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The Evergreen

Seattle Times coverage of pot policy, culture and lifestyle.

August 18, 2014 at 12:47 PM

From seed to sale, challenges abound for licensed pot growers

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Part 1: Startup pot operation full of stress and hard work

This is the first story in a seed-to-sale series focusing on one pot-growing operation in Seattle as owners take their historic product from seedling to retail store shelf.

June 7, 2014 – Inside a windowless Sodo warehouse teeming with 1,143 pot plants, one of the state’s pioneering marijuana producers waited anxiously to “snap the lights.”

To growers, that means putting the leafy stalks on a 12-hour cycle under the lights. The suddenly shorter “days” signal to the plants that fall is coming — in early June.

“That’s when we play Mother Nature,” said Steve Elliott, an owner of one of Washington’s first licensed pot growers, AuricAG. “It puts the plants into hyper-drive.”

To propagate the species, the all-female plants then start to flower, secreting resins, sticky with pot’s psychoactive chemicals, to attract pollen. But not a speck of pollen should be around if Elliott and team have done their job. Desperate, the plants get more sticky, more pungent and more valuable. Their fastest-growing strain should be ready for harvest five weeks after flowering begins.

Seed to Sale 20As the cycle is repeated in coming weeks, AuricAG’s owners will confront crucial questions. Can they deliver to the state’s first recreational pot stores a crop that meets purity standards, makes a decent profit and brands them as mature entrepreneurs who view pot more like good wine than hippie lettuce?

Much is at stake, including personal finances and reputations. Even the perceived success of Washington state’s experiment with legal weed depends on the first wave of growers getting good products to the stores expected to open in July.

The name AuricAG hardly conjures marijuana, never mind counterculture. But it is a sly riff on the owners’ ambition. “Auric” is more than the first name of the James Bond villain Goldfinger. It means related to, or derived from gold.

And gold is what the owners of AuricAG hope to grow. It’s what they dream of reaping. And it’s the standard they aim to set for the new industry.

With their backgrounds, the owners believe they’re well-equipped for the mission. “This product is basically a widget. You manufacture it and distribute it. I understand that operation,” said Mark Greenshields, the company president.

Sales director Joby Sewell sees pot differently. “Instead of selling two-by-fours or hammers, this is living and breathing. There’s passion involved, and that’s why I’m in it,” Sewell said.

In any case, those on the team have faced a steady diet of stress. They had to find property where the landlord was willing to break federal law. They had to pass the state’s vetting process, including FBI background checks. They had to install security cameras — 29 in all — to cover every inch of their operation. “Treat this like a prison,” a state inspector told them.

They’ve also had to create 911 clones — and counting — from the 232 plants they brought in during a 15-day window in which state officials essentially looked the other way while the industry sprouted from medical-marijuana farms and illegal sources.

Cloned cuttings develop in a water solution. For AuricAG to succeed, its harvests must meet purity standards and turn a profit. (Photo by Steve Ringman / The Seattle Times)

Cloned cuttings develop in a water solution. For AuricAG to succeed, its harvests must meet purity standards and turn a profit. (Photo by Steve Ringman / The Seattle Times)

There’s little rest for prospectors in the first days of Washington’s green rush. And even with their more-than-a-half-century of combined business experience, the local guys who own AuricAG are in deeply unfamiliar terrain as a company that banks won’t even serve because of the federal prohibition of pot.

Will they really be forced to deal only in cash? How will they protect it? Is there a chance they could be one of the few pot merchants a local credit union has said it will service on a trial basis?

“It would bring a big sigh of relief,” Greenshields said Wednesday morning. That afternoon, a committee at Salal Credit Union would decide if AuricAG was worthy of becoming their first customer in the pot industry.

Willing credit unions

Two credit unions have stepped up to give legal pot merchants a trial run, Numerica in Spokane and Salal in Seattle.

Credit unions tend to operate within state and appear to be more comfortable developing programs that meet Washington’s pot law than multistate banks, said Scott Jarvis, director of the state’s Department of Financial Institutions.

AuricAG’s Greenshields was the first potential customer to make a presentation to Salal. Greenshields brought a thick binder with 23 sections, stocked with tax returns, financial disclosures, credit references.

The odds still didn’t seem all that favorable.

Salal is starting with no more than seven pot companies in what it calls a “beta test” for the industry. “We aren’t sure how labor intensive these companies are going to be,” said Bob Schweigert, senior vice president. “We have to do this right. If we stumble at all, it’s going to impact the ability of others.”

Formed by Group Health employees in 1948, Salal is the 23rd-largest credit union in the state, with $366 million in assets, Schweigert said.

He sees great potential for pot business. “It’s going to surpass the alcohol industry,” he said.

Salal decision-makers emailed Greenshields on Wednesday just after 4 p.m. Impressed by the experience of AuricAG’s owners, they said they wanted to make the company a customer.

From checking accounts to armored-car pickups, Salal was excited about its role, Schweigert said. “You don’t get very many opportunities in your life to be at the forefront of something like this.”

Greenshields was relieved at the news. “That takes a major pain off of our radar,” he said, checking another task off his list.

Sewell responded via text message with one word: “Awesome!”

