Weed Dudes owner Michelle Cleaver discussed her business’s growth in front of the Sitka Chamber of Commerce. “It’s hard to talk to a room full of people who may be with you on your dream, or against you. But I’d like to think that I’m educating the world,” Cleaver said. She hopes cannabis will be downgraded from a Schedule I drug to at least a II, which would lower some of the barriers in research on marijuana, and would eliminate some of the challenges retailers face in transportation and finance. (KCAW photo/Robert Woolsey)

Sitka’s budding marijuana business is poised for significant growth, despite major limitations in transportation and finance faced by the industry.

Because of a conflict with federal law, the producers of Alaska’s legal marijuana can’t deposit their sales in banks, which makes otherwise routine tasks like paying bills a challenge. Nevertheless, one of Sitka’s pioneering cannabis retailers told the Sitka Chamber of Commerce this week (2-21-18) that statewide pot sales had already topped $57 million.

Downloadable audio.

Michelle Cleaver was the first person in Sitka licensed to sell cannabis, and the seventh in Alaska, following the 2014 election which legalized marijuana in the state.

Her store, Weed Dudes, brought in nothing for the first ten months, while the state designed a regulatory structure. By 2017, everything was in place to do business, but Cleaver didn’t have much to sell.

“So up until July I was out of pot more than I was in pot. People would come in and all we had was pre-rolls. We rarely had bud, because that’s what people wanted. And it took a little longer for the edibles to come out, and it took a little longer for the manufactured items to come out. But the last time I was out of pot was in July.”

Unlike other businesses, you can’t just call up your cannabis wholesaler and have a bale of Mexican Sativa goldstreaked to your store. Marijuana remains on the US Drug Enforcement Agency’s list of Schedule I controlled substances, along with heroin, LSD, ecstasy, and peyote. You can’t put it in the US Mail, or transport it across state borders. Just getting samples of Sitka’s local crop to Anchorage for mandatory testing required Cleaver to meet with — and win the cooperation of — the Federal Aviation Administration, the Transportation Safety Administration, the vice-president of Alaska Airlines, and law enforcement.

“I was in a room with six men in suits or uniforms talking about weed, and I was not in handcuffs!” (audience laughs)

Sitka now has three licensed cultivation facilities which have taken up the slack (and five more applicants, according to Cleaver), and two other retailers. And business is going pretty well. In the first 14 months of legal cannabis sales in Alaska the industry statewide generated over $57 million in sales, and contributed over $5 million in taxes .

Cleaver’s biggest problem remains something you just wouldn’t think would be a problem.

“It’s really a hard thing. We should be able to put our money in a bank just like every other person. We should be able to use credit cards. We should be able to take checks. We should be able to do all of these things, but the banks are afraid.”

Cleaver operates almost exclusively in cash, because banks — which are federally-insured — are reluctant to receive money from the sale of a Schedule I drug. She thinks credit unions, which have a different insurer, will eventually come through for the cannabis industry, but until then she goes around paying her bills in cash — which means monthly trips to Seattle to pay her credit card bill, as well as a special trip to the IRS to pay her federal taxes, also in cash.

Cleaver and the two other retailers in Sitka paid a combined $116,000 in local sales taxes to Sitka in 2017, plus a $5,000 annual licensing fee.

These are expenses that her competitors don’t share.

“Really, my competition is the black market, and if the black market beats my price what good am I? No one’s going to come buy from me. So I have to keep my prices at the same or lower than the black market, and I have to know what the black market is doing these days.”

Cleaver says her retail model is not perfect, but she compensates for low prices with high volume — and variety. She’s got a range of edibles and oils in addition to the more conventional cannabis buds, and concentrates for dabbing and vaping — products which were developed in the black market, mostly by younger innovators who have an entirely different outlook on pot than the culture she grew up in.

Cleaver calls herself old school, but she’s definitely a pioneer, serving as a bridge between the estimated 60 people now employed in Sitka in the cannabis industry, and the world of conventional business represented by the chamber of commerce.

Although she worries about providing health plans for employees and other routine business matters, little else about her operation is routine.

“They ask me, Are we going to drug test? Hell yes I’m gonna drug test. I want all my employees to know what kind of drugs we’re selling. So they need to take them home, test them out and come back and tell me what they think — that’s my idea of drug testing in my store!” (laughter)

Cleaver believes that Sitka has already won a good reputation for its cannabis product, as evidenced by the number of out-of-town fishermen and other travelers who make a special effort to get to her store. “They know the weed is good in Sitka,” she says, “because we’re snobs.”

Note: This story was corrected on 2-25-18 to amend Cleaver’s remarks about the amount of sales tax her business paid in 2017. The figure she quoted — $116,000 — was the combined total sales tax for all three of Sitka’s cannabis retailers, not just Cleaver’s business.

Master Grower Eric Van Veen shows a freshly harvested marijuana in the flower room,. (KCAW Photo/ Cameron Clark)

The Sitka Assembly recently reauthorized permits for one cannabis cultivation facility, Green Leaf, and two retail stores – Weed Dudes and Northern Lights Indoor Gardens. But while local government has been reinforcing the rules for the marijuana industry, growers and retailers have been building their businesses — literally from the ground up.

