Pubdate: Sun, 08 Jun 2014
Source: Seattle Times (WA)
Copyright: 2014 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Bob Young
Page: A1

POT STARTUP VENTURE GROWING FOR THE GOLD

While They're No Strangers to Business, the Hands-on Owners of One
State-Licensed Grow Operation at First Thought, 'This Is Crazy.' but
Soon All Their Work and Stress Will Pay Off - They Hope.

Editor's note: 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.

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.

As 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.

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.

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.' "

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, 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.
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MAP posted-by: Matt