Call of opportunity

Sewell and Elliott have played soccer together for decades and still play every week. They used to joke that they should get into pot dealing, with Elliott growing and Sewell selling. “Because I was getting burned out selling wine,” Sewell said. “There’s only so many times you can hear people say, ‘Ooh, I smell eucalyptus.’ ”

They discussed opening a medical-marijuana dispensary a few years ago with Greenshields. But they deemed it too risky. Sewell stayed in wine, where he has worked in sales and distribution. Elliott remained a commercial painter who grew a little medical marijuana on the side. Greenshields was a habitual entrepreneur whose latest gig was setting up video-rental departments in rural grocery and convenience stores.

AuricAG team members talk during an impromptu meeting. From left were Mark Arnold, Joby Sewell, Mark Greenshields and Steve Elliott. (Photo by Steve Ringman / The Seattle Times)

AuricAG team members talk during an impromptu meeting. From left were Mark Arnold, Joby Sewell, Mark Greenshields and Steve Elliott. (Photo by Steve Ringman / The Seattle Times)

When Washington voters approved Initiative 502 in November 2012, legalizing possession and sale of marijuana, Greenshields called the band together to revisit pot commerce.

“At first, we all were like, ‘This is crazy.’ But he kept driving forward,” Sewell said.

In the state system, they could apply for licenses as growers (called “producers”), processors (who tend to make pot-infused edibles or liquids), or retailers.

Under the law, only retailers can sell to consumers, and only licensed producers and processors can supply retailers.

As of June 3, the Liquor Control Board had approved licenses for 49 producers and 41 processors statewide.

Greenshields steered the group toward production because of Elliott. “I knew Steve could grow the product. A grower doesn’t do you any good in retail. It would just be a waste of talent,” he said.

On the first day the state took applications for pot licenses, the AuricAG team submitted theirs.

The team includes Greenshields, 48; Elliott, 45; Sewell, 44; and Mark Arnold, 50, a friend of Elliott’s and former Boeing inspector, who works as assistant grower.

In daily tasks, the approach is more collective. All tend to wear soccer jerseys, shorts and sweatpants to work. “Titles get left at the door when we walk in,” Sewell said.

But they’ve slid into roles since the official birth of their company on April 16, when they became the 16th grower licensed in the state. “We had about 30 to 60 seconds of real joy and high-fiving,” Greenshields said about the day they passed their state inspection. “Then I looked at everybody and said, ‘Now the real work begins.’ ”

Theirs was but one of the 2,800 applications for state growing licenses. They applied for a license that allows them to farm up to 7,000 square feet, a mid-sized operation in the state system. They hope to produce at least 1,000 pounds of pot a year to start, a small fraction of the 80 metric tons the state eventually expects to be legally produced.

Their families approved. “My dad was 100 percent supportive. He sees the potential of the industry,” Greenshields said. “My mother was very worried. I brought my parents down to say, ‘Look, you can see we’re fairly secure.’ ”

Mark Arnold, left, and Mark Greenshields pot cuttings in the clone room, making the most of plants obtained during a 15-day window of nonenforcement. (Photo by Steve Ringman / The Seattle Times)

Mark Arnold, left, and Mark Greenshields pot cuttings in the clone room, making the most of plants obtained during a 15-day window of nonenforcement. (Photo by Steve Ringman / The Seattle Times)

Sewell said his parents and wife also thought it was a good opportunity. “I haven’t talked to my children yet,” he added. “They’re young (12 and 8). I haven’t figured out how I’m going to direct that conversation.”

The team will have invested $150,000 of their own money by the time they sell their first products. The owners tapped retirement accounts and sold cars and houses to raise the money, Greenshields said. But they didn’t have to rely on outside investors.

“The money is an issue,” Sewell added. “But the big pressure I’m putting on myself is that you don’t get these opportunities often, if ever. To fail would be emotionally devastating because I don’t want to go back to working for someone.”

Work and stress

The first two months of AuricAG have been short on glamour and fun.

Those on the team water and feed plants every day, which means mixing nutrients and pH balancers. They create more clones by taking clippings from existing plants. That requires tapping an identification code for each new plant into the state’s traceability software, intended to track the flow of every gram of legal pot.

Much of their time has gone into building walls and creating segregated growing rooms to reduce risk from parasites and pollen. Installing an air-conditioning system, running from the floor to the top of their 17-foot walls,

Looking down a hallway built of plastic sheeting, grower Steve Elliott takes a break from construction. Segregated growing rooms reduce risk from parasites and pollen at AuricAG’s Sodo warehouse. (Photo by Steve Ringman / The Seattle Times)

Looking down a hallway built of plastic sheeting, grower Steve Elliott takes a break from construction. Segregated growing rooms reduce risk from parasites and pollen at AuricAG’s Sodo warehouse. (Photo by Steve Ringman / The Seattle Times)

was a major task. It led to long hours and stress.

The AuricAG team members did most of the work themselves to save money.

But Elliott couldn’t “snap the lights” until the air-conditioning was working. And with each passing day until then, it appeared more challenging to meet their goal of having a crop ready for stores in early July.

