Methow Valley Nursery expects to get a license to grow marijuana in a commercial/industrial zone outside Winthrop. Photo by Marcy Stamper

Methow Valley Nursery expects to get a license to grow marijuana in a commercial/industrial zone outside Winthrop. Photo by Marcy Stamper

By Marcy Stamper

Ed Rhinehart expects to receive a license this week to grow marijuana in Winthrop, but that achievement will do little to compensate for his frustrations with delays and changes from the state’s licensing body that reduced his crop to a quarter of what he had planned and caused him to miss the growing season.

“It’s going at a snail’s pace. It’s the government—time means nothing to them,” said Rhinehart, who, like all businesses seeking to be part of the new industry, had to submit his application for a license to produce and process marijuana at Methow Valley Nursery to the Washington State Liquor Control Board back in December.

Rhinehart had expected approval of his application to be swift, since he owns the property free and clear, was not borrowing money, and has no criminal history. “It’s kind of a slam-dunk,” he said.

Rhinehart had four workers building the fence and security system at his site on Horizon Flats Road in February. The 35,000-square-foot enclosure was completed in April. But there were numerous delays and an eight-week wait for the final inspection. 

The enforcement officer visited Methow Valley Nursery on June 30. “I passed with flying colors,” said Rhinehart, who heard from the Liquor Control Board on Monday (July 7) that his license had been forwarded to the billing division for the $1,000 license fee.

Things really slowed down during the past two weeks as the Liquor Board concentrated on retail licenses, said Rhinehart. The state issued the first 24 retail licenses—including one in Winthrop and one in Okanogan—this week. The first licenses were granted to producers (growers) and processors (who package the product or infuse it in other ingredients) early this year.

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Neighbors concerned

Although Rhinehart has had aggravations with the state, he has not heard any rumbles of discontent from neighbors, unlike the experience of operations in more residential areas.

A large farm going in on Benson Creek Road has raised the concern of neighbors, who describe “five huge plywood pens” on a single lot with no regard for aesthetics. “You will pass out in disbelief,” said Jerome Thiel, who lives on the rural road south of Twisp.

Five companies are renting space on the property to set up marijuana production and processing operations. Each must have its own fence and security system.

A landscape contractor working at the site on fencing and irrigation said that three of the five had passed their final inspection last week. The contractor, who declined to be identified, said each business would have its own staff but might share helpers.

The contractor, who is from the Seattle area, has been living on the property along with other workers. He said they had been very busy erecting fences and installing security systems until the inspection.

“We’re excited. It’s been a lot of work. There are some naysayers, but most people are for us,” he said. “People in the community are scared of what they don’t know.”

Although the worker said the previous tenant had cleaned up old cars and farm equipment, he acknowledged, “It’s not a beauty to see, but it’s not our decision.”

The owner of the Benson Creek property, who lives in Western Washington and asked not to be identified, said they had been looking for a way to farm the land and to generate income. She said they had connected with the five businesses by chance, when a family member met one of the prospective growers and learned they were looking for land in Eastern Washington to grow marijuana and entered into a rental agreement. She said they had explained they would be growing marijuana for medicinal purposes.

“I know some neighbors in the area are upset,” she said. “Nobody likes change—people don’t like liquor stores, either.”

“Maybe it will bring in extra taxes for the community. People are living in the community and buying groceries,” she said.

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Worries about lifestyle

Thiel said residents on Benson Creek have different concerns. Some worry about the impact on their lifestyle from increased traffic or the effect on property values and on children in the area. Others have questions about safety or objections to marijuana itself, he said.

Five separate businesses are setting up marijuana growing operations on a single lot on Benson Creek. Photo by Marcy Stamper

Five separate businesses are setting up marijuana growing operations on a single lot on Benson Creek. Photo by Marcy Stamper

While the state has imposed strict buffer zones for marijuana operations from facilities such as schools and day-care centers, there are no restrictions associated with nearby residences.

Some people have expressed concerns about whether some of the wooden fences will be able to withstand high winds or snow. The law requires an eight-foot fence but does not give other specifications.

