Brooke Gehring sat behind a desk at her corporate banking job as the foreclosures piled higher. It was 2009 and, with a background in loan compliance, her days were unenviably spent handling dashed dreams and financial ruin during the saddest days of the Great Recession.

But the economic collapse seemed to have a silver lining as her downtown Denver phone rang repeatedly with inquiries about large, bank-owned properties that could be used for cannabis businesses.

“Marijuana wasn’t on my mind. I hadn’t even been in a dispensary,” she recalls. “It wasn’t like my goal that year was to leave an opportunity where I could climb the corporate ladder and get into marijuana.”

But the inquiries set off a light bulb. As Colorado prepared to regulate its medical marijuana market, she decided to leave the corporate gig and create her own job description.

At first, the plan was to offer consulting services to cannabis entrepreneurs who needed insights into banking, real estate and regulatory compliance. Seven years later, Gehring is CEO and co-owner of a 100-employee, multi-million-dollar cannabis business within Colorado’s thriving cannabis industry.

Along for the exciting and at times bumpy journey to a stable, mid-sized, seed-to-sale enterprise has been Kelly Whyman, one of Gehring’s closest friends since they both were assigned to the same freshman hall at Miami University of Ohio.

Whyman first heard of Gehring’s consulting plan in July 2009 at about the time Gehring gave notice to the bank she was leaving. “She was like, 'That's it, I’m done,’” says Whyman, who trained horses professionally in South Florida before selling three of them so she could join Gehring’s consulting business and move to Colorado in early 2010.

“I said if you’re going to go into marijuana, I’m going … into marijuana with you,” she says. “We knew it was worth jumping. What was the worst thing that could happen at 28 or 29 years old if we failed? Neither one of us was scared of that.”

Soon, an unexpected opportunity presented itself for Gehring, who had set up shop under the name LiveGreen Consulting. An out-of-state businessman she was advising on how to enter Colorado’s regulated medical marijuana industry offered to sell her his grow and medical dispensary licenses.

“I had less than 48 hours to make a decision,” Gehring says, and she waited until the 11th hour before officially accepting.

In Ohio, Gehring had worked for large retailers, including Abercrombie & Fitch, then one of the hottest teen clothing brands, and helped lay out the company’s first Hollister test store. Years of retail experience, and years more of regulatory and banking experience, she says, seemed to provide a springboard for success. She signed the forms.

“I was really torn, [but] I felt I would be able to raise the capital and pay the original owner back,” she says. “There wasn’t a million dollars sitting in my bank account. I was really driven and focused.”

The deal wasn’t a dream, but it offered a solid start. Along with the licenses came a large warehouse, but it wasn’t built out for a grow operation, so Gehring decided to add to her collection of state licenses in a second deal, through which she gained an operational indoor garden.

Intense networking yielded financing, but soon disaster struck. The operational grow facility was leased, and the landlord was, unbeknownst to Gehring, in financial trouble. The building suddenly was repossessed, and the lessees locked out.

Intent on adhering to state rules — then silent on what to do with crops in such a situation — Gehring walked away from hundreds of plants at a major financial loss. She remains frustrated she wasn’t told in advance about the landlord’s troubles, and views the episode as one good example of why companies should own rather than rent properties.

“It was catastrophic,” Whyman recalls. “You needed cash to go out and buy [marijuana] to have inventory,” and every penny mattered.

Hard work running the dispensaries and careful accounting kept the business afloat, and Gehring was able to make repayments on a loan of about $250,000 from an initial investor.

In 2011, Gehring’s company merged with Patients Choice of Colorado, ending her need to buy from other growers to stock dispensary shelves. She became CEO and co-owner of the merged company FGS Inc., which has two grow sites in Denver, Colo., and four storefronts — two in Denver and one in Lakewood under the brand Patients Choice, and one in Edgewater under the banner of LiveGreen Cannabis.

A Market Shakeup

As the business stabilized, a political earthquake struck in November 2012, when Colorado voters, by passing Amendment 64, made their state the first (along with Washington) to legalize a regulated market for recreational marijuana.