Elliott was eager to focus more on his plants. “The hard part is doing the build-out and plant management at the same time,” he said. “It’s a logistical nightmare.”

On Saturday, 48 days after they moved plants into the warehouse on Easter Sunday, they put the plants on a 12-hour cycle and tricked them into flowering.

In the weeks to come, Elliott will find out if he is successful growing, harvesting and curing far more plants than he had ever managed before.

AuricAG also will know if it can strike deals with retailers in the Seattle area willing to put its products on their shelves.

Part 2: For pot yield of growers’ dreams, fickle plants need constant care

They call it “weed” because marijuana supposedly grows like one. But it’s not simple getting this multimillion-dollar product to market. There are many quirks and challenges of growing at an industrial scale.

June 28, 2014– 

A marijuana grow room in Sodo blazes from a dozen 1,000-watt bulbs. The light is so intense that Mark Arnold, assistant grower for pioneering pot producer AuricAG, wears blue-tinted lenses to cut the glare.

Surveying the tall plants — made happy, Arnold believes, by his own positive attitude — he beamed: “Who says money doesn’t grow on trees?”

If all goes according to plan, AuricAG could fetch $2 million a year for its products.

But it’s not easy cultivating high-quality pot on an industrial scale. “It’s remarkably hard to do consistently,” Arnold said.

Working beneath 1,000-watt bulbs, Mark Arnold, assistant grower for pot producer AuricAG, scoots around on a stool cutting the center hearts off the lower branches of the marijuana plants to increase growth to the buds. Gray fungus and insects are potential threats. (Photo by Steve Ringman / The Seattle Times)

Working beneath 1,000-watt bulbs, Mark Arnold, assistant grower for pot producer AuricAG, scoots around on a stool cutting the center hearts off the lower branches of the marijuana plants to increase growth to the buds. Gray fungus and insects are potential threats. (Photo by Steve Ringman / The Seattle Times)

It’s even harder when you’re a do-it-yourself operation, like AuricAG. Converting a Seattle warehouse, last used for car repairs, into an indoor pot farm is far from the plug-and-play automated facilities whose probes and nutrient systems nurse pot plants like electric nannies.

Throw in AuricAG’s ongoing build-out and fraught female plants — tricked into hypergrowth by artificial light — and you’ve got challenges. “This is when I go home and pray every night things are going to work out,” said master grower Steve Elliott, after AuricAG’s electrical system recently misfired and its air conditioning misbehaved.

The company, among the first 76 licensed growers in the state so far, had hoped to have its product in the initial wave of stores expected to open July 8. Now the team of middle-aged local guys is resigned to late July.

Elliott wanted to slow down and get everything working as desired. “People don’t understand what a volatile crop it is,” he said. “One wrong move, and you lose your room. It’s hard to explain to business people. They say you’re just losing money.”

Mark Greenshields, president of AuricAG, thought Elliott was overly concerned. “What it’s really about is plant perfectionists,” Greenshields said, referring to temperatures in growing rooms “just a little outside the perfect zone” of 75 degrees.

There’s not much choice but to defer to Elliott. He is like a lead singer in a band, Greenshields said. His talent demands that he calls certain shots when it comes to the plants he calls his “girls.”

“You have to roll with things like this,” said sales director Joby Sewell.

And, AuricAG’s delay isn’t devastating.

Retailers are scrambling for contracts with producers who can put pot on store shelves. They’ll need product in August as well as July. “Just about every retailer wants to lock us down,” Greenshields said.

State officials are expecting supply — which can only come from licensed producers — to be scarce at first, driving prices upward. Some growers are seeking up to $5,000 a pound, Greenshields said, almost triple the price of pot on the illicit market.

First step: starter plants

Greenshields and Sewell envision their product selling for roughly $3,000 per pound. They believe their pot will be as good as anybody’s. But they want to be in the business long-term and establish a well-regarded brand. They don’t want to be seen as gouging the first customers just because they can.

After retailer markup and before sales tax, Sewell hopes consumers can buy an eighth of an ounce of AuricAG weed for $60. Top-shelf eighths sell in medical marijuana dispensaries for roughly $40. But dispensaries don’t pay the stiff state excise taxes that the recreational system will — 25 percent when producer-processors sell to retailers, and another 25 percent when retailers sell to consumers.

AuricAG’s 500-square-foot grow rooms should each produce at least 12 pounds per harvest, Elliott said, citing the growers’ general rule of one pound per light. The yield could be much more.

In its assembly-line system, in which new clones are supposed to constantly replenish supply, the AuricAG team hopes to pump out 500 to 1,000 pounds of pot in its first year.

That could bring roughly $2 million in receipts before taxes and expenses. As for getting rich, Sewell said, “I don’t see it in the short term.” But AuricAG does hope to increase the size of its operation one day, and it is already exploring new lines of business, such as packaging for other growers.

