Living the Dream?

Even a business that has operated in compliance for years can be upended by anti-cannabis efforts

The cannabis industry requires you to be able to live and thrive in duality. Just like life has pleasure and pain, good and evil, war and peace, this industry has success and failure. Many times, the success or failure isn’t ultimate (like selling or closing down the business), but it is the underlying and consistent fear of failure, paired alongside the excitement for potential success that always seems to be an arm’s length away.

Roy Arms, right, has been running Boggy Boon farms in Malaga, Washington for five years, but recent changes to regulations will force him to make renovations to his greenhouses to stay in compliance.

Five years ago, we opened the Boggy Boon farm in Chelan County, Washington, where the environment is perfect for greenhouse production with 300 days of sunshine per year. In addition to the climate, there were virtually no barriers to entry for cannabis operations. When I called the county to discuss building our facility, the employee on the phone confirmed that Chelan County treated cannabis as agriculture and had no plans for any additional regulations to restrict cannabis farmers.

We moved forward with our business plan and invested more than $1 million to build our state-of-the-art greenhouses. Since the structures are used for agriculture, we didn’t need to meet the excessive snow- and wind-load requirements of a typical steel building. This is great for growing because we want to let as much sunshine in as possible; more steel beams, bars, arches, gutters and other structural components means less sunlight. We knew the structures’ designs would be stable — and that has proven to be true over five years of operating through wind, rain, snow and heat.

We built them just like any other greenhouse for any other industry — adding on our high-tech bells and whistles — and handled the construction ourselves. It was arduous work, but we powered through. The property started with no power, no water and no existing structure at all, so we had to bring in everything ourselves.

We’re located in the type of town where you don’t build a 24,000-square-foot greenhouse without anyone noticing. We had several interactions with the water district, public utilities district, local electricians and contractors, heavy equipment operators, excavation equipment rentals and the county itself for things like our fence permit.

We weren’t the only entrepreneurs who decided Chelan County would be a great place to grow great cannabis. There were 42 other farms in the county. But as more farms were getting operational, some rumblings began throughout the county.

Chelan County is 2,994 square miles dotted with small communities. One small but vocal community united to voice to the county their opposition to a potential farm in their area. That led to a bigger conversation about how the government should control cannabis production and processing throughout the whole county. We attended all the workgroups and all the public hearings. We met with our county commissioner and even invited the main representative of the vocal opposition (and her friends) to visit our farm. They agreed that we were operating the right way and, in their eyes, the right location (we are in a rural industrial zone on the outskirts of town that was previously a rock quarry).

After two years of meetings, hearings, public comments, letters from employees, committee meetings and working through everything, the county first set up a moratorium, then enacted an outright ban, before finally creating such a restrictive zoning ordinance that an estimated 39 of those 42 Chelan County cannabis farms had no way to comply.

Boggy Boon is one of the three farms that can potentially comply with the new zoning ordinance, if we convert our greenhouses to meet “indoor” building standards, apply for a conditional use permit and maintain that permit each year.

I guess you could say we are lucky to even have an opportunity to comply, and we have started the process of compliance by filing our conditional use permit application. But converting our property and our greenhouses to meet “indoor” requirements will cost another $1 million investment, just to keep doing the same exact thing we have been doing for four years.

Changes in the classification of the Boggy Boon greenhouses from agricultural to industrial buildings will require $1 million in upgrades and may affect the amount and direction of light the plants receive.

Almost all producers and processors in Washington’s cannabis industry have struggled for the past four years, with an estimated failure rate of 50-85%, but we have persevered and increased sales each year. We had our best year ever in 2019, increasing our sales revenue by 20%. We currently have an excess of orders to our more than 100 retail partners. We have increased our efficiency and still grew our post-production processing staff by 20%, and we’re planning on hiring additional staff in early 2020 keep up with expanding orders. We are growing the best-quality flower we ever have. We released 17 new genetics and three new product categories to market over the last year. And we still have four untapped revenue streams we are pursuing in Q1.

But while we have all those successes, we have the potential impending doom from the county regulations. It’s the same duality we have lived in since we started. On one hand, our business has hit its stride. On the other, we face the seemingly insurmountable task of finding the financial investment necessary to ensure we are able to sustain our operations into the future.

The good news is that we thrive in the duality.

 

Roy Arms is the CEO of Boggy Boon, one of the top cannabis producers and processors in Washington state, supplying over 100 retail stores. He is responsible for 24,000 square feet of cultivation and processing areas inside the company’s state-of-the-art greenhouse facilities. He spent five years in the U.S. Marine Corps and has previous corporate experience in quality assurance and client services.

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