Gehring recalls that night well. She was attending an election results watch-party. Though she supports legalization of marijuana for recreational use, she was nervous about what the resounding victory would mean for her livelihood.

“Legalization being on the ballot was very scary, and it’s not because I don’t believe in personal rights and states’ rights and legalization. I do,” she says. “It was, ‘How would the federal government react?’”

For nearly a year, it was unclear if the Obama administration would seek to block the opening of regulated recreational marijuana markets. An unfavorable decision could have had broad consequences, as marijuana remains federally illegal (no secret to anyone in this industry).

“Everyone who had been working toward [passing Amendment 64] was celebrating. I was at an election night party and said to myself, ‘We have some serious work to do.’ The next morning was nose to the grindstone,” Gehring says.

Ultimately, the Justice Department said it would not interfere with state-legal pot markets, so long as enforcement triggers such as widespread underage sales or interstate smuggling were not tripped. Gehring reoriented her business, which she co-owns with two partners, and three of the company’s four retail locations now offer recreational sales, with the exception of Lakewood.

One Foot on Regulatory Ground

Throughout her career, Gehring has made a point of being fluent in regulations, helping to shape them, understand their implications and ensure compliance. When legalization happened in Colorado, in fact, she got herself selected for a working group advising the state on rule-making.

“The decisions we would make in 2013 have an impact today,” she says.

Blake Brower, director of retail operations under Gehring, says constantly changing rules make Gehring’s regulatory know-how essential to the success of the business. “It’s a huge asset to our company that she’s involved in the politics side,” he says, speaking as he prepares mock-ups of a new state-ordered THC symbol. “Everyone looks to her, even the other owners.”

In addition to overseeing the business, Gehring is involved heavily in industry and advocacy groups. She’s chairwoman of the board of the Marijuana Industry Group, a large Colorado trade organization, and is a founding member of the groups Women Grow and the Council for Responsible Cannabis Regulation.

But the job is not all tedious rules-reading.

Recently, Gehring attended a brand launch party DJ’d by rapper, entrepreneur, and cannabis business owner and investor Snoop Dogg, and then boarded a plane to Jamaica the next day, where she and Brower helped judge a locally grown cannabis competition organized by High Times.

Growing Cultivation Know-How

The very essence of Gehring’s business is, obviously, cultivation, an area in which she had no prior expertise when she entered the industry.

The company now is using almost 100 percent of built-out grow space at its two grow facilities, jointly comprising 35,000 square feet. But key to cultivation success was finding the right person to lead the endeavor. And that was no easy lift.

“It’s been a learning curve and a very costly one,” Gehring reflects. “We’ve had four people prior to our current director of cultivation. … Learning from our past challenges and mistakes, it’s finding someone who has the right combination of hands-on experience, a strong work ethic, and the ability to manage and lead the team. We have finally, after five-plus years, reached a healthy balance.”

The current director of cultivation, Dustin Siegel, is someone Gehring says she’s known for a decade, a relationship that provides a foundation of trust. She describes him as having large-scale, corporate cultivation experience since 2010, but says he, more importantly, has the company’s best interests at heart, reflected in completely open dialog on all aspects of the grows’ operation.

“Unfortunately because of ever-changing regulations, growing in these indoor environments and having to create consistency in what you’re doing in order to comply, you’re going to have to have a cultivator who can be open and honest with you, even if what they’re telling you isn’t good news,” she says.

Supplementing the director of cultivation — who supervises the crop, grow-site staff and on-site processes — is a director of cultivation operations, who is primarily responsible for plant count allocations, seed-to-sale systems and data collection. The data is, in essence, the virtual tracking of the physical plants and inventory. The weights and measures are taken at various stages of the plants’ production cycle, explains Gehring, and overall yields of each harvest batch are looked at in correlation to the demand of the company’s retail outlets — all of which provide valuable information used for improving the company’s well-established protocols and processes.

Five employees work full-time on data collection, tracking plants from seed to sale and serving as essential cogs in regulatory compliance. “They could easily work 60 to 70 hours a week,” Gehring says, “... because product is always moving.”

While learning the cultivation ropes, Gehring leaned on the services of Kenneth Morrow, a leading cannabis consultant who founded Trichome Technologies (and also a columnist for Cannabis Business Times). She says his guidance helped her adopt a framework for thinking about large-scale cultivation. “He has an eye for process, and this is true: You have to make this a machine, and all of the parts need to work together,” she says.

Five years ago, “there wasn’t a lot of comparison out there” from which the company could borrow best practices, she says, and despite expert advice, “a lot of this was learning through the hard knocks of our own grow. It comes down to cultivating healthy plants and a healthy environment, and being able to establish that core value and mindset in every employee, from the person who scrubs buckets every day to the person who manages harvest schedules” she says.

Since the cultivation facilities opened, Gehring’s company has poured over $3 million into upgrades, on top of the expense of buying the buildings — a 10,000-square-foot former print shop and a more than 25,000-square-foot former furniture warehouse.

The facilities were reequipped with pricey HVAC systems, power upgrades, new lighting and other technologies to optimize plant growth.

The larger facility serves as the primary grow, with the smaller site used for experimenting and testing of seed-grown plants and soils for possible later use at the larger facility.

“We’re constantly evolving and finding optimal strains for our genetic library,” she says, important because state-legal growers generally “have somewhat incestuous genetics because of regulation.” Originally, growers traded authentic genetics and came up with unique hybrid strains from those phenotypes, she explains; now growers are restricted to purchasing seeds or clones from other licensed businesses, which sometimes means buying from your competitors.

Everything is running smoothly now, Gehring says, thanks to a large and cohesive team. “Cultivation is not just a head grower and someone who trims; these are sophisticated and well-managed departments,” she says.

Banking on Banking Troubles

Despite her background in banking, Gehring says one particularly challenging aspect of the business (and she’s certainly not alone here) has been trying to figure out the magic recipe for bank account retention, saying her business has lost about 34 bank accounts since 2012. Her current bank account has lasted over two years.

To other business owners who ask for advice, she suggests, “Always work with banks that know you’re a marijuana-related business.” Full transparency makes for a more durable relationship, she says, even though banks often require significant oversight and intrusive business vetting, as well as steep fees, if they know cannabis is involved.

Gehring says the company’s current focus is improving upon what it already does well, and that she expects industry consolidation in the future. “We’re in a stage of overregulation right now, [and] with the increasing costs of being in compliance 100 percent of the time, eventually some of the small businesses will be purchased by the larger conglomerates,” she says.

Until the next development, Gehring and her associates are grateful for their good fortune and are committed to staying the course.

Steven Nelson covers legal affairs and drug policy for U.S. News & World Report. He lives in Washington, D.C., where a green thumb would be useful.

It’s easy for cultivators to focus on lighting and nutrients. But a well-planned HVAC system not only keeps plants growing comfortably, it helps protect against threats like downy mildew.

It can be tough to figure out what HVAC equipment is needed, and the range of options can leave growers feeling overwhelmed, says Nadia Sabeh, agricultural and mechanical engineer for consulting/engineering firm Guttmann & Blaevoet.

“There [are] so many systems, so many moving parts,” she says. “But what I find is that [cannabis growers] are just trying to grow, and get growing as soon as possible. These guys just want something that works.”

In an indoor facility, the goal is to take both the heat and moisture from the recirculating inside air, says Sabeh.

She starts with refrigerant-based cooling and dehumidification usually called “mechanical cooling,” which is an air conditioner that comes in two main forms: a packaged DX (direct expansion) unit or a split unit.

A packaged DX unit works by flowing air across a cooling coil past the dew point, which pulls moisture out of the air as it chills. Once the air is dry, a reheater brings the temperature to a healthier target for the plants.

Denny Dikeman, head grower at Colorado-based B*GOOD, runs four 10-ton Carrier packaged DX units, one for each of his grow rooms, totaling about 5,000 square feet. He supplements that with three 5-ton units that are used to help balance temperature and humidity swings.

“That main unit cools, reheats and dehumidifies probably 80 percent of the air,” says Dikeman.

To help with air circulation, Dikeman uses 16- to 18-inch wall-hung circular fans, about 25 per grow room. They move air through the canopy, while six ceiling-mounted Big Ass Fans in each of his bloom rooms disperse hot air rising from his high-pressure sodium (HPS) lights.

A split unit is similar to a residential-use air conditioner, which runs in two parts: a condenser that rejects heat (possibly outside the building), and fan coil units or air-handling units inside the building. Refrigerant runs between the outside and inside units, pulling heat out of the air inside the building.

Rafael Chavez, consultant for Advantage Consulting Group Inc., relies on a custom system of two split 30-ton units running in 12-hour rotation for his 9,500-square-foot grow (four flowering rooms and one veg room) in Los Angeles.

“Each one of the four flowering rooms has about 30 tons of AC going into it. We place the air handlers inside the rooms, and run the Freon copper and all that to the roof, where the condensers are,” he says. He also runs a 260-pint HI-E Dry dehumidifier system in each room.

With 40 dual-ended HPS lights in each flower room and a 12-foot ceiling, the system generates a lot of heat. Part of the reason he maintains the split units is a habit of wanting to build a discreet grow, and packaged DX units tend to be much larger and attention-grabbing, he says.

Between the two, Sabeh prefers a packaged DX unit. A split unit usually means more indoor units to reach temperature goals. Plus, more units also means more parts that could break down. A split unit doesn’t remove enough moisture from the room as it cools, instead trapping it in that space, she says, because they are sized for temperature rather than humidity. That means it can hit a temperature goal, but could change the relative humidity in the grow room with less control.

When Dan Grace, president of Dark Heart Nursery in Oakland, Calif., planned a 7,000-square-foot addition to his nursery operation, he wanted a system that would not only keep the plants cool, but also manage humidity, he says.

“Although we were able to tightly control most of the variables in our system including temperature, watering and fertilizing, we were not able to tightly control humidity,” says Grace.

They measured evapotranspiration rates of the grow and approached Sabeh with the data: The nursery actually had a substantially greater dehumidification load than temperature load, he says. The 70-ton AAON packaged DX unit he decided on keeps control of the temperature. But when it reaches the correct temperature, it can also separately dehumidify the air by cooling, then reheating it to maintain both targets.

A third option for an indoor facility is a chilled water unit, which uses a chiller to cool a water reservoir. The system pumps that chilled water to air handlers (built with fans and a cooling coil to dehumidify) throughout the grow area, pulling heat and moisture out of the air. A chilled water unit is meant for a larger grow, probably more than an acre, says Sabeh.

“But chillers are complex pieces of equipment,” she says. “You need a pretty savvy maintenance staff. Or you might want to set up a service agreement with the local maintenance contractor.”

Chavez is in the process of building a new grow in Desert Hot Springs, Calif., in an 80,000-square-foot warehouse. There, he’s looking to place two 300-ton chilled water units to manage the heat. The grow uses LED lighting, which runs cooler, despite the hot environment.

“The [chilled water units are] a little more expensive, but they’re much more efficient,” says Chavez. “Since we’re growing in the desert, I need it to be reliable.”

If a cooling system doesn’t specifically handle dehumidification (or enough to achieve a facility’s goals), a second option would be desiccant.

Desiccant is a media that absorbs moisture from the air. That media can be recycled in a desiccant wheel, which collects moisture, then evaporates that moisture with heat as it passes around the wheel. It dries the air, but it needs to be cooled again to match the temperature goal for the grow. The temperature coming from a desiccant wheel can reach anywhere from 90 to 140 degrees, says Sabeh.

Heating Things Up

Heating options begin with the source: hot water or hot air.

Hot water can be run through pipes under a bench or on the ground to the media itself to provide heat directly to the root zone, says Sabeh. Hot water tubes also can be run along the base of the plant to provide some convection as well as heat radiation.

Hot water also can be run through a coil with a fan attached to push the heated air out into the grow. Though it’s not as common, some greenhouses still run with a traditional radiator, says Sabeh.