Mark Greenshields, left, president of AuricAG, and Mark Arnold, assistant grower, move plants in the company’s indoor pot farm in Sodo, which houses more than 1,000 plants in various stages of growth. (Photo by Steve Ringman / The Seattle Times)

Mark Greenshields, left, president of AuricAG, and Mark Arnold, assistant grower, move plants in the company’s indoor pot farm in Sodo, which houses more than 1,000 plants in various stages of growth. (Photo by Steve Ringman / The Seattle Times)

The company has more than 1,000 plants in various stages, from clones just 2 inches tall, to 2-foot-tall juveniles, to behemoths stretching above Arnold’s head. Every plant taller than 8 inches must be assigned a bar code and a 16-digit identifier for the state’s tracking system.

The first challenge, though, was rounding up the starter plants. Elliott, who had grown medical marijuana on a small scale, used some of his plants and reached out to friends and fellow growers. They offered him cuttings from their reliable mother plants.

In all, Elliott gathered 232 of these. Then the team started snipping off small branches, about 2 inches in length, creating more clones, as they’re called. Those are nourished until they produce stringy roots.

Then they’re transplanted into red keg cups filled with crushed coconut husk, which Elliott thinks is better than soil for growing. They graduate to three-gallon buckets in a couple weeks. All along, they’re fed a diet of water and nutrients, including calcium and magnesium.

All of their products must be tested by state-accredited labs to certify their chemical content and lack of contamination.

Inside the rooms, you can see distinct differences in the plants.

Some are cannabis sativa, a tall, spindly species that hails from tropical zones and is known for its energizing effect.

Others are shorter and thicker. They’re derived from cannabis indica, which has its origins in Afghanistan and Central Asia. Indica is prized for its more sedating properties.

Because of rampant crossbreeding, most of the strains are actually hybrids that lean one way or another, dominant in either sativa or indica genes. Marrying the two produced a plant generally “short, fast and strong,” according to Michael Pollan, author of “The Botany of Desire.”

A happy gardener

AuricAG has more than 30 strains in all, including Berry White, Cotton Candy, Obama Kush and Snoop Stream. The tallest plants are Skunk #1, whose lineage can be traced to Mexico, Colombia and Afghanistan. Another strain called Hog’s Breath tastes, Arnold said, like you fell face-first into dirt and apricots.

The Blueberry strain dominates several rows. Look at their hearty happiness, Elliott said like a proud papa, marveling at the similar structure and color in plant after plant.

But disaster lurks around every corner, Arnold said, from botrytis, or gray fungus, to bugs, like the mayfly. Defenses include neem oil sprayed on plants and a crunchy silica substance spread around the base of the plants, which looks like shards of glass under a microscope and lacerates tiny insects that crawl on it. Even the wheels on AuricAG’s watering buckets get bleached, to prevent contamination.

The best overall defense, Elliott said, is good air flow that maintains the right temperature and humidity. If rooms are too hot, plants will dry out and droop. If they’re too cool, dampness will invite pesky critters.

The growers believe their positive energy also helps the plants. If so, Arnold may be the equivalent of a human vitamin. A former Boeing inspector with a big scar on his back from spinal surgery, Arnold is a believer in the medicinal properties of marijuana.

His first growing experience came after he got his medical card and a friend challenged him to try keeping one plant alive for a year. “I was able to get off painkillers,” he said. “It allowed me to dream.” Now he’s living his dream, he said, tending plants at AuricAG.

“You always have to think about the gardener,” Elliott said. “If the gardener is happy, the plants feel it.”

Progress, challenges

The most exciting moment in growing, Arnold said, comes at the first sight of little flower buds, called “popcorn.” These clumps of tiny white pistils are the beginning of flower clusters that eventually reach the size of a zucchini, sticky with resin full of pot’s active chemicals. The appearance of popcorn stirred pride and joy in Elliott and Arnold.

Getting the air-conditioning system working on automatic controls was another big relief. That allowed sensors and actuators to adjust each room to ideal conditions, even while Elliott lay in bed. Until that juncture, Sewell was trooping down to the warehouse around midnight — because he lives closest — to check on the plants. Some of the biggest ones would gulp a gallon of water during his visits.

“I can actually sleep at night,” Elliott said. “We turned the corner.”

He’s eager to get software that will allow him to monitor the grow rooms from his phone and alert him via email if something goes astray. With it, he can even fine tune warehouse conditions from home.

But more challenges wait.

Some of his plants are too tall, growing several inches a day. That called for raising lights in one room, where plants were topping 6 feet. In turn, that meant less illumination spilling onto the lower branches of the biggest plants.

Elliott’s next task is to construct two more growing rooms, with 17-foot-tall tarp walls to reduce the risk of mold and other contaminants. He’d rather manage plants. But Elliott sees his sweat equity as the price of autonomy. AuricAG could seek help from outside investors. “But then somebody else has say,” he said.

A retailer visiting from Bellingham said he was impressed by AuricAG’s progress. “I like what I see, in terms of the setup. It leads me to believe you will have a high-quality product,” Justin West, owner of Cascade Herb, told Sewell and Elliott.

But West said he wouldn’t sign a contract to buy pot from AuricAG until he could see and sample some of the product.

As Greenshields and Sewell meet with more and more potential retail partners, Elliott is reminded of his burden in the coming weeks. “For a grower,” he said, “there isn’t a good day until harvest.”

