On Nov. 6, 2012, Raft Hollingsworth III, founder and CEO of The Hollingsworth Cannabis Company (THC Co.) and his sister, Joy, the company’s director of operations, watched election results roll in in Seattle’s Capitol Hill neighborhood, one of the city’s most diverse districts filled with coffee shops, eateries, pubs and gay bars. It was an evening full of wins for them, as they witnessed President Barack Obama’s re-election and the legalization of adult-use cannabis and same-sex marriage in Washington State.“Seattle’s a pretty liberal city, so everyone was celebrating here,” Joy remembers. “People were going crazy on Capitol Hill, just having a great time, because these three things all meshed together at one time.”

Raft remembers it well, too, as it was also the moment he realized a new opportunity had presented itself: the chance to grow cannabis legally and commercially.

Nearly a year later, in October 2013, Raft called his family together at his parents’ home, where they convene most weeks. His mom, Rhonda, father, Raft Jr., and Joy were huddled around Raft, the baby of the family, when they noticed something out of the ordinary: The youngest Raft brought a PowerPoint presentation to their typically casual gathering.

He walked his family through the business plan he developed during the past six months—for a cultivation operation in outdoor hoophouses. He explained why this was the most cost-effective way to cultivate cannabis at scale, how they could quickly launch the business with minimal money down (roughly $80,000) by following the regulation requirements to the letter (which Raft III summarized as “an 8-foot fence, cameras covering the entire property, and that’s really it”) and by not going overboard on unnecessary purchases.

He wanted his family to be his partners and investors in the project.

“It was mostly just to get my family kind of excited about the prospect of starting our business,” Raft III says of his living room pitch. “I knew that cannabis wasn’t going to be a passion project for them. But I knew that working together and trying something new and taking a risk together would be something fun.”

His father, a career parks department employee in Washington State, and his mother were a bit surprised by the presentation’s subject matter. But they also were impressed by the amount of thought their son had put into the plan, and by the end of the pitch, they were on board.

“I saw his passion and knew that he had done a lot of legwork on this,” Raft Jr. explains. “And so you go with your heart, and your heart says, ‘you got to support them.’”

Joy, however, was more hesitant. “I thought he was psycho,” she says with a laugh. But when her dad retired from the parks department and invested his retirement fund into the project, she felt compelled to join the new family business.

“Ever since we’ve started, it’s felt like we jumped off a cliff and we’re building a plane on the way down,” she says.

Quick Launch

A lot has changed in the five years since THC Co. harvested its first cannabis crop. For starters, the company is now much more than a hoophouse surrounded by an 8-foot fence topped with razor wire and decked out with cameras. Today, the 30,000-square-foot (tier 3) farm in Shelton, Wash., is fitted with eight greenhouses, a post-harvest space and an extraction lab.

Growing and scaling the business was a slow process for the Hollingsworths. In the first two years of operation, the parents and siblings did everything themselves, from figuring out licensing to purchasing the property, managing crops (including hand-watering) and harvest. Raft III even slept on a fold-out cot in the office located on the property to avoid the 90-minute commute back to Seattle. Staying on site and managing everything was crucial to the business surviving those early growing pains and to Raft III learning the intricacies of growing cannabis at scale.

“I stayed there … and really worked to understand forward and backward exactly what ... would need to happen on a day-to-day basis. And that’s fundamental,” Raft III says.

When he encountered problems that come with expanding your 100-square-foot-basement grow to a one-acre farm, Raft III was hard-pressed for resources. So he turned to the nearest approximation to a cannabis education he could find: Skagit Valley tulip farmers. “Now granted, growing an acre of weed is not some big undertaking when you talk with a guy who has a thousand acres of tulips up in Skagit Valley,” he says. “But you could take a lot of their practices and implement [them] into what you’re doing.”

One such practice was automating irrigation. It wasn’t until February 2016 that the Hollingsworths built up the capital to invest in an irrigation/fertigation system, giving the CEO plenty of time to research his options. Raft III opted for a PVC system with Dosmatic injectors for the company’s fertilizer salt nutrients. That system alone saved him and his family 18 working hours per day. “[It] changed the outlook of our farm and allowed us to have multiple cycles, multiple harvests, … [and] not have to be onsite 24 hours a day,” he explains.

When it comes to making decisions for the business, Raft III tries to take as much time as he can to evaluate a situation from all angles—a vital approach when your parents’ retirement fund is at risk and fierce competition and razor sharp margins quickly chew through any budgetary wiggle room you afford yourself. Take for example THC Co.’s growing medium mix of 50-percent coconut coir, 20-percent sphagnum peat moss, 20-percent dolomite lime, oyster shells, worm castings and other amendments, and 10-percent perlite and vermiculite. The Hollingsworths knew they were looking for a medium that drained well. Raft III tested out the mix in a handful of pots before making the full conversion to this new media. “It was a really light, inert mix that was soilless, and … reusable,” he says. The budget-friendly price of $75 per yard sealed the decision.

Scaling and Adapting

This pragmatic approach to cultivating and scaling a business doesn’t mean that THC Co. always chooses the most frugal option. A product or system’s contribution to the company’s carbon footprint is also a factor.

As children of a former parks department employee, environmental stewardship was always a big part of the Hollingsworths’ identity. Raft says, “I knew that farming and agricultural gases were a big contributor to greenhouse gas emissions.” (According to a recent Environmental Protection Agency (EPA) report, “in 2017, greenhouse gas emissions from the agriculture economic sector accounted for 9 percent of total U.S. greenhouse gas emissions. Greenhouse gas emissions from agriculture have increased by 8.8 percent since 1990.”)

THC Co. uses a minimal amount of supplemental lighting–often a major portion of a cannabis business’s power consumption and carbon emissions–instead operating as a sungrown farm as much as it can.

The CEO looked into adding power when he was considering implementing a small indoor operation for the winter or additional greenhouse lighting. During a casual conversation with a neighboring cannabis farm, a roughly 9,000-square-foot indoor grow, Raft III asked how much their power bill was, as both groups were working with the same utility company.

“Their power bill was like $14,000 a month,” 10 times as much as THC Co. was paying at the time. “And I said, ‘That’s not sustainable.’” The utility company also wanted to charge THC Co. nearly a quarter-million dollars to run additional power lines to the property. As such, the farm still operates on just a 400-amp circuit (equivalent to two family homes with central air systems).

Beyond electricity, THC Co. also developed a rainwater reclamation system that allows the company to funnel standing water away from its crops and back into the aquifer, where it is eventually pumped from the property’s well that is used for feeding plants. Using government estimates on the amount of rainwater that collects on a 30,000-square-foot farm, THC Co. was able to calculate that its water reclamation system returns more water into the aquifer than the company consumes in a year.

THC Co. also avoids using chemical pesticides to prevent and treat any pest or disease presence. Instead, the company relies on beneficial insects and bacteria, as well as organic foliar sprays, to keep contaminants at bay. But just as important as the products and solutions he applies to plants is the method used to apply those foliar sprays. “It doesn’t matter what you are using if you [aren’t] applying it properly.” To ensure that those applications were not over- or under-applied to any part of the canopy, Raft III procured an atomizer (fogger) that “totally coats everything in a greenhouse, to the point of saturation almost, really evenly.”

Being sustainable goes beyond being eco-conscious; those resource-saving practices also often have a positive impact on the company’s bottom line. For example, adding solar panels and batteries to store energy allowed the Hollingsworths to save more than 80 percent on their utility bills.

Grow With the Market

Finding efficiencies wherever they hide helps THC Co. remain competitive in Washington’s challenging market. Finding where to cut costs or increase productivity extends past the greenhouses and into the post-harvest processing. That’s where Joy comes in.

As director of operations, Joy is tasked with ensuring that team members have everything they need to complete their jobs effectively and that the company is meeting production and delivery deadlines. Her days are long: She usually wakes up at 5 a.m., her commute from Seattle starts at 6 a.m., and she typically works 12 hours. Her schedule has improved (slightly) as she’s figured out how to best structure her days and company workflow.

In the first two years, Raft III, Joy and their father could be found “clustered together, watering the plants every day, trimming, harvesting,” Joy recalls. As the three organically found which roles were best for them, Joy gravitated toward the post-harvest tasks: the drying, curing, sorting, bagging and tagging. (Rhonda manages the finances, handling bills and payment schedules. And as a lifelong cannabis connoisseur, she doubles as the quality assurance and research and development branch for THC Co.)

The company’s post-harvest process is extensive, if a bit expedited. Freshly cropped plants first pass through a Twister T4 wet trimmer, where large fan leaves are knocked off the bud. From there, buds move into one of two temperature-controlled drying rooms to sit on perforated stainless-steel sheets for about “five or six days,” Joy says. A second machine trim using a Greenbroz dry trimmer removes sugar leaves (collected and used in the company’s pre-rolls) and prepares grade-A flower, the kind that will be sold in glass jars to consumers, for its final hand trim. THC Co. then cold-cures its products at roughly 35 degrees F for at least four weeks before the product is sold to a retailer.

Once harvest season begins, Joy and her processing team dry, trim and sort through 50 pounds to 60 pounds of flower per week. Any product not being sold as flower is sorted between different extraction processes and wholesale options. Because the company has its own processing capabilities, 70 percent of the harvest is sold to retailers under one of the company’s five brands (THC Co., Hollingsworth Cannabis, PAPAVU, Joystick and Elio CBD), meaning 30 percent of the product is sold white label/wholesale to other producer/processors.

And just like it helped her brother in the cultivation area, automation has helped Joy in post-harvest. For example, the company added equipment to help with packing pre-rolled joints. “We went from packing a couple-hundred pre-rolls a day … to doing thousands a day,” Joy says.

The company’s business model was forced to change “because the market has changed,” Joy explains. “We were trying to be everything for everybody. And I think a lot of people were in that boat because they wanted to get sales, … and the consumer didn’t really know what they wanted.”

For example, how the company packages and sells flower lots to its retailers reflects just how the market evolved and the consumer became more educated. “When the market first started, people wanted to try a little bit of this, a little bit of that,” Joy says. “Stores have gotten comfortable with knowing their clientele, people are willing to spend more, and they’re willing to buy certain brands, and knowing different strains, and they’re ... able to navigate that a little bit easier. So naturally we shifted [from single grams] to doing [only] eighths.”

The impact of that shift on the company’s bottom line was immediate. While the Hollingsworths were spending more money on a per-package basis for larger glass jars, their total packaging costs went down as they no longer had to bag and tag nearly 454 individual glass jars. “Ain’t nobody got time for that,” Joy says with a chuckle.

Blood Is Thicker Than Cannabis

On the front lines of that customer and retailer relationship is the Hollingsworth’s patriarch, Raft Jr. During the past five years with the family company, his role has shifted from being his son’s mentor in building the business to managing sales relationships with partner dispensaries.

Acting as a customer relations specialist and traveling sales rep has given Raft Jr. a wide-lens perspective on the Washington market, and his input helps shape the company and the brand. When Raft III and Joy discuss potential packaging or logo changes, their father acts as a voice for retailers as he communicates what he’s seeing and hearing from the business’s customers.

“I’m really trying to research the market [while on sales calls],” explains Raft Jr. “When I’m visiting stores, I’m looking at layouts, looking at how the stores [present products] and see[ing] how we can get in the store and then … how we can be featured once we’re in that store.”

Raft Jr.’s sales pitch changes as dispensary purchasing managers become more educated on cannabis options and get a better sense of their customers’ needs. “It did start with price,” he says of early conversations. Today’s questions focus mostly on terpene and cannabinoid content, growing conditions and customer service. Instead of being prepared to beat competition on price alone, Raft Jr. often asks dispensary managers what their customers are looking for. “And then I tried to come up with how I can provide that type of a product to [that] store,” he says. “And then I look to see what’s in [the] store and how I can improve upon the selection.”

As much as he likes interfacing with dispensaries and helping build a start-up business, what Raft Jr. and the rest of the Hollingsworth clan appreciate the most about their company is the company they get to keep. “Working with my family, seeing them, working with them every day, that’s the best thing. And the worst thing is seeing my family and working with them every day,” Raft Jr. says with a laugh.

Having those people to fall back on can sometimes be the only thing that keeps the brother and sister duo from throwing in the towel. Their mother, Rhonda, remembers a talk she and her husband had with their children after a particularly difficult week left Raft III and Joy dejected about their business’s prospects. It was a Sunday night, she recalls, “And we said to them, ‘You know what people are doing right now, everybody on this block, just about everybody that you know? They are getting ready to get up and go to a job, and many of them hate the job they’re going to. You guys are doing something very rare: You’re making the decision of whether or not you even have to go into your own office. And that’s a luxury that is so rare for two 30-year-old black people.’

“And that’s what every parent wants for their child, for them to get up and decide whether or not they’re going to go to work in their own business, to work for themselves, to make decisions for themselves.”

Brian MacIver is senior editor for Cannabis Business Times and Cannabis Dispensary magazines.

Odor is a powerful force. A simple waft from a fresh pot of coffee can be enough to excite your senses and get you ready for your day. The first whiff of fresh cut grass signals the arrival of spring. And a sniff-and-touch test is still a standard for determining when cannabis has been sufficiently cured.

Odor is also powerful in that it can cause headaches, both figuratively and literally, for you and your business. A complaint about a smelly grow facility or extraction lab can (and often does) quickly escalate from a neighborly squabble to civil suits, fines and regulatory crackdowns.

Unfortunately, odor control is grossly misunderstood. For example, significant differences exist between odor masking and mitigation, as well as between the effect of each on your cultivation operation; nearly a quarter of cultivators, however, are unaware of the differences, according to the research behind this “Special Report: Cannabis Odor Control.” Terms like misting and vapor phase technologies will cause nearly 75% of cultivators to scratch their heads as well; just 25% of cannabis cultivators know the difference between those two odor-masking and -control methods.

This is why Byers Scientific & Manufacturing has partnered with Cannabis Business Times to support vital research in this first-ever deep dive into cannabis odor control, as well as the implications cultivators face when odor becomes an issue for neighbors and/or municipalities.

As cannabis cultivation proliferates throughout North America and beyond, odor control becomes a more pressing concern. Communities unfamiliar with, and often wary of, cannabis don’t typically welcome cannabis odors with open arms. Even those municipalities that do embrace cannabis businesses may turn up their noses at the stench. In fact, nearly 1 in 5 research participants said they have received complaints from neighbors or the community about cannabis odor. Today, having an odor control plan is often a requirement to obtain a permit or operating license.

We started Byers Scientific & Manufacturing to leverage next-generation odor control solutions to join like-minded entrepreneurs and corporations working to leave our globe in a healthy state for future generations. In the cannabis industry, we observed a significant need to educate cultivation businesses about odor mitigation and the environmental and financial risks stemming from misinformation or a lack of knowledge about available solutions.

We are pleased to support Cannabis Business Times in this effort to learn about your odor-related challenges and needs, so that together we can better serve you and other cultivation and processing businesses in building a better, and better smelling, cannabis industry.

Cannabis odor control is serious business, especially when neighbors take cultivators to court over it. Some have done just that in Colorado, California and Oregon, suing cannabis growers under the Racketeer Influenced and Corrupt Organizations Act.

Commonly referred to as RICO, this act is known for Mafia- related prosecutions by allowing ordinary citizens to sue criminals who cause them financial harm and collect three times the amount of damages jurors find, in addition to attorney’s fees. Due to marijuana’s Schedule I drug classification, marijuana cultivation and sales remain illegal under federal law, leaving the door open to RICO prosecutions.

While judges in these prominent RICO suits ruled against the plaintiffs, the cases remain notable as they highlight risks involving cannabis odor, and in the Colorado suit—the most publicized of the cases—how odor control contributed significantly to the defense.

Colorado

Michael and Phillis Reilly turned to federal court in 2015 when a cannabis grow (Alternative Holistic Healing) moved next door to where the couple kept their horses. A panel of the U.S. Court of Appeals for the 10th Circuit found that growing cannabis for sale is a violation of federal law, and thus “is by definition racketeering activity,” which could decrease the Reilly’s property value. The panel also found it plausible that alleged odor from the facility could make the couple’s property less valuable. The appeals court sent the case back to district court.

Matthew Buck, the defense attorney representing the land owner, Parker Walton, argued during the trial that the grow did not cause any odor due to its odor-control system, which did not vent outdoors. He added that the Reillys’ property value had actually increased, not decreased, as claimed. On Oct. 31, 2018, a jury in Denver decided that the grow facility did not hurt the Reilly’s property value, ending the closely watched case in favor of Walton.

California

In August 2018, residents in a Sonoma County, Calif., neighborhood filed a lawsuit in San Francisco federal court accusing Carlos Zambrano and his company, Green Earth Coffee, of violating racketeering laws by running his cannabis cultivation operation without local permits or a state license. Zambrano had applied for a cultivation permit, which was not issued and was pending an appeal at the time of the lawsuit. The neighbors alleged that the grow’s noise and odor were major disruptions to the area.

Zambrano filed a motion to dismiss the case in October 2018. In it, he said that the nine neighbors suing him had not stated a valid claim under RICO, as they had not suffered financially. On Dec. 27, 2018, U.S. District Judge Jon Tigar ruled in Zambrano’s favor—that the neighbors could not sue Zambrano and his operation under RICO because bad odors and noise are nuisances that do not cause the kind of measurable financial losses required to pursue a case. The ruling came several weeks after Green Earth Coffee ceased its operations as part of an agreement with Sonoma County’s permitting department, which said the business did not comply with all its rules.

Oregon

Plaintiffs in Ainsworth v. Owenby filed a RICO lawsuit in December 2017 against a cannabis cultivation operation with a greenhouse on a neighboring property. The landowners argued that noise from the facility and the “persistent stench of marijuana,” among other complaints, had disrupted their lives and made their properties “worth materially less than they otherwise would be” and “harder to sell at any price.” The district court summarized the plaintiffs’ complaints into three injuries: “(1) diminished use and enjoyment of their properties; (2) reduction in the fair market value of their lands; and (3) expenditures on additional security measures.”

Ultimately, the court found that—similar to the Colorado case—these three injuries were not actionable under RICO, and the case was dismissed in August 2018.

On Jan. 29, Santa Barbara County supervisors organized what turned out to be a contentious meeting on cannabis regulations. About a year prior, the county passed its local cannabis ordinance, and it was time to check in and evaluate the progress thus far; the public, as noted in a December New York Times article on the county’s cannabis cultivation odor issues, was not overwhelmingly supportive. Audience members at the meeting wore clothespins attached to lapels and collars, signifying “the need to pinch their noses,” as a reporter from the local ABC news affiliate, KEYT-TV, explained.

“We’ve had enough,” Carpinteria resident Maureen Foley Claffey said at the meeting, according to a report by the local news outlet Coastal View. “Pot stinks, and we’re mad as hell.”

As municipalities and county governments around the U.S. are finding out, regulating a new industry forces a steep learning curve.

Das Williams, supervisor for the First District of Santa Barbara County, has been at the forefront of cannabis regulation development so that the county would have something on the books and a legal foundation. In addition to organizing public hearings in Santa Maria, Williams even hosted a community meeting at his home in Carpinteria, the coastal city of 13,600 residents all neatly packed in among 14 square blocks. In those meetings, he learned that odor is a top concern for community members.

“Getting odor control right is just crucial for any community where there is close proximity between growers and a large number of residents,” Williams says.

Santa Barbara County started by building odor control technology requirements into the county’s zoning codes. “We put a term that is used in laws often of ‘best available technology’ that preserves our ability as technology improves to ask for better odor control—and demand better odor control,” Williams says.

In addition to licensing requirements, counties can control land use requirements as part of their odor control tools, meaning they can determine what type of structure or business can occupy which zones.

“If you mandate odor control, you are de facto banning outdoor cultivation in a zone where you mandate odor control,” Williams says. “And so, we have done that in Carpinteria. We have both de facto banned outdoor cultivation … by mandating odor control, and we’ve done it de jure by requiring a buffer of 1,500 square feet between residences and outdoor operations. In Carpinteria, that means there’s only two or three parcels that would qualify. … Essentially, our permitting tends to favor greenhouses.”

Carpinteria’s population density is just over 1,400 people per square mile, according to 2010 U.S. Census figures, more than five times California’s average of 251 people per square mile. Williams says his county’s plan worked for his densely populated corner of the California cannabis market. In communities with different population densities, however, Williams counsels a more personalized approach.

Complaints and Solutions

The onus is on greenhouse operations to apply the “best available technology” to keep their plants’ odor at a reasonable standard. Dennis Bozanich, deputy county executive officer with Santa Barbara County, says that the legislation has given his agency a proper baseline for enforcing local code. It’s a work in progress, as most cannabis laws are, but it’s given him and his team a path forward to work with both businesses and residents.

“It does tend to be complaint-driven, but it’s also proactive as well,” Bozanich says. “As part of the compliance team, we have staff regularly visiting licensed operators, identifying practices or business operations that are outside of the requirements established in our local regulations. We then cite and/or come up with an improvement plan for them to come back into compliance.”

Further, the ability to enforce an ordinance gives Bozanich a chance to suss out illicit grow operations in the county. When responding to a complaint, the county team will first assess whether it can be traced to a nearby licensed grow facility; other times, a complaint may lead them to an unlicensed business that needs to be shut down. The county spends $1.7 million per year on an enforcement team that’s eradicated about 1 million plants from July 2018 to March 2019, Bozanich says.

Often enough, though, he says the county is building cannabis odor into a more proactive conversation with licensed growers.

“At times,” Bozanich says, “we will go to an operator as part of our compliance check to say, ‘Look, we’re continuing to get a large number of other complaints. When was the last time you looked at your own odor control system? Is everything operating normally? Are there any service needs? Were there any purposes for which you had the system shut down for any period of time, for routine maintenance, for example? What was the duration of that?’ And then we’re working with them to make sure they are operating that odor control system as consistently and as finely tuned as possible.”

When it comes to selecting an odor control technology, Williams says “the real key here is: What’s the maximal effectiveness of a system that you can do with the lowest energy use?

“That’s a balance. If the energy use is so high, then the operator will be tempted to turn it off sometimes. … That of course would defeat the purpose. So, getting this right from a technical perspective and from a standards and community expectations perspective is really important,” he says.

And it is, in the end, a conversation. As the licensed cannabis industry comes into its own, Santa Barbara is joining an increasing number of local governments and business communities trying to wrangle an understanding of how cannabis will interface with the rest of society.

Williams and his fellow supervisors talked to professionals in solid waste circles and in the odor control vendor community. Then, of course, the growers and Santa Barbara residents weighed in on how to enforce this balancing act.

“We’re still learning,” Williams says. “I don’t want to say that we’ve gotten it all down. We established in the ordinance a standard, and we will, by experience, learn how to do it better.”