Hot air can come from a furnace that burns natural gas, propane, or other fossil fuels. They can be located either centrally in the air handling unit or as separate unit heaters mounted directly in the grow space. However, Sabeh has never seen a unit heater inside an indoor grow; they are more typical in greenhouses.

Electric heaters are available, but Sabeh doesn’t recommend them as an option because they heat inefficiently for the amount of energy used.

Energy is also a concern for a hot water system, since no matter how the heat is distributed, the water still has to be initially heated. In many cases, that means a hot water boiler, which will often be fueled by natural gas, says Sabeh. Electricity is also an option here as well, but depending on the energy codes in the state where the grow is based, the amount of electric heat in a facility could be limited.

If the grow is in a location with strong sunlight, solar radiation could be used to heat the water and store it in a tank until nighttime, when the heat is needed, supplemented by a boiler or water heater when necessary, Sabeh says.

Energy usage plays into HVAC system choices as well, mainly through utility rates. When designing an HVAC system, take local gas and electricity rates and availability into account, says Sabeh.

Considering Expense vs. the Cost of Choosing the Wrong Equipment

It can be tough to look past the initial cost of a system (the capital expenditure, or CAPEX) to how efficiently it can support the grow (operating expense, or OPEX), says Sabeh. And when growers get caught without an effective plan, sometimes they end up going to the nearest big-box store rather than to an engineer.

For Chavez’s new Desert Hot Springs grow, he’s planning on spending about $300,000 for his chilled water units, which plays out to about 10 percent of his total budget there. He’s doing the planning himself, with plenty of research to back up his decisions. His planned model runs the grow on about 80 percent of his HVAC, with about 20 as backup.

“It’s basically to be able to maximize what we can out of the equipment we have,” says Chavez. “The more research I do, cost has a lot to do with it.”

Although Chavez has mapped out most of the HVAC system (working with a dedicated HVAC employee), he cautions that if cultivators are going to go D.I.Y., they need to understand enough of the system to know how to check an employee or contractor’s work.

“I always do things myself. I always do research. The manufacturers have a lot of good data out there, and I like to make friends with smart people in the industry,” he says.

Dikeman estimates that he has spent more than $250,000 in air conditioning for his grow over the last five years, including the four rooftop units at about $30,000 each and $25,000 for the supplemental 5-ton units, he says.

Taking data to an engineer narrowed down the choices as to what would fit the required parameters for Grace’s grow.

“By the time we were done …, we had a really tight specification on the piece of equipment we were going to buy and install,” says Grace. “It costs something to do that, but much less than it costs if you realize down the road that you bought the wrong equipment.”

Cultivators could dedicate about 25 percent of their CAPEX to the HVAC system, and get a customized system that not only supports the grow, but could benefit the facility through high energy efficiency or other means, says Sabeh.

In addition to finding the right piece of equipment to achieve your goals, she says, it’s also important to “talk about everything else you weren’t thinking of. Let’s talk about noise, or maintenance or redundancy. So then you can play with temperature and humidity; you can decide what the best combination is. If you just pick an off-the-shelf piece of equipment, you get what you get.”

“I want to go nice and slow with this. I don’t want this to be a joke to people. It’s not a joke to women.”

Whoopi Goldberg, on getting started in the cannabis industry with her new Whoopi & Maya brand cannabis products geared toward women, including products meant to manage pain and cramps from periods.

Source: USA Today

“We are going to survive by it because we sure as hell can’t survive without it.”

DeBeque, Calif. resident Darrel Kuhn, after the town avoided a revenue crisis in 2014 by approving cannabis growing and retail sales, bringing in $340,000 in tax revenue in 2015. The town renovated a community center, repaired town utilities and started scholarships for local students.

Source: Thinkprogress.org

"I am proud to sign this bill that will provide long overdue medical relief to patients and families who could benefit from this treatment."

Pennsylvania Governor Tom Wolf, as he signed Senate Bill 3 into law, making Pennsylvania the 24th state, plus the District of Columbia, to legalize medical marijuana. The bill gives access to patients suffering from any of 17 medical conditions, including cancer and post-traumatic stress disorder.