Part 3: Pot farmers in state driving a bumpy road to market

Until test results come in, the AuricAG team won’t rest easy. 

July 26, 2014– 

The pistils, or white strands that mark the blooming of marijuana flowers, have turned amber, the color of money to the pot farmers inside a Sodo warehouse.

Sticky and pungent trichomes cling to the leaves of an AuricAG “Sodo Blueberry” pot bud that is a few weeks away from harvest. (Photo by Steve Ringman / The Seattle Times)

Sticky and pungent trichomes cling to the leaves of an AuricAG “Sodo Blueberry” pot bud that is a few weeks away from harvest. (Photo by Steve Ringman / The Seattle Times)

It’s time for the first harvest of “West Seattle Kush” by AuricAG, one of the pioneering legal pot growers in Washington state.

The team of local guys isn’t popping Champagne yet. Drying, curing and crucial lab tests are to come — and probably more of the unanticipated problems that have stressed the AuricAG team in their race to market.

They’ve worked Father’s Day, Fourth of July, and close to 130 days straight. Finances are short, refrigerators bare, nerves frayed. One recent night, during a full moon, the guys got “pretty emotional,” said sales director Joby Sewell. They argued about equipment and building problems but the beef was really about exhaustion, Sewell said.

“Bilbo Baggins put it best, we feel ‘like butter scraped over too much bread.’ ”

In that sense, AuricAG exemplifies the bumpy start of the state’s recreational pot system, with a handful of stores opening earlier this month with short supply, most only to shut down a few days later while they waited weeks for more.

Although AuricAG is harvesting three months after receiving a license on April 16, just several weeks behind their initial schedule, they’re a relatively small farm and may bring only 50 pounds to market in the next month. That’s not even a dent in the projected statewide demand for almost 500 pounds of recreational marijuana per day.

The state has licensed 109 growers since AuricAG, a rate of about one per day that’s drawn complaints. “I’m not sure what the intended rate should be,” said Randy Simmons, the state’s marijuana project director. “We’re getting faster every day.”

Still, consumers are in for a rough ride until at least September, Simmons said, when there should be enough supply to keep stores open.

He isn’t surprised by the choppy launch. He predicted scarce inventory and high prices late last year when asked for a 2014 forecast. And that was before the state severely restricted the size of growing operations, in part out of concerns about creating a Big Marijuana industry.

Just as AuricAG is finding the business of growing pot on an industrial scale to be more challenging than imagined, the state is seeing that creating a decentralized “mom-and-pop” system may come with drawbacks.

AuricAG partners Joby Sewell, Steve Elliott, Mark Greenshields and Mark Arnold stand in the maturing pot field that’s still a few weeks away from harvest. They are all wearing blue-tinted sunglasses so they can see normal colors around the sodium vapor lamps. (Photo by Steve Ringman / The Seattle Times)

AuricAG partners Joby Sewell, Steve Elliott, Mark Greenshields and Mark Arnold stand in the maturing pot field that’s still a few weeks away from harvest. They are all wearing blue-tinted sunglasses so they can see normal colors around the sodium vapor lamps. (Photo by Steve Ringman / The Seattle Times)

Off-kilter start

Something seemed off-kilter with Washington’s legal pot system when opening day came and the Klickitat County hamlet of Bingen, population 750, had the same number of licensed pot stores as Seattle, with its 650,000 residents.

But even if all 21 stores slated for Seattle had opened, there wouldn’t have been close to enough to go around.

When state officials created the architecture for a legal pot system they aimed to allow just the right amount of marijuana around the state. Let too much grow, the theory went, and some would be smuggled to other states. That might lead the federal government to quash our experiment. If they permitted too little to grow, they figured, they’d fail in the goal of undercutting the illicit dealers.

Based on an estimate by consultants, Simmons and his bosses at the state Liquor Control Board (LCB) set statewide demand for recreational marijuana in its first year at 80 metric tons. That translated into 2 million square feet of farms.

But when the state was swamped with 2,800 applications for growing licenses, LCB leaders redrew their proposed limits. Out went the maximum 90,000-square-foot farms; in came new tiered limits — 21,000 for the biggest growers, 7,000 for medium-size farms like AuricAG, and just 1,400 for the smallest farms.

That limited the ability of big growers to get supply to market in the first months.

Some established medical-marijuana growers such as Solstice — the first legally permitted cultivators in Seattle — had drawn up plans to go big in the recreational market.

Solstice was a day away from closing on a property deal in East Wenatchee that would allow them to grow more than 2 acres, with room to expand. But when the state cut the maximum back to less than a half-acre, Solstice’s Alex Cooley said the development no longer made financial sense. Solstice hit the pause button to draw up plans and find property for a 21,000-square-foot farm.

The rule change set Solstice back six months, Cooley said, and likely kept it from delivering hundreds of pounds to stores that opened in early July.

The 2 million-square-foot cap and one-license limit may have hindered large growers, Simmons said, but it probably helped smaller growers to get a toehold.

In any case, the state has now licensed growers with the potential to farm 1.3 million square feet, or about 60 percent of the allotted space, though most are weeks or months from getting products to market.

