Where pot is legal: Farming city makes room for a new crop

Oct. 16--What would legalized marijuana look like in the Last Frontier? Alaskans are in the midst of the debate surrounding Ballot Measure 2, the initiative seeking to legalize, tax and regulate recreational marijuana. In late September, Alaska Dispatch News headed to Washington state to see how the fledgling industry is taking shape and how legalized marijuana is affecting the state's economic and cultural landscape.

WENATCHEE, Washington -- In this Pacific Northwest city, known as the "Apple Capital of the World," a new agricultural industry is taking root: marijuana.

Roughly three hours inland from Seattle, the Wenatchee metropolitan area is home to about 100,000 people. To drive there, one heads through the Cascade Range, past rolling fields dotted with sheep, horses and bison, into a climate markedly different from the rainy coastline. Wenatchee boasts 300 sunny days a year, and its desert hillsides rise up treeless and dusty from the Columbia River.

Agriculture -- particularly fruit crops like apples, pears and cherries -- is a major economic driver here. The industry benefits from some of the cheapest electricity costs in the nation, thanks to nearby hydroelectric dams, and irrigation from the Columbia River and its tributaries.

Two different cities actually make up this idyllic countryside: to the west of the Columbia River, Wenatchee. To the east, East Wenatchee. To an outsider, they appear as one. Driving between the two takes roughly three minutes.

The two cities have taken different paths on marijuana legalization. In Wenatchee, a local ordinance banned marijuana businesses. In East Wenatchee, marijuana businesses are permitted. But Wenatchee's ban hasn't stopped growers from starting up just outside of city limits. The area is already home to a handful of marijuana producers, and 16 more have applied for licenses, according to Washington Liquor Control Board data.

As the community adjusts to legal weed's potential impacts, entrepreneurs are charging ahead, navigating the risks and regulations of the new industry.

'We took a huge risk'

Drive through East Wenatchee, past rows of tidy apple orchards, and you'll come across Gecko Growers marijuana farm. Visible from the road, a 12-foot wall rises around the marijuana plants, in striking contrast to neighboring farms that have no fences or visible security.

"Beautiful, isn't it?" co-owner Kevin Dietz said on a sunny September afternoon, standing on the deck overlooking the outdoor grow. He watched with crossed arms as co-owner and master gardener Gary Bryant disappeared and reappeared among the farm's 259 plants, some of which reached 13 feet into the sky.

Dietz says that the outdoor harvest will reap 500 pounds of marijuana, bringing Gecko Growers$1.3 to $3 million once the harvest is complete in mid-November. That will pay off the company's initial investments and allow it to build its business, Dietz said.

In just a few years, everything has changed for Dietz and his wife, Connie. They quit their high-pressure, high-paying jobs selling disability insurance and turned their eyes toward marijuana. That corporate lifestyle -- "ties, blah blah blah, hotels, you know the life," Dietz said -- is behind them now.

"I thought I'd retire as a salesman selling insurance. ... I thought we were going to ride into the sunset," Dietz said. But in 2012, the couple saw the changing tide and realized marijuana would likely be legalized in Washington. So they became part of a medical marijuana collective and taught themselves to grow weed.

The couple applied for a producer license as soon as the state began accepting applications. They secured land, constructed the operation with the help of family and friends and got to work growing their crop.

They gave up their old, corporate lives to be their own bosses, the couple said. They wanted to be a part of a fledgling industry. And they saw the market potential. "Somebody's gonna make money," Dietz said. "It might as well be us."

With 21,000 square feet of marijuana canopy, the farm is a Tier III grower, the largest allowed under Washington law.

In Washington, marijuana monopolies are effectively banned. Producers are allowed to hold only one license for now, as the Washington Liquor Control Board sifts through thousands of applications. Eventually the board will allow a single producer to hold three licenses, with canopy up to 30,000 square feet per facility. Restricting producers to three licenses was deliberate, the board says, to prevent a handful of businesses from dominating the market.

Dietz believes these restrictions are a "blessing," for now, giving producers a chance to start their businesses without being pushed out by big investors. Over the long term, though, he thinks that blessing will become a curse to consumers, who may have to choose lower-quality product due to a producer's limitations.

Dietz said quality is his biggest concern -- that, and living a lifestyle he and his wife desire. Their business model centers on this: Most of the grow operation is outdoors, Dietz explained, allowing one harvest of massive plants each autumn. Meanwhile the smaller indoor grow, roughly 5,000 feet, will produce all winter, pay the bills and sustain itself. That way, the couple can spend winters in Cabo San Lucas, Mexico, while employees -- mostly family members, including their children -- manage the indoor operation.

