The first seven marijuana entrepreneurs on the Kenai Peninsula received their state approvals on Thursday and Friday.

The state Marijuana Control Board gave its stamp of approval last week to four standard cultivators and five limited cultivators on the peninsula. Two licenses were issued in Kasilof, two in the Nikiski area, one in Homer, one in Sterling and one just outside Soldotna. Two growers in Seward, Stony Creek Growers and Budding Alaska, were delayed because the board members still had questions for the applicants. The board will review those two again at its July 7 meeting.

The licensees cannot start growing immediately, though — they still have to wait up to 60 days for the Kenai Peninsula Borough government to review and approve the licenses before they can start up operations. The borough Planning Commission will review the nine applications at its Monday meeting, and the borough assembly could review and approve them as soon as its June 21 meeting.

Sunday found Mike Harris, owner of standard marijuana cultivator Croy’s Enterprises, working on his future grow space in a building on Pine Street, just east of Soldotna. The facility, which Harris said he helped build in the 1980s, is a long stucco building on Harris’s old family homestead, complete with a family memorial plaque behind it and the pond where his father homesteaded.

The Marijuana Control Board approved his standard cultivator’s license last week, but he is still working on the smaller requirements — getting the lights installed, setting up the security cameras and other adjustments. Eventually, he plans to turn Croy’s — named after Harris’s younger brother, who died at age 19 — into a full production facility, complete with a kitchen, a retail shop and pipe shop, he said. The kitchen will make oils and other products to be sold on site in the retail shop. No one younger than 21 will be allowed on the
premises, he said.

Harris said he want to draw the buyers away from the black market because the legal market will be safer.

“I’m about legitimizing the business,” he said. “Bringing (customers) into a legal space makes it safer.”

Chase Griffith, whose business Permafrost Distributors received its state approval Friday, said he’s starting off tentatively. His license is for a limited grow, so he plans to only grow his marijuana downstairs in his Nikiski facility for now.

“If it’s successful, then we can roll the money that we make into something bigger,” Griffith said. “We’re not just going in full speed.”

Griffith said he doesn’t consume marijuana himself — he owns an oilfield service company — but the marijuana industry seemed like a good chance to bring in some extra income and provide a service to the community himself. He and his brother, who will be working in the business with him, are both longtime Nikiski residents, he said.

They’re working on the details of their business now, like a fire inspection and their marijuana handler permits. But they won’t be able to grow until they receive local approval and have their licenses in hand.

The borough assembly considered an ordinance at its June 7 meeting to shorten the application process by waiving the local government’s right to protest these licenses. The ordinance’s sponsor, representative Kelly Cooper of Homer, said waiving the borough’s right to protest would cut off the 60-day waiting period for approval and would allow the growers to get their plants in the ground outside. The outside grow, which can only take place in the summer, would provide much more product than the indoor grows, she said.

However, the assembly shot down the ordinance, with only Cooper voting for it. Several who voted against it said they were uncomfortable with setting the precedent of waiving the local government’s right to protest licenses.

That wasn’t unexpected, said Dollynda Phelps, one of the co-owners of Peace Frog Botanicals, a limited cultivation operation based in Nikiski. She said she expected the borough to approve all the licenses in the upcoming weeks. The state approval process went well for her business, she said.

“The approval process for us went well,” Phelps said. “We are (growing) in our basement, since we’re limited grow — the board’s biggest question was whether minors would have access and of course they wouldn’t.”

There are other kinks to work out with the regulation, though, one of which is the way parts of marijuana plants are taxed, she said. The heavy tax on some parts of the plant may dissuade processors from purchasing it, leaving growers with profitble product they cannot sell. The regulations are an ongoing process, she said.

Leif Abel, one of the co-owners of Kasilof-based Greatland Ganja, received his state approval as a standard cultivator on Thursday. He said he is confident he would get his license — the borough planner has already reviewed his requirements, and the only hurdles left to jump through are Planning Commission and borough assembly approval — but was concerned that the delay would make a dent in his growing season.

The disconnect between the state and local requirements has caused some headaches in the last year and a half since Proposition 2 passed, making licensing a game of alternately rushing to get requirements in place and waiting for long periods, Abel said. The

“Realistically, it seems to me that these processes could have worked in tandem at the same time and things could have gotten done a little more timely,” Abel said. “And then, another thing that makes it really difficult is that everyone is having a different experience because every local government has created a different set of rules … There’s no level playing field.”

Brian Ehlers, one of the owners of Alaska Bud Brothers Aerogardens in Kasilof — a standard cultivator that also received his license last week — said one of the obstacles has been getting the fire safety inspections. The state staff is limited and the facilities are all over the state, making scheduling difficult, he said.

Ehlers said one of the biggest challenges will be running a business in the marijuana industry with low overhead. The tax structure in Alaska will be heavier than in some of the states that have legalized a commercial industry in the Lower 48, and the first few years will be a struggle, he said.

“Some people have said, ‘You’re gonna be making millions,’ but we’re going to struggle to make a profit just like everybody else,” Ehlers said. “You know, we’re just going to see how it goes. It’s still all up in the air.”

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

The exterior of Croy’s Enterprises, a marijuana business near Soldotna Alaska, is shown on Sunday, June 12, 2016. Croy’s was one of seven marijuana businesses on the Kenai Peninsula to be granted state approval last week.