Questions, decisions

A pot shortage obviously creates a good situation for farmers. Retailers are so desperate AuricAG could package a million pounds of pot in old shoes and sell it all, Sewell joked.

But that dynamic also increases pressure. Sewell and CEO Mark Greenshields want to sell products. Master grower Steve Elliott and assistant grower Mark Arnold are more focused on the all-female plants they call their “girls.”

Tension surfaces in decisions over things such packaging, and whether to use bags or bottles. Elliott wants glass jars or plastic pill bottles because beautiful buds get crushed in bags. But bags are more practical for labeling, Sewell said, and they stack and hang more easily for retailers.

AuricAG will go for now with sealable bags, and plan to use jars or containers for top-shelf products.

That leads to questions about what to name the products. Should they stick with established strain names such as Deadhead OG? Or should they create more generic names that suggest the energizing or sedating properties of strains?

And which of the many retailers calling, wanting to buy their products, should they sell to? This is one area where AuricAG has remained firm from the start. They want long-term relationships with a handful of retailers, who, like them, don’t want to gouge initial customers with high prices.

For AuricAG this means selling pot at about $7 per gram, with the state’s 25 percent excise tax included. That should lead to retail prices of about $20 per gram or less, Sewell said.

Once their first crops are out the door, they’d like to expand their growing area. But that remains uncertain at this time because their 5,000 square-foot warehouse gets only 200 amps of electricity from Seattle City Light, about equivalent to the power going to a single-family home, Greenshields said. With intense lighting in three grow rooms and a loft for nursing small plants — plus all the air conditioning needed to keep the operation below 80 degrees — AuricAG is perilously close to using all the power it can get without tripping its circuit breakers.

AuricAG sales director Joby Sewell checks the labeling inside the drying room where the first small harvest of Kush is drying. Down the hallway, different rooms are framed out and covered with plastic that houses pot maturing at different stages of growth. (Photo by Steve Ringman / The Seattle Times)

AuricAG sales director Joby Sewell checks the labeling inside the drying room where the first small harvest of Kush is drying. Down the hallway, different rooms are framed out and covered with plastic that houses pot maturing at different stages of growth. (Photo by Steve Ringman / The Seattle Times)

So AuricAG waits on City Light to upgrade their power to 600 amps. When will that happen? Greenshields shrugged. AuricAG has been waiting months with no news.

When they do get more power, there will be pressure on the team to buy a machine that extracts key chemicals from the trimmed leaves for use in oils, tinctures and edibles. That $75,000 investment could prove very lucrative, they believe. At the same time, team members who’ve been going without pay for months would love to put some money in their pockets.

But that’s getting ahead of the immediate challenges.

Now, they’re focused on “flushing” plants before harvest. That means feeding them only water for a week or so to get nutrient supplements, and metals such as magnesium, out of the plants. Then it’s on to pulling the plants, hanging them to dry, trimming leaves from the flowers, and curing them just the right amount of time for the desired flavor, effect and moisture.

Tests on the first batches of pot harvested around the state by Analytical 360, one of the state-certified labs, found that about 10 percent of the samples failed because of common mold, like the kind you find on a lost cup of coffee, said Randy Oliver, chief scientist for Analytical 360.

During Seattle’s hot summer, AuricAG has been challenged by humidity issues.

Elliott has said there are no good days for a grower until harvest. But really, there are no good days until the test results come in.

That will determine if all of AuricAG’s babying of its plants paid off, and if people will start buying their pot the first week of August.

Part 4: As they work out kinks, pot growers strive to meet demand

Countless hours went into preparing AuricAG’s first batch of marijuana for retail sale. Then it took just four hours for all 259 of its packages to sell out. This first harvest has allowed AuricAG to cover its bills, and now the company is looking ahead with expansion plans.

August 16, 2014- 

It might have been Seattle’s easiest pot deal, if you don’t take into account FBI background checks, adding every gram into the state’s traceability system or testing for mold and moisture in a state-licensed lab.

Mark Greenshields and Joby Sewell climbed into a 1997 Toyota Land Cruiser with a bit more than a pound of marijuana and cruised down Airport Way, with directions on a manifest provided by the Liquor Control Board.

Just more than a mile later they arrived at Cannabis City, Seattle’s first — and for now, only — retail pot store. It took all of four minutes.

Inside the store, the pair from AuricAG — one of Seattle’s first state-licensed growers — plopped the cardboard box on a frosted glass counter.

The blessing of the first pot delivery being held by AuricAG's team members. (Photo by Steve Ringman / The Seattle Times)

The blessing of the first pot delivery being held by AuricAG’s team members. (Photo by Steve Ringman / The Seattle Times)

“Two hundred fifty-nine bags counted three times,” announced Greenshields.

“And it’s going to be counted a fourth,” said Cannabis City manager Amber McGowan, as she gently poured the pot packages on the counter.

Sure enough, there were 259 two-gram bags of West Seattle Kush, freshly packaged, with gold labels indicating the pot passed state tests and contains about 15 percent THC, the psychoactive ingredient that gets you high.

“Is the packaging OK?” Greenshields asked.

Save for a missing sniff jar, all was well, McGowan said. Perfect, even.