Ginger Reddington, another Benson Creek resident, first learned about the prospective marijuana farm in April when a neighbor called her in tears. Reddington said she had no opposition to the farm as long as it didn’t have an impact on the environment or change their lives on the quiet road.

After Thiel and his wife sent a letter to the Liquor Control Board outlining their concerns, the board forwarded the letter to the license applicants. One of the business owners called him to explain their businesses and compliance with laws, said Thiel. The owner has also attended meetings of local irrigators on behalf of the property owners.

“I just hope they are successful and that everything plateaus out. They want to be good neighbors,” said the owner of the Benson Creek property.

Names and contact information for the 30 applicants for licenses to produce, process and sell marijuana in the Methow Valley (from Methow to Mazama) were obtained from the Liquor Control Board through a public-records request. The board has been issuing regular updates of licensing actions, but cannot provide details about the status of individual applications because there are too many to track, according to Brian Smith, spokesperson for the Washington State Liquor Control Board.

Most of the applicants declined to comment for this story or could not be reached. At most of the addresses filed with the Liquor Board there was no activity or construction visible from the road.

An applicant on Wolf Creek Road who has erected a fence and installed greenhouses could not be reached to learn the status of his application.

In December, the Okanogan County commissioners decided to treat marijuana just like any other crop, meaning that there is no need for any special permits or notification of neighbors. “It’s hard to know how people will comply with the regulations already in the law. It’s hard to imagine what regulations we can add,” said County Commissioner Sheilah Kennedy at the time.

Lazy Bee Organic Gardens used wood and metal fencing on Wolf Creek Road outside Winthrop, where the company has applied for a license to grow and process marijuana. Photo by Marcy Stamper

Lazy Bee Organic Gardens used wood and metal fencing on Wolf Creek Road outside Winthrop, where the company has applied for a license to grow and process marijuana. Photo by Marcy Stamper

“It seems surprising—other businesses with similar effects and impacts on land use do require conditional use permits,” said Thiel. He is frustrated that the Liquor Board has said the responsibility lies with the county—and vice-versa.

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Added costs

All applicants have had to make a significant investment in infrastructure just to obtain a license. For outdoor operations, growers are required to have a solid, eight-foot-high fence to obscure the crop, alarms and 24-hour video surveillance.

Rhinehart built a 35,000-square-foot fence to accommodate 21,000 square feet of marijuana plants. But after receiving a flood of applications, the Liquor Board reduced the canopy statewide by 30 percent to keep the crop “manageable.” Rhinehart’s application was further reduced to only 7,000 square feet based on his two-year business plan, which anticipated a smaller crop in the first year and ramped up the following year.

Nevertheless, the requirement to install the complete infrastructure before a license can be issued may provide a solution for outdoor growers like Rhinehart who could not plant this season. Some licensed producers are now strapped for cash and are selling good-sized marijuana plants to other licensees, said Rhinehart. The “starts” are expensive and the logistics of transferring them are cumbersome, but they could provide an opportunity to work the kinks out of the system, said Rhinehart. “The best-case scenario is that I’ll have Christmas buds,” he said.

With the state’s requirements for tracking every plant from seed to sale, it’s impossible to be a grower and business manager, said Rhinehart. Each plant must be labeled and entered in a tracking system. All shipping—to testing labs and retailers—must be done in secure vehicles, with the route and estimated departure and arrival times filed with the state, he said.

Rhinehart has no background in agriculture and will be the business manager of Methow Valley Nursery. He became interested in the industry after being shown some business proposals as a potential investor. “I’m a numbers guy and I’d never seen numbers like this before—it was staggering,” said Rhinehart.

Despite the delays and additional expenses, Rhinehart remains confident that the business model will work, albeit over a longer horizon.

“If I had known how frustrating and inept the state was in the beginning, I would never have done it,” he said.

While Rhinehart anticipates his producer license this week, a separate application for a processor license is mired in additional restrictions that prevent him from putting the building inside the fence, since the Liquor Board says production and processing operations cannot be located on the same legal parcel. Rhinehart is contemplating an appeal. The Liquor Board told him appeals are backed up at least six months.