KCAW recently went behind the scenes to explore the highs and lows of Sitka’s cannabis trade.

Downloadable audio.

Reefer. Cannabis. Pot. Weed. Whatever you call it, it’s been legal to recreationally grow and consume in marijuana in Alaska for almost two years now.

Since 2015, pot shops have been sprouting up all across the state, providing the green stuff to anyone 21 and older. Sitka has two thus far, located in the same shopping center and one store apart.

Michelle Cleaver is the proud owner of one of these dispensaries, appropriately named “Weed Dudes.”

“It’s a good job to come into. It’s interesting. It’s fun. You get to meet all different people all day long. And you get to sell them weed,” she said.

Weed Dudes was Sitka’s first marijuana retail store and it definitely gives off that vibe. Cannabis-inspired art and clothing by local artists line the walls and ceiling, drawing customers to a clear case that splits the room.

“In our case here, we have some locally grown pre-rolls. We have seven different strains. We have 818 headband, that’s with the highest THC content in our store. Then we have Lucky Sleven. We have our White Lady, some Skywalker — that stuff will take you to a place far, far away,” Cleaver said.

Like a lot of dispensaries, Weed Dudes doesn’t have its own growing facility. They have to partner with different companies to ensure they have enough product to fill their shelves.

Their local supplier is Green Leaf, which is owned by Sitka assembly member Aaron Bean and grower Eric VanVeen. After signing in and greeting their fish, Mary Jane, VanVeen led me on a tour of their warehouse-sized operation at the end of Halibut Point Road.

“So here’s our veg-room-slash-mother-room. All these different plants, the big ones here, are all different strains. Right now, we’re sitting on 23 different strains of cannabis,” he said.

Plants cover almost every inch of the room, leaving only enough space for growers to examine each product. It looks like a sea of green, with marijuana growing in batches intended to generate 800 flowering plants at all times. Green Leaf grows each plant hydroponically in rockwool cubes, which VanVeen says is preferable to soil.

“Generally, hydroponics is a faster growing, better turnover rate. We have less chance of disease. There’s a really quick in and out, about 90 days from the time they’re put in a block until the time they’re ready to harvest,” he said.

Slideshow: Marijuana Cultivation

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(KCAW Photos/ Cameron Clark)

Alaska is a good environment to cultivate weed indoors. Although it gets cold, growers can produce the heat. The threat of bugs and other pathogens isn’t as high as other states. Also, the water quality is top notch, so each plant can reach its full potential.

But what about cultivation? How does Green Leaf produce 23 different strains of cannabis for a market that knows the difference? Part of Green Leaf’s facility is dedicated to cloning.

“What we do is about every two weeks, we take cuttings.” Pointing to a plant, he said, “Let’s say that right there would be one clone. We’d take about 20 or so, not too many, and then we would go into [the clone room],” Van Veen said.

The clones are then put into rooting hormones and rockwool cubes, in a small humid room. Each plant receives a little blue tag with the date and strain on them, for tracking purposes.

Simultaneously, germinating seeds — both imported and from Green Leaf’s own stock —  are also transferred to cubes. After about two weeks, the tiny cannabis plants are transplanted to the “veg room” for a month until they bud. Then, it’s down to the “flower room.”

The lights have a violet hue to them and fans blow constantly. Rows of flowering marijuana plants are sectioned off by strain and fill two rooms. Some almost touch the ceiling.

Owner Aaron Bean says there’s a certain way to make sure the plant reaches it’s full potential.

“During the last week, you don’t feed it any nutrients. You’re just flushing it out. When you flush it out, it focuses all of its energy onto those buds and all the nutrients that are left in the plant go to the bud. That’s a good indicator that it’s time to chop,” he said.

The chopped plant is then brought upstairs to four Green Leaf employees, sitting at a big table with a mound of weed in the middle. They’re processing the best of the cannabis for drying and curing. VanVeen won’t disclose the exact time and temperature, but he’s clearly proud of the results.

“Open these babies up and they smell just really great, you have to take a whiff…[sniffs] mmm! This is one of our favs, it’s a 2.0…mmm,” Van Veen said.

This is the extent of the celebrating at Green Leaf, because — as always — another batch is waiting.  For something so closely associated with a laid back lifestyle, cannabis demands a lot of the people who produce it.

“It’s work. It’s not easy. It’s not running around in shorts, tank top or whatever.  Everyday we’re checking every single reservoir, we’re writing notes about how the plants look… more logging than I ever imagined,” Van Veen said

After testing, and some regulatory paperwork, Green Leaf secures the cannabis in a locked container for the trip to Weed Dudes — about 8 miles — where it’s packaged for sale at about $12.50 for the cheapest pre-roll. Or if you’re feeling adventurous, you can pay an extra $4.50 for the Skywalker OG Pre-Roll 1 Pack…and begin your journey to a galaxy far, far away.