From the beginning, AuricAG owners said they planned to charge about $7 per gram. They ended up settling on $7.73 a gram, but a portion of that will pay for packaging and delivery fees, and the state’s 25 percent excise tax.

It was higher than sales manager Sewell initially wanted, but with a retail markup and sales tax, the two-gram bags cost Cannabis City customers $42.33 — right around the $40 mark Sewell was gunning for.

McGowan said she’s negotiating with another Seattle grower who wants about $12 a gram.

The AuricAG owners said all along the company wasn’t in the price-gouging business, even with the state-licensed growers in the market’s driver seat because of a demand that greatly exceeds supply.

“Some growers are high-priced and more concerned with their bottom line than how their product comes out and how it looks to society as a whole,” McGowan said. “At this point in the game, with so little supply, I have to work with them.”

Cannabis City manager Amber McGowan walks a drawer full of West Seattle Kush to a retail cabinet to sell to customers lined up outside the store. Mark Greenshields and Joby Sewell of AuricAG — one of Seattle’s first state-licensed growers — watch from across the room as their first harvest goes up for sale. (Photo by Steve Ringman / The Seattle Times)

Cannabis City manager Amber McGowan walks a drawer full of West Seattle Kush to a retail cabinet to sell to customers lined up outside the store. Mark Greenshields and Joby Sewell of AuricAG — one of Seattle’s first state-licensed growers — watch from across the room as their first harvest goes up for sale. (Photo by Steve Ringman / The Seattle Times)

“With AuricAG, their price point is good. We were able to do that easily,” she said.

Sixty-eight days after they flipped the light switch on their “girls,” as grower Steve Elliott calls their marijuana plants, the AuricAG team finally got paid. Cannabis City cut them a check for $4,002.07.

The store hadn’t had marijuana to sell for several days. By the time it opened early Tuesday afternoon, about 40 people from across the country and even Canada were waiting in a line that wrapped around the side of its building, eager to buy one, and only one, package of AuricAG’s pot.

It took just four hours for the store to sell all 259 packages.

“I’ll celebrate for five seconds and then it’s on to the next one,” said Greenshields, allowing just the hint of a smile to tug at the corners of his mouth. “I’ll feel better when the entire crop is processed and sold.”

Elliott, back at AuricAG’s Sodo warehouse, estimated the entire initial crop — which should hit stores around the state by month’s end — would yield about 20 to 30 pounds of bud, fewer than the 50 pounds the growers initially hoped for “if the marijuana gods smiled” upon them, as Greenshields often jokes. Still, money was finally flowing in the right direction.

“This is just the tip of the iceberg,” Sewell said.

It’s been months since the AuricAG owners have seen paychecks. They pulled from retirement accounts and sold cars and houses to pool $150,000 to get the operation started, according to Greenshields.

Money from the West Seattle Kush will pay for this month’s rent. Sales of strains to follow will pay for utility and other bills through October.

“This crop has to get us to the next crop,” Greenshields said.

Still, he said there’s a chance they’ll all be able to take home small paychecks by the end of this month. How much depends on the final weight of the crop, but he said it could be between a single dollar and $10,000 each.

First harvests

It had been a tedious three weeks in AuricAG’s Sodo warehouse. First Elliott and the rest of the crew harvested about 175 plants, weighed and dried the crop.

AuricAG company president, Mark Greenschields drops all his normal work to help trim their first harvest of Kush, trimming the buds on the plants before cutting and drying.  (Photo by Steve Ringman / The Seattle Times)

AuricAG company president, Mark Greenschields drops all his normal work to help trim their first harvest of Kush, trimming the buds on the plants before cutting and drying. (Photo by Steve Ringman / The Seattle Times)

Then they began working strain by strain to trim, cure and prepare the pot for sale. The West Seattle Kush was first, but behind it were 13 more strains.

The constant snip, snip, snip of titanium pruning shears has taken a toll on the AuricAG guys. Sewell had a four-day stretch where he trimmed for 18 hours a day.

“I sit there, and my eyes start to blur and my shoulder gets a knot,” he said.

The burden of trimming got so heavy that AuricAG brought in two volunteers to help. An experienced trimmer, Gene Spaeth, had worked “in the middle of nowhere” in California as a trimmer for a medical grow.

Spaeth said a good trimmer could chew through one to three pounds a day, depending on the quality of the marijuana. But the AuricAG team isn’t up to speed just yet; Greenshields said Spaeth trims “at least twice as fast” as the rest of the team.

With trimming, the difficulty rests with clipping the tiny sugar leaves that wrap and “cocoon” the bud, Elliott said.

Before a final trim, buds are housed in jars and opened once a day to let moisture out. “When it’s in the jars, the terpenes mature,” said assistant grower Mark Arnold, referring to the sticky resin that coats the buds and gives strains their specific smell. That “builds the flavor profiles,” he said.

AuricAG's Joby Sewell smells some buds curing in the holding room from their first harvest. (Photo by Steve Ringman / The Seattle Times)

AuricAG’s Joby Sewell smells some buds curing in the holding room from their first harvest. (Photo by Steve Ringman / The Seattle Times)

Once dry, flavorful and ready for testing, the pot was sent to one of several state-licensed labs. Moisture and mold are the enemies of any pot grower.

