Approved by borough, peninsula marijuana growers now in final permitting

After the state issued its first marijuana growing permits on June 9 and 10, nine local cultivators were approved by the Kenai Peninsula Borough Assembly on Tuesday. Many expect to have crops ready by the end of the year.

Four cultivators applied for and received a standard grow license — Alaska Bud Brothers Aerogardens and Greatland Ganja, both in Kasilof, Croy Enterprises in Soldotna, and Budding Alaska in Seward. The five limited cultivators, who can only use up to 500 square feet of growing space, were Green Rush Gardens of Sterling, Peace Frog Botanicals in Kenai, Permafrost Distributors in Nikiski, Talisman Farms in Homer, and Stoney Creek Growers in Seward.

After the borough Finance Committee voted not to object to the state licenses previously awarded to all except Stoney Creek and Budding Alaska — whose applications were denied because of incomplete information and will be reconsidered at the state Marijuana Control Board’s July 7 meeting — the borough assembly passed the licenses as part of its consent agenda.

Leif Able, a co-owner of Greatland Ganja, said that after getting borough permission, licensees got a letter from the state Alcohol and Marijuana Control Office with a checklist of final procedures to be carried out before they begin growing.

“We’re in the final licensing phase, which means we’ve crossed our t’s and dotted our i’s,” Able said. “One would think ‘Oh, you’ve got your license, everything’s done.’ But that’s not the case.”

The nine steps in the list, culminating in an inspection visit from a Marijuana Control Office enforcement officer, mostly concern the marijuana-tracking software METRC — an acronym for Marijuana Enforcement Tracking Compliance, which the state requires growers to use to monitor and record the status of each of their plants from seed to sale.

After the applicant is trained in the system, passes a test and has been given a METRC account, they are shipped radio-frequency identification tags to place on each of their plants, allowing its life cycle to be recorded.

James Gossman owns the newly-licensed Alaska Bud Brothers Aerogardens. His son, horticulturist and agriculture consultant Brian Ehlers, will be Bud Brothers’ lead cultivator. Gossman said the METRC system is less of a burden than he’d thought.

“It looked like there was going to be a big startup cost to have it, and monthly fees to have it,” Gossman said. “As it turns out, it’s economical ... Everyone thought you had to have infrared scanners — nope. You just need to have a license with them, $40 a month, and buy little tags to stick on your plants.”

Although Bud Brothers was granted a state license earlier this month and borough permission on Tuesday, Ehlers and Gossman won’t be starting their crop soon.

Gossman said he’s surrendered the standard cultivation license he was granted and is applying for a limited license because of a final permitting requirement they couldn’t meet — an inspection from the state fire marshal.

For this inspection, Gossman said he’d need to submit architectural drawings and engineering documents he doesn’t have. Getting the required documentation, Gossman said, is “a relatively expensive thing to do if it wasn’t done when the building was built. A lot of people outside of city limits built their buildings without these. And anybody going for a standard cultivation facility has to get these done.”

Gossman said this requirement came into existence after he’d begun his application, and he hadn’t known about it until recently.

“When we applied for a license at the beginning of March, a limited cultivation facility and a standard cultivation facility were under the same regulations and the same demands with their buildings — what they needed to do, what they needed to have, what the fire marshal needed,” Gossman said. “Those changed. Had we know at that time what they were going to change to, we would have applied for a limited cultivation.”

Gossman — who took a mortgage on his house to finance the startup of the business — expects his second license, like his first, will take around three months to get.

“What’s going to hurt us more than anything is that we’ve been sitting here waiting for three months, and we’re about to start over,” Gossman said. “Had we gone with limited in the first place, we’d be done. In three months we’d have product going to market. Now we’re just going to be planting. That’s going to be killer.”

Ehlers said he plans to submit the limited cultivation license applications within the next few days. He estimated the aborted licensing attempt and subsequent delay has lost the business tens of thousands of dollars.

While Gossman said his limited operation wouldn’t be able to compete with the volume of larger cultivators, he believes his product will be able to find a place in the market.

“What the retailers are going to look for is yes, quantity, but also variety,” Gossman said. “While we won’t have a lot of product, it can be another one they can put on their shelves. And we hope that when they run out, our product will be good enough that they’ll want some more.”

Although no marijuana retailers have been licensed yet, many of the newly-licensed cultivators said they were making deals with prospective buyers — both retailers who would sell the product as smokable marijuana and processors who would use it to create edibles and extracts. Able said Greatland Ganja had around ten buyers statewide interested in his crops.

Other cultivators are also looking at a diverse market.

Dollynda Phelps of Peace Frog Botanticals plans to have her plants growing by the end of July and to start selling product by November.

She said her prospective customers include both local and Anchorage-based businesses. She said Peace Frog will market to users seeking health effects by specializing in strains low in tetrahydrocannabinol (THC) — the psychoactive ingredient of marijuana — and higher in cannabidiol (CBD), another active ingredient that some researchers believe has medical applications as a pain-killer.

Mike Harris, whose business is Croy’s Enterprises, is looking at a similar market and believes a large share of the interest is in edibles.

“The information I’m getting from other states is that 50 to 60 percent of the market is going to edibles because people are not necessarily smokers, but they want the advantages of the CBDs as a painkiller, and the THC,” Harris said.

Eventually Harris hopes his establishment will house not only his growing operation, but retail and production branches of the business as well. A goal of his business is to diminish the local illegal market for marijuana and other drugs, he said, adding that most of marijuana’s danger as a drug comes from the environment in which many people buy and use it illegally.

“The only way marijuana is a gateway drug is because somebody’s sitting on a couch smoking a joint with somebody who wants to sell them heroin,” Harris said.

Harris believes legal marijuana products will be able to out-compete the black market, he said.

“The legitimate market has a great advantage because now you’re going to have a selection of product that you know has been exactly tested, that there’s no pesticides, no molds, and what levels of CBDs and THC levels exist,” Harris said. “This is a designer product, basically.”

Harris said the marijuana business is a challenging one to enter, however.

“We’re trying to do something that is more difficult than any business starting in the US right now,” he said.

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

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