# So you want to grow legally under 502?



## deebickle (Sep 13, 2013)

Alright, I hate the bullcrap and rules I see being proposed for Washington 502 adult marijuana use. But, I mean really, this is a chance to be a legal grower, pretty much a first in the world. Hard to pass up, and I think the rules might be doable. So I think I'll throw my hat in the ring and apply for producer/processor ($500 to apply), and $2000 for the two licenses. If I want to quit after one or two harvests, I should be able to cover costs. I want to keep it small, entire space needed would be about 1500 sq ft. My big unknown is our county zoning is undecided, if they don't come out with something soon, it'll be too late. I want to do it on my place, 20 acres of forestland with house. I don't know if the LCB would consider that as at a 'place of residence' or not. If they zone indoor growing in industrial only, then I'm looking at pretty serious rent, and hard to come by too, with everybody and their cousin thinking like me.

Anybody else thinking of doing this please join in with ideas. Like the required operational plan that needs to be included with the application. I think the LCB will give more guidance about what should be in the plan besides what's in the rules, but not sure.

I'm confused how the producer is supposed to sell without a distributor system, but I think that will sort itself out.

Any other people thinking seriously about being a 502 grower?


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## mustang519 (Sep 14, 2013)

Hey Dee: My journey started when 502 passed. Since then I have purchased property and Monday will be the final inspection to the 30 x 48 foot building I just finished. I will have two 12 x 8 flower rooms (4 x 1000w each) and a 12 x 8 veg-clone-mother room. I will also apply for a producer and processor license. I think that you will have to contact retail stores and set up your own distribution to them. The residence thing is a bit confusing, I think they will have to give us more information before I truly understand that part of the regulations. I hope to have the rooms in place in the next month. Good luck and keep moving forward.


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## deebickle (Sep 17, 2013)

Wow, tang, you're on your way. So what do you figure is your optimal annual production from the space? Yeah, distribution will probably be like medical until a system gets in place that is more efficient. I emailed the LCB about the residence question and the response was clear. If it is an outbuilding that you are not living in then it would be considered okay by the state. Now the local zoning is another issue, but out of state control. So that means it is a possibility for my situation, depending on my local county zoning decisions.

Maybe I should ask a mod to move this to a different part of the forums....


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## SunJ (Sep 19, 2013)

Like I said, mustang, I envy you. I still don't have my land, but I do have this picture of the 4200 square foot facility I want to build! dee, I know you didn't ask me, but I'm basing my model on a self-imposed 99 plant limit for the first several runs. As for distribution, I plan to designate one day a week for delivery, since I'll be set up on a perpetual weekly harvest. As I understand it, we can't use anyone but ourselves or an employee to do the delivering. And since I'll be a one man show in the beginning, it's going to be me logging the miles.


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## Demurrer (Sep 22, 2013)

The license application window will be very short to prepare the application package. Especially the Ops plan for those who haven't done one before. I'm offering a 2 day workshop in Bellingham, Seattle, Vancouver, and Spokane on drafting the Business Plan. anyone interested can check out my website www.mjbusinessplan.com


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## Demurrer (Sep 22, 2013)

deebickle said:


> I think the LCB will give more guidance about what should be in the plan besides what's in the rules, but not sure.


The LCB is going to provide a template for the Plan. At a minimum it will require everything they made a specific rule about but it will also require some form of financial disclosure. I'm assuming it will be the same 4 financial statements that are included in a standard Business Plan but we'll know for sure on Oct 16th.


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## colonuggs (Sep 22, 2013)

just remember bros..... TAXES SUCK.

until the Feds change the marijuana from sch#1.... you will not be allowed any business expenses or tax deductions

As of yet Banks wont take marijuana money they closed business accounts related to the industry  So all cash


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## mustang519 (Sep 23, 2013)

Dee: I am glad to hear about the residence. I want to build a house on the property next year. I passed the building inspection on Monday, and have started the electric and water to building. Trenches are in, pipe and conduit in place. I will finish the wiring and plumbing next weekend. I too will stay under the federal minimum number of 99. Can't take that chance. I hope to produce .5 grams per watt to start. That would mean about 2 kilos per month. I hope to get approx. 50 lbs per year (indoors). I also plan to have a solid wall greenhouse (12 x 16) that should add approx. 15 lbs to the mix. If I can keep costs down this should provide a good income for mom and pop. So far on this project is has been all pop. I have been able to keep cost under control but the amount of man hours is double what I calculated. Good thing I started early. Keep moving forward!