If anything, the pot was a little too dry, but easily passed the state’s test for bacteria, yeast, mold and other contaminants.

Test results in hand, AuricAG finally packaged its first product. Greenshields said it took three people more than eight hours to weigh 3.5 pounds of West Seattle Kush and hand pack it into small, sealable bags adorned with golden labels that list the percentage of active ingredients, along with AuricAG’s logo.

AuricAG company president, Mark Greenschields drops all his normal work to help trim their first harvest of Kush, trimming the buds on the plants before cutting and drying.  (Photo by Steve Ringman / The Seattle Times)

AuricAG company president, Mark Greenschields drops all his normal work to help trim their first harvest of Kush, trimming the buds on the plants before cutting and drying. (Photo by Steve Ringman / The Seattle Times)

“Fair share of mistakes”

As the first plants were being trimmed, new ones already were taking their place in the growing rooms. In a few days, the growers plan to begin the flowering process anew.

Next time, though, they’ll do a few things differently.

“We made our fair share of mistakes,” Greenshields admits.

“I’m in a big manufacturer,” Elliott said. “I’m no longer in a little garden. It’s what I’ve done times 10.”

Instead of two flowering rooms, they plan to use four, and stagger the growing to keep a steady supply. Their first crop grew too tall because of air conditioning problems, which forced them to allow the plants extra time vegetating while they fought the temperature and humidity. This time, they plan to keep the plants a couple of feet shorter — think bushes instead of trees. And they’ll harvest more frequently.

The business side will see changes, too. Once the first harvest is sold off, Greenshields said, AuricAG expects to have enough money to hire super trimmer Spaeth, and Ky Boisjolie, a commercial painter who volunteered to help the team set up the warehouse and has been helping with trimming.

The extra hands are much-needed. Greenshields said he hadn’t taken a day off since Father’s Day. Elliott figured he’d worked more than 70 straight days.

The growers are excited about expanding, too. Greenshields said Seattle City Light has approved ramping their power from 200 to 600 amps.

More power means more lights. And more lights means plants will yield more marijuana — and money.

More power also means AuricAG can move ahead with plans to finance a machine that extracts key chemicals from the trimmed leaves for use in oils, tinctures and edibles. Instead of becoming waste, the trim could be converted into more product.

Changes moving forward

The biggest changes going forward might be directed by Sewell, AuricAG’s sales manager.

Right now, 1.7 million square feet of growing space is licensed by the Liquor Control Board, according to Randy Simmons, the state’s marijuana project director. The state will cap production at 2 million square feet. Simmons said if all the licensed producers had crop that was flowering and ready for harvest, supply would not be an issue. But many producers were only recently licensed, including 18 last week. Thirty-eight retailers have been licensed, and more than a dozen are waiting on licensing fees or final inspections. About 20 have opened.

Sewell hopes to get a jump on what soon will become a more competitive market.

He’s using his background in the wine industry as a guide. Unless AuricAG can create distinctive and desirable brands and product lines, he said, retailers will have leverage over the company and take a larger share of the profit.

“Once you have a brand that (retailers) want and need to carry in a storefront, they have to be competitive with each over the brands,” Sewell said.

Creating a compelling brand is a particularly vexing problem in a marijuana industry that’s transitioning from shadowy to legal.

“There’s only so many types of mayonnaise,” Sewell said. “But how many strains of marijuana are there? How many producers? There’s tons.”

That might include renaming strains to appeal to a wider consumer base. Take, for example, the Alaskan Thunder(expletive) strain.

“That’s not necessarily (a name) we want to market,” Sewell said. “But the strain is good.”

Sewell said AuricAG will brand its own pot as Seattle grown. They named their kush West Seattle Kush; their blueberry strain is Sodo Blueberry.

“When someone comes, let’s say, from New York,” Sewell said, “they don’t want marijuana grown in Yakima or Bremerton.”

He said AuricAG also will “tier out” its pot. The best buds will be set aside for the “gold series,” mid-grade product for the “silver series,” and so on.

The “snicklefritz,” as Sewell called it, that ends up at the bottom of the bag could be sold as a retro-branded product — something that Sewell thinks could appeal to boomers. He envisions $10 bags of lower-end pot packaged with rolling papers.

Sewell also plans a line of high-CBD pot known for its medicinal qualities marketed under the Remedy label.

Ultimately, Sewell said, the team needs to have the flexibility to react to the market, which is part of the reason Elliott maintains 34 strains waiting to be cloned and produced as the market demands.

“Some people might want something that makes them sleepy. Some people want to giggle. Some want just a light buzz,” Sewell said. “We have to be ready to change.”

While this first harvest has allowed AuricAG to cover its bills, October’s harvest will be a watershed moment.

How much more pot will four rooms produce? Will the extractor, which could take more than two months to set up, be ready in time to process oils and dabs? Will shorter plants pay off?

The company is bullish on the prospects.

“I’m not losing sleep at night,” Greenshields said.

But he and his partners aren’t getting much sleep, either.

 

Comments | More in News | Topics: auricag, greenshields, seed to sale

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