Source: PA.gov

“This saves lives. This will take [the depression or anxiety] off their mind, at least temporarily, until they can find some more permanent help or relief.”

Steve Defino, founder of the Veteran Farmers Alliance, who handed out more than half a pound of free cannabis to veterans dealing with PTSD in Colorado at a charity event.

Source: KXRM

“If this entity were based south of our border, the federal government would prosecute it as a drug cartel.”

Nebraska Attorney General Douglas Peterson and Oklahoma Attorney General E. Scott Pruitt, in their lawsuit against Colorado’s legalized marijuana program. The U.S. Supreme Court rejected the suit in March, and both states are currently joining another case being considered by an appeals court.

Source: SCOTUSblog

“Blackout systems are not new to the horticulture industry,” says Dave Bishop, regional sales manager for Conley’s Greenhouse Manufacturing. “When [they] were first used, it wasn’t critical that every bit of light and shadow was blacked out — just the majority of it. Cannabis growers, however, believe that every pinhole of light has to be blocked out. So the advancements in the systems have been in that sense … and from truss to truss, so that it seals completely.”

“The cannabis industry has created a demand for a better blackout,” agrees Mauricio Manotas, president of Ludvig Svensson, which manufactures technical textile solutions. “The light-sensitivity of the crop (and the value) has pushed companies like us to work diligently in that direction.”

Multi-Purpose Solutions

“An automated blackout system typically serves a couple purposes,” says Bishop. “One, to black out the sunlight. … Also, in a lot of counties and even states where cannabis is legal, they don’t want light pollution. [So], when supplemental lighting is needed at night, the blackout systems keep the light from going out. The third function is that in colder-weather conditions the curtains can be pulled shut at night to keep it warmer,” and reducing the energy bill.

Two Layers or Three?

“Black out material went through its own development, away from simple black plastic,” says Peter Stuyt, vice president of Total Energy Group Inc., a greenhouse equipment manufacturer and retailer. “Different combinations of black, laminated and aluminized material are now available, for blackout mostly in two-layer combinations. In cannabis, grower expectations will make us use three layers, and I have worked with systems carrying four layers of material.”

“Right now the industry ‘standard’ is a triple-layer, normally with two layers of black and one layer of aluminum or white,” says Manotas.

However, three layers is more expensive and isn’t necessarily better, says Patricia Dean, CEO of Wadsworth Control Systems, which builds complete blackout systems, from the motor controls to the environmental controls. In fact, she says, “We conducted a study using light sensors … and found that two layers is sufficient versus three layers.”

Three layers also doesn’t allow for as much “breathing,” says Dean. “Some growers [in traditional agriculture] cover the greenhouse with the blackout curtain, and then … when it’s dark, they’ll uncover it to increase ventilation, reduce humidity. But cannabis growers don’t want to do that.”

Growers, especially in warmer climates, like southern Colorado, says Dean, “would benefit from using a dual curtain system — with one shade and two blackout layers. Some growers on the hottest days will cover the greenhouse during the day with the blackout layer to keep out the heat. But with the dual-system, the shade, which is an open-weave so air can flow through the curtain, can be closed during the day and will cool a greenhouse by 10 degrees, depending on the humidity and other factors.”

What’s Important to Look For?

Manotas suggests growers look for companies with a history in the greenhouse industry. “We take into consideration the geographic location, climate, greenhouse type to recommend options. We also have most of our products tested and developed as Fire Rated, which, with the … equipment on these houses (lights, motors, etc.), is an extremely important feature,” and often a must to meet local fire codes.

Local support is also important, he says.

Stuyt says, “Since reputable shade and blackout fabrics carry a pro-rated warranty of five years, the system hardware should last as long without too much hassle.”

Bishop says growers should look for “references [or a guarantee] that the system will black out the light, since you won’t really know until the system is up.” It’s also important, he says, “[that the] system … has a simple, automated control system, so it’s easy to change the control panel from 12 to 15 hours of darkness.”