Getting to this point has taken countless hours of research and a whole lot of money. Since marijuana remains illegal at the federal level, banks have hesitated to finance pot operations. That means entrepreneurs must drum up the capital to cover start-up costs, and a lot of it.

To start Gecko Growers, the couple invested $650,000. "It came out of our own pocket. Cash." Dietz said.

"We took a huge risk," Connie Dietz said. "Anybody that's thinking about getting into this, don't think it's easy."

She warned potential entrepreneurs of roadblocks at the local, state and federal levels, which can all trip up a would-be pot grower. Securing a bank account took two weeks. Construction bids were steeply inflated after companies found out what kind of operation they were bidding on, the couple claims. Local regulations required them to construct the grow's looming wall, technically an "outdoor building" instead of an 8-foot fence as required by state law. And city officials were intent on making the process as onerous as possible, Kevin Dietz complained.

Money was tight in the beginning. Even after a few indoor harvests, "there are still days that are stressful," Dietz said. "There's nobody here to say: What do you do now? It's on us."

There were some surprises, too. Connie learned only a few years ago that her brother-in-law, Gary Bryant, had a background growing pot. Now he's their master gardener. Connie's parents, who she said hail from a deeply conservative Southern background, approved of the new venture. Her father, an avid gardener, even helped to save the ailing plants during the initial stages, she said. Their neighbors were supportive of their new venture.

Now, the couple says, their product is in high demand. Supply is sparse in Washington, and producers so far barely scratch the surface of the market. The couple said they've fielded calls from every retailer in the state.

Keeping up with demand

Across the river is Monkey Grass Farms, one of the state's largest indoor marijuana grows. Like Gecko Growers, Monkey Grass is a family-owned, Tier III farm. Without access to financing, several families have pooled their resources to invest in the company. And the business cannot keep up with the state's appetite for legal weed.

Unlike Gecko Growers, Monkey Grass Farms is an indoor-only grow focused on mass production. The owners say it is one of the most productive indoor facilities in the state. More than 4,000 plants are packed into the warehouse.

The operation sits in an unmarked warehouse on a dusty, industrial road outside Wenatchee city limits. The only hint of what lies inside -- besides a faint smell of marijuana that whisks through the parking lot -- is a sign on the front door warning that only adults over 21 may enter.

Inside, the "head of security" trots across the concrete floor to greet visitors -- a friendly Bichon Frise named Abby. The ventilation system whirs loudly in the warehouse, which used to be a Coors beers distribution center.

In six weeks, the families renovated the old warehouse from an empty facility into a series of grow rooms, a transformation that still shocks Cole Hurst, the mastermind behind the setup, he said.

On a Friday afternoon, employees wearing green jumpsuits sat at a long wooden table, clipping buds from marijuana plants. The company harvests every Friday. That day, they were hoping to get through 100 plants, yielding around 200 ounces of pot.

Co-owner Eric Cooper came to Monkey Grass with a 7-year background in the medical marijuana industry, as did business partner Hurst. "I never would have dreamt it would have gone legal," Hurst said.

And initially, Hurst was not supportive of legalization, because he had found such success in medical marijuana.

"To be totally honest with you, I voted no (on the initiative)," Hurst said. "It was going just fine the way it was ... and it's unregulated."

"But then I realized when it did pass, we all did, that we better do something. ... I also saw a brighter picture" of where legalization could lead the state, Hurst said.

Like Hurst, some within the medical marijuana community opposed Washington's recreational marijuana initiative. Unlike Colorado, where existing medical marijuana retailers transitioned to recreational sales, Washington's initiative did not reconcile the existing medical market, which today remains largely unregulated and quasi-legal. So when the initiative passed, a new industry was started from the ground up.

Alaska would also need to construct a whole new industry, on an even tighter deadline, should Ballot Measure 2 pass. Like Colorado's, Alaska's initiative leaves most of the regulations up in the air. Alaska would have nine months to craft the regulations after the effective date of the initiative, which is 90 days after the election is certified. That means the regulations would be laid out by November 2015. The state would start accepting business applications by February 2016. The first business registrations would be issued three months later.

In Washington, a 64-page initiative laid out many of the state's complex rules, and the state board spent an additional year refining the laws before applications were accepted. The first retail stores opened in July.

Washington's rollout has been characterized as slow, and in these early months, retailers have struggled to keep supplies on the shelves. Some blame the state for licensing stores before producers had marijuana to sell -- a cart-before-the-horse situation.

Paid to get people stoned

In East Wenatchee, marijuana retailer The Happy Crop Shop has never run out of weed, but only because it limited how much customers could buy, owner Mark H. McCants said.

Wearing a tie-dye lanyard and bandanna tied over long gray hair, McCants said he still pinches himself that his life has taken this turn. He hated his old job painting houses. Now, McCants calls himself a "marijuana guidance counselor," and he revels in the fact that he spends his days getting people high. "Who else gets paid deliberately to get people stoned?" he said.

McCants feels he has both literally and figuratively won the lottery. Only 334 retailers are permitted statewide, and would-be businesses put their applications into a lottery system. Like producers, retailers can only hold up to three licenses, to prevent monopolies from arising.

His business partner took a risk, purchasing the shop's log cabin on a hunch before their license had been approved. The day McCants found out they had gotten a license, "I get a call from my partner. ... He tells me and I just start crying," McCants said.

A steady stream of customers flowed through the shop on a Friday afternoon. Some lingered by the locked glass boxes where samples are kept, but most headed directly to the sales counter, where the product is stored.

Prices at The Happy Crop Shop are two to five times higher than in the black market, according to a Seattle retailer, at $25 to $30 a gram. McCants hopes consumers will come to him for the ease and safety of purchasing legally.

The store opened in mid-July, and two months later had yet to secure a bank account. Instead, it relies on "off-site banking." McCants still isn't sure what they'll do when it's time to pay federal taxes.

Yet the shop is thriving, McCants said. "I get picked on a little bit," he laughed, but "the community has wrapped their minds around us."

Waiting to exhale

The nascent industry may have producers and retailers scrambling, but on the streets there is little sign of legal weed. Most people agree that life hasn't changed. But not everyone welcomes the new industry bubbling up right outside Wenatchee city limits.

David Lawrence, who was selling produce at a Wenatchee street festival, said his 16-year-old daughter has gone to rehab twice for marijuana consumption. He vehemently opposes legalization. "I think it's just gonna cause more and more problems," he said.

He hasn't noticed any changes, yet. "In 12 months' time ... I think the city and people will have a better idea of what it's going to cause," Lawrence said.

"It is what it is. I mean, people voted for it." Lawrence said.

Much of the discussion in Alaska has centered on the effects on youths, and the same holds true in Washington. Debbie Angilley, crime victim advocate for Wenatchee's Together for Youth nonprofit organization, said legalized marijuana has made her job as a youth educator more difficult. "Definitely we have found that the attitudes of the youth have changed, because they feel it's legal, there's nothing wrong with it," she said.

"We try to explain how the teenage brain hasn't developed ... that it's taking away from the development of their brain," she said.

Local lawmakers are split on legalized weed. In June, the Wenatchee city council voted 4-3 to place a moratorium on marijuana businesses. That moratorium is temporary, and the council will decide whether to extend it by December. Meanwhile, Wenatchee is being sued by an individual who wants the ban lifted.

Unlike Alaska's marijuana legalization initiative, an opt-out option for local communities was not included in Washington's law. That was done deliberately, with the idea that participation was needed from as many communities as possible to curb the black market, according to the initiative's principal drafter and criminal justice director for Washington'sAmerican Civil Liberties Union, Alison Holcomb.

Still, a total of 118 communities across the state have placed some kind of ban on the industry, according to the Municipal Research and Services Center. The state legislature will likely take up the issue next session.

Wenatchee city council member Bryan Campbell voted for the moratorium. "I have a background as a reserve police officer. ... I've seen a lot of the ramifications of drug use, and I have a bias, if you will," Campbell said.

"People always say, well, it's not as bad as alcohol, and I wouldn't disagree with that. But how many additional drugs do you need to put into the mix before you have a disaster?" he said.

Yet Campbell doesn't mind the fact that retailers are just a stone's throw away. "They're friends of mine. ... I don't have a problem with it," Campbell said.

City Mayor Frank Kuntz voted in favor of the initiative. Nationally, "I think that's where we're headed ... whether you like it or don't like it."

He anticipates that some societal issues will be exacerbated by legal weed. Kuntz takes issue with the fact that all taxes go to state coffers, a concern echoed by many in the community. "If you're going to put the burden of society on my local police officers ... and the state magically gets to have all the money, (that) doesn't make a lot of sense," Kuntz said.

He doesn't anticipate much savings to the city, nor a huge economic boom based around the industry. New jobs and "a little sales tax is nice," but in terms of major economic transformation, marijuana won't provide it, Kuntz said.

But "if you can legalize it the right way, and tax it the right way, and give some to the local governments so we can deal with it, then I don't have a problem with it," he said.

Slide show: In Wenatchee, a marijuana industry comes alive

Coming Friday: Five things that haven't happened in Washington state since legalization.

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