COTTAGE GROVE - Dirt is moving at the future site of LeafLine Labs’ medical marijuana manufacturing facility in the Cottage Grove Business Park.

The city is southeast of St. Paul along the Mississippi River.

The city sold 24 acres of land to LeafLine Labs Dec. 4 for about $3 million. Crews broke ground that same day on the first phase of the project, which is a 41,000-square-foot building.

City Administrator Ryan Schroeder said the construction began immediately so that the building’s footings could be in place prior to the winter freeze.

LeafLine Labs - formed by several family members of the Bachman floral franchise, but not affiliated with Bachman Inc. - was one of two entities chosen by the Minnesota Department of Health earlier this month to manufacture medical marijuana when it becomes legal in 2015.

Otsego-based Minnesota Medical Solution was the other applicant chosen. That small town is northwest of the Twin Cities near Interstate 94.

Schroeder said recently the city bought the land for $1.7 million from the Cottage Grove Economic Development Authority and turned around almost simultaneously and sold it to LeafLine Labs.

About $951,000 of the purchase price, he added, is an assessment to cover costs associated with landscaping and pavement work.

“The city is assessing to the construction project and is granting a loan through that assessment for a five-year term at 5 percent,” Schroeder said. “It’s an investment vehicle for us.”

Another $100,000 of the land sale is an assessment to pay for the sidewalk installation.

The construction of the first phase is expected to be completed by July 2015, when LeafLine Labs is expected to begin manufacturing medical marijuana.

Mayor Myron Bailey said LeafLine Labs is a “positive project for the city of Cottage Grove.”

“Our staff is being referenced as sort of the model for other people who are looking to get into this business because of the work that they did and the speed with which they did it and the accuracy with which they did it,” City Council member Justin Olsen said. “Their work is probably the linchpin why Cottage Grove was ultimately chosen by the folks at the Department of Health to be the home for one of these facilities.”