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Originally published June 7, 2014 at 8:01 PM | Page modified July 28, 2014 at 5:25 PM

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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.

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.




Seattle Times staff reporter

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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.

Bob Young: 206-464-2174 or byoung@seattletimes.com

On Twitter: @potreporter



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