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## deebickle (Sep 23, 2013)

Mustang - You are well along the road, but seems to me you are are maybe too far ahead. If the county or city you are in has not yet implemented marijuana zoning, what makes you think that the land you are building on will be in an approved zoning classification? Not trying to be on a downer, but when you apply to the LCB, the application will go to the local government for approval. If they say no due to zoning then the state won't issue license. At least that's my understanding of the process. I guess if you're in an agriculture zone, you might figure you'll be safe no matter what. But I would check with your county planning department.

As for the 99 plant thing, I think that is clearly off the table after the last DOJ memo, if you are following the state rules they are not looking at number of plants, period.

Demurrer - thanks for the link. Good idea to offer such a workshop. Can you tell me how a business plan differs from an operational plan? Seems like a business plan goes more into the financial side and the OP is more how things are going to be done.


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## PurpleBuz (Sep 23, 2013)

deebickle said:


> As for the 99 plant thing, I think that is clearly off the table after the last DOJ memo, if you are following the state rules they are not looking at number of plants, period.
> 
> .


Do not count on the 99 plant count to be ignored. Regardless of the memo, if the feds decide to target you (for whatever bogus reason) they will come after you, and the 99 plant count is still in the law.


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## deebickle (Sep 24, 2013)

Yeah, you're right, they can do what they want ultimately. But, under that reasoning, no one should get into 502 industry, because (regardless of 99 plant minimum sentencing) the Feds can bust your chops for any 'bogus reason', and deliver some severe penalties. A la Montana MMJ just recently. So why should anyone feel safe under 502?


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## PurpleBuz (Sep 25, 2013)

its a matter of managing risk. If you go large (100s of plants), the risks are much higher.


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## mustang519 (Sep 25, 2013)

I have thought about the county and what action they might take. I do not have to worry about city zoning.... out of any town. The property is zoned agriculture. The worry is that the county will pass a moratorium. I don't think they could change zoning that would be contrary to state law but I am no expert. Yes I am early but I want to be ready when the process begins. I have been planning this well over a year when passage of 502 looked promising. The good news is the property is worth more now than when I purchased it so even if the worst happens (denied) I can recover my costs. Several communities around this area are not going issue city business licenses so they will have no ties to a federally outlawed business. They plan on allowing the retailers with out a city license. Still up in the air. If I get a license then the state of WA will be my accomplice in breaking federal law and the state will be getting a cut of the profits, I hope this will keep the feds at bay, but I will not take a chance on a minimum sentence. Not my kind of fun. For me this is a calculated business venture. I will pull the plug when.... denied, rules make it cost prohibitive, new local regulations, etc.


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## deebickle (Sep 25, 2013)

Yeah, I'm with you both on this, I guess. Play it as safe as possible and be flexible. That's interesting, having the city basically ignore it to keep themselves from accountability. You should be fine with the ag zoning, I would think, unless they do the moratorium. Sounds like my county is going to come out with something by Oct. 1, which would be great for a little planning time, since you need an address in the application.


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## deebickle (Sep 28, 2013)

So the word is that my county is going to allow a 502 grow in residential zoning. Like it's no different than growing tomatoes, which is allowed in residential zoning. That would be great if it happens, I'll post when I hear the official word.

On another note I called my insurance agent to ask about getting insurance as a producer/processor, he said there was only limited for dispensary at this point. The LCB rules currently call for insurance, including *product liability*. Don't know who would issue that, or if they did it would be at high prices, as to make it unavailable. Might make it impossible for the little guy.


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## SunJ (Sep 29, 2013)

Check with Farmers Insurance.


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## deebickle (Oct 1, 2013)

That's my agent, Farmers. He checked other sources too.

On another note, this grow idea sounds good only if prices stay someplace reasonable. But I'm thinking of acres and acres and large greenhouses on the east side and cheap labor .... Any reason why the price won't sink way down there? A big operation could produce tons of bud outdoors. So that would change the economics of producing under lights, legal or not. Only thing might be if the quality goes downhill, might still be demand for indoor.

look at this photo from 420 magazine article.


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## SunJ (Oct 1, 2013)

That's no bueno! I was told back in June that they'd be able to help me. Now I have some calls to make...


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## deebickle (Oct 2, 2013)

Let me know if you find out something different. In all fairness though, it may just be since there are no final rules in place yet. They would be unwilling to underwrite anything until they know the lay of the land. Once the rules are finalized they might offer something. I would doubt that anyone would offer product liability for marijuana though, so hopefully that requirement will get changed.


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## Demurrer (Oct 7, 2013)

Business Plan is the 'bigger' document that includes more of the 'vision' stuff that investors and key suppliers look for. Operating Plan is the 'day to day' operations stuff and is usually a section within the Business Plan. Many people use the terms interchangeably unless there's a specific reason to use them more accurately. The WSLCB rules apply to stuff that usually goes in a Business Plan AND stuff that usually goes in the Operating Plan section of the Business Plan. So, I'm curious to see what the WSLCB's Operating Plan template looks like. The materials I'm preparing for the class can be used to prepare the full Business Plan. Once the WSLCB's Operating Plan template comes out (Oct 16th) I'll customize the materials to fit that template. So, from my workshop participants will have the 'Operating Plan' for the license application and the bigger 'Business Plan' for other uses.


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## Demurrer (Oct 7, 2013)

I did a quick google for marijuana insurance and there are a few companies that have been in the medical mj insurance business for awhile that will do product liability. Cannasure was one. That said, I think deebickle may be right that you won't be able to get a quote until the rules are final.


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## colonuggs (Oct 8, 2013)

*SEATTLE (AP)*  

Nearly a year after Washingtons voters legalized marijuana for recreational use, Seattles City Council has voted to set limits on where pot-related businesses can locate.

The council on Monday approved a zoning measure for marijuana grow operations, processing facilities and retail stores. It limits indoor grows to 20,000 square feet and allows them only in certain industrial areas.

Washingtons legal marijuana law already includes zoning requirements keeping the businesses away from schools, parks and playgrounds. Seattles measure additionally keeps them out of historic and landmark districts and residential areas.

Seattles ordinance also addresses medical marijuana operations in the city, making clear they will have to obtain state licenses if they want to continue operating past Jan. 1, 2015.

The state currently has no regulated medical marijuana system, but officials are considering ways to regulate medical marijuana so that it doesnt undercut recreational pot sales or prompt federal crackdowns. Recreational pot stores are expected to open by next summer.


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## colonuggs (Oct 8, 2013)

*Seattle City Council passes marijuana zoning rules*








*Related*

View Larger 

Seattle City Council passes marijuana zoning rules


By Graham Johnson
SEATTLE &#8212; 
The Seattle City Council approved a landmark zoning ordinance Monday after months of discussion. 

Because state law prevents pot businesses from setting up within 1,000 feet of schools, parks and day cares, they will be effectively confined to industrial land and some commercial areas.

The heaviest industrial areas near the Port of Seattle will be largely off-limits to pot growers after business groups raised concerns about traditional industry being priced out by marijuana businesses.

"Marijuana on a per-square-foot basis will probably generate more money than the Boeing 737 plant does," said Dave Gering of the Manufacturing Industrial Council.

"I think that's ridiculous," said Ben Livingston of the Center for Legal Cannabis. "I don't think pot growers are going to displace current port businesses."

Livingston has created detailed online maps showing where businesses can go, and charges for access.

Existing marijuana grows in the newly-prohibited zones will be allowed to stay, provided they are less than 5,000 square feet.

The new city ordinance sets the maximum size for marijuana growing operations at 20,000 square feet in some areas, even though the state will allow them as large as 30,000 square feet.

The city ordinance also requires medical marijuana businesses to comply with the new rules by January 2015 and obtain a state license.

Right now, there are no state licenses for medical marijuana. The state legislature is expected to take that issue up next year.

In the meantime, medical cannabis businesses are very concerned about the new ordinance.

Steve Sarich of the Cannabis Action Coalition was visibly angry as he gave public comments before the city council.

"You've declared war on the patients of the State of Washington and the patients of Seattle," Sarich told the council. "The four of you who are up for re-election, we'll be gunning for you. And the next election in 2015, we'll be gunning for the rest of you."

The council passed the zoning ordinance 8-0. Tom Rasmussen was absent.


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## GotAnyWeed? (Oct 22, 2013)

maybe someone can help me out with this. 
What if I just wanted like 5 plants in my house just for me. I won't sell and it won't leave my property really. I'll just smoke it and share it with friends whenevs. Do I need a license too??
I'm no different than a gardener who grows tomatoes for their salad. You know what I mean??


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## PurpleBuz (Oct 22, 2013)

GotAnyWeed? said:


> maybe someone can help me out with this.
> What if I just wanted like 5 plants in my house just for me. I won't sell and it won't leave my property really. I'll just smoke it and share it with friends whenevs. Do I need a license too??
> I'm no different than a gardener who grows tomatoes for their salad. You know what I mean??


Under 502 not allowed, and you won't be able to get a permit.

Currently you can get a medical recomendation and grow for yourself.

The Dept of Health, Dept of Revenue are recommending to legislature that medical home grows are eliminated. Sounds like new age communism to me.


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## GotAnyWeed? (Oct 22, 2013)

PurpleBuz said:


> Under 502 not allowed, and you won't be able to get a permit.
> 
> Currently you can get a medical recomendation and grow for yourself.
> 
> The Dept of Health, Dept of Revenue are recommending to legislature that medical home grows are eliminated. Sounds like new age communism to me.



Damn! I think in CO you can have like 6 plants. But I can be wrong. 
At least there's gonna be some weed shops for anyone 21 & over in like Seattle....or is that not really the case too??


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## deebickle (Oct 22, 2013)

Retail MJ stores will be allowed, 334 of them in the state, I think.


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## Blu Dream (Nov 1, 2013)

I just spoke to a Spokane Attorney who is in the process of helping future growers get set up and he indicated Spokane County and Stevens County are going to require the growing be done in Agriculture Zoned areas. FYI. Does anyone have an update on where a person can find insurance that would comply with the WAC?


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## deebickle (Nov 1, 2013)

yeah, I sent an email to the LCB and they sent me a list of companies that they think will provide the proper insurance:

*Washington State*
· Farmers Quincy
· Greenpoint Insurance Advisors LLC
· MarijuanaInsurance.net
· Premier Southwest Insurance Group

I talked with Doug Banfelder from Premier Southwest. Real nice guy, seemed like a straight shooter. He can get insurance that meets the regulations, and if you comply with some of their additional requirements (safe, etc.) you can get fire and theft coverage also. Haven't compared with anybody else yet. 

I think my county is going to allow producers to locate in residential 5 acre zoning, but nothing rock solid yet.


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## Dannoo93 (Nov 1, 2013)

Ya ur only gonna be getting like 4$ a gram as a producer and processer 

Dannoo93


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## deebickle (Nov 1, 2013)

Wish I knew what the price was going to be, would make some decisions a lot easier. lol

Really tho, free market, who knows where it will shake out, but probably won't hit a stable level for a few years. Nobody's setting the price, so the question is how efficiently can you grow quality - and still make it worth doing?


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## bird mcbride (Nov 2, 2013)

Here in Canada the government has decided on industrial mj. Two production licenses have been issued all ready. I've got the gears in motion. I've found someone without a criminal record who is willing to spearhead the application and I have another guy who has been turned down already and figures he can get it right the next time. I'm kinda hoping they score the right to produce. Iknow where I'll be working


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## colonuggs (Nov 6, 2013)

Apply for your marijuana business license November 18 through December 19, 2013Marijuana licenses *are not* distributed on a first come, first served basis. All applications received or postmarked by December 19, 2013 will be reviewed. Applications submitted after December 19 will be returned.

*Is there anything I should do now?*
If you are forming a corporation or limited liability company (LLC), you must register with the Washington Secretary of State's (SOS) office. Register now. The Liquor Control Board (LCB) will not issue a license to a corporation or LLC that is not registered with SOS as a domestic entity.

*How do I apply for a marijuana business license?*
To apply for a marijuana business license, you must file a completed:


Business license application
Marijuana license addendum (available November 18, 2013)
You must also pay all required application fees and your license application must be approved by the Washington State Liquor Control Board (LCB).


*How do I file?*
The fastest and easiest way to file an application is online.


*Online:*
On November 18, a link to the application will appear here. Pay using E-check of a MasterCard, Visa, or American Express credit or debit card. (Gift cards and refillable cards cannot be used.)
*By mail:*
The paper application will be available on this web page November 18. Applications must be postmarked no later than December 19, 2013. Pay by check, cashier's check or money order only.
*In person: *
The paper application will be available on this web page and at Department of Revenue offices starting November 18. You can drop it off, along with payment, at any Department of Revenue office. Pay by check, cashier's check, money order or cash only.

*What will it cost?*
All license applications must include:


A *$250 nonrefundable* fee for each marijuana endorsement you apply for (producer, processor, or retailer). 
A *$19 nonrefundable* fee for filing the business license application. 
A *$5 nonrefundable* fee for each trade name you register. 
Depending on your business, other fees (some or all nonrefundable) may also apply, such as:


A weighing and measuring device fee if you are determining the amount to charge based on weight
City license fee

*What are my risks?*
If you aren't approved for a license by LCB, you will lose any nonrefundable fees.

*Also, according to LCB:*


The number of retailer licenses is limited; if too many apply, a lottery will be held for the eligible applicants. 
Getting a license doesn&#8217;t guarantee that you can operate your business. Local laws may apply. LCB may issue a license even if the local authority has a marijuana moratorium in place. 
I-502 also limits the size of the canopy grown by all marