Marijuana businesses settling in

KENAI – “You’re on camera.”

Mike Harris nodded up at the corners of the ceiling, where spherical black lenses glinted in the weak winter light. The rest of the room at Croy’s Enterprises on Pine Street outside Soldotna, a combined marijuana retail, grow and manufacturing business with a planned pipe shop as well, was outfitted with cedar woodwork and a fresh coat of paint, with cloth draped over the glass display cases to protect them during the work. But the cameras were apparent, and there were more throughout the building — 42, to be precise.

An industrial garage door seals off the room, which is destined to be the retail space. Customers will enter through the lobby, and once their ages are verified as older than 21, staff will escort them back to the retail shop. At night, the garage door will be lowered for security. The doors to the outside of the building are all equipped with alarms.

The security system is monitored from a booth, where the video is also stored. Camera feeds from the outside and inside report to the computer, where the data is stored on a massive server to comply with state requirements.

There’s even more security to enter the grow area. Employees need to shower and change their clothes before entering the restricted area, and guests have to be escorted by staff members, wear a badge and be signed in and out by an employee. Employees also have to have marijuana handler certification, issued after they take a class with state-certified curriculum and pass a test.

Three different rooms host marijuana plants in the grow area, strung with bright lights and smelling of fertilizer. Strict documentation of every watering, trimming and planting hangs on the hallway wall, and as soon as a plant is eight inches tall, it’s tagged and put into the state tracking system, Metrc.

Harris said the goal is to do everything legally and also to produce exceptional product, from beginning to end. The building will eventually host four businesses — a pipe shop in the front, a retail marijuana shop, a production kitchen where butters and edibles will be produced and the grow operation in the back.

“We intend to be the very best of everything,” he said.

Licenses and markets

Last spring, marijuana operations like Harris’ received the green light to start working toward opening. Harris’ business occupies a sprawling building originally designed as a medical clinic. Though the building was on the market for six years, it never sold, and Harris decided to jump into the marijuana business as an entrepreneur.

He spent the next year fitting and refitting the building to meet all the requirements. First he had to document the building going back to 1984, when he and his father originally built it. He had to redo the electrical and heating systems, double the drywall on the back wall of the building, install humidifiers and dehumidifiers — the list goes on. He estimated that since June, he’s spent about $350,000 on regulatory procedures.

After voters passed Proposition 2 in November 2014, state and local governments began puzzling over how to proceed with regulations. The Marijuana Control Board was formed and began drafting regulations and licensing requirements in July 2015, finishing its work in the winter. The Kenai Peninsula Borough’s Marijuana Task Force began meeting in summer 2015 and reached its final recommendations in January, setting few limits beyond those the state had.

There’s huge demand for the product. It takes months for a marijuana plant to mature to harvest, then another month for it to dry and cure before it can be transported to a lab in Anchorage to be tested, per state requirement. Testing can take 72 hours, and then once it’s cleared, it can go to a retail shop to be sold.

Red Run Cannabis Company, the peninsula’s first retail marijuana shop just inside Kenai city limits on the Kenai Spur Highway, opened for a single day on Nov. 21. The line wound through the store and into the parking lot all day. The store had sold all of its product by the end of its first day and has been trying to find additional supply since to stay open.

As more cultivators come online, the supply will likely even out with the demand and impact prices, said Brian Ehlers, one of the owners of limited grow business Alaska Bud Brothers in Kasilof.

“Once some of the bigger guys are up and running, the market will be a little more flooded, but whatever you grow is going to sell,” he said. “There’s been a lot of rumors about price gouging and all that, but that’s just it, rumors. (The market) is in its infancy, but I would imagine here within a year hopefully there will be enough product within a year.”

Looking forward

Marijuana businesses on the Kenai Peninsula have more than just market competition to worry about. In October 2017, voters will take up the question of whether commercial marijuana operations should be legal in the borough outside the cities after a citizen petition received enough signatures this year to make it to the ballot.

The petitioners missed the deadline to make it onto the October 2016 ballot, and the borough assembly has not brought forward an ordinance to hold a special election specifically for the marijuana question. Marijuana business entrepreneurs pressed for the vote to be delayed to October 2017 to give them enough time to operate for at least a year.

The Alaska Small Cultivators Association, an industry group composed of mostly peninsula marijuana businesses and support businesses, has discussed whether to run a campaign against the proposition but hasn’t made a decision yet, said Jeremiah Emmerson, co-owner of Homer-based marijuana ancillary services company SquishCo and chairman of the ASCA. They will be participating in public events to raise awareness, though, he said.

“That’s definitely something we’ll be taking an active role in,” he said.

Harris, who is an ASCA member, said one of the regulations the organization has discussed as an issue is the borough’s rule against on-site consumption. The state allows it as long as the business has an endorsement, but the Kenai Peninsula Borough decided not to allow it. That blocks growers from sampling their own product for sampling purposes, he said.

“We want them to allow it only for growers, not for the public, so we can test our own product,” Harris said.

Ehlers said testing the different strains is critical for growers to produce a good product.

“As a product, that is paramount,” he said. “That is a really important part of the process, to be able to go through the genetics … the only way you can do it is test it. Hopefully (the onsite consumption ban) can change.”

Growers on the Kenai Peninsula work together. Ehlers said he spent time helping another local grower with one of her harvests; Harris said he recycled the garage door on his retail space from High Bush Buds owner Patricia Patterson. Emmerson said the small business owners organized the group in anticipation of the industry growing and big business growers trying to get a foot in the door, the way they have in other states where marijuana has been commercially legalized.

“We do want to see and support that industry, that microbusiness industry, but a lot of people have fears of big marijuana coming in,” Emmerson said. “Well, a lot of small cultivators have the same fear. We share that with the opposition.”

Ehlers said other groups around the state have told him the Kenai area industry’s network is stronger than elsewhere in the state.

“We know there’s way more than enough for everybody to make a living off of this,” he said. “We all have the same goals … there’s more than enough negativity everywhere else.”

Elizabeth Earl is a reporter for the Peninsula Clarion and can be reached at elizabeth.earl@peninsulaclarion.com.

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