to be ready to take advantage of yet another pot boom and make sure that it is ready to handle the pressure of increased production by producers both underground and aboveboard.

“The elephant in the room is what’s going to happen with respect to cannabis generally,” says Harris. “That is when I think innovation areas are going to be plug-and-play,” referring to the ease with which Arcata and other cities could expand and adopt innovation zones.

“We want to get some experience under our belts before we get into mid-2016,” says Ornelas. “We want to make sure we have experience managing this business.”

Editor’s Note: This post was updated to reflect the fact that Arcata’s Medical Marijuana Innovation Zone is in the works, but full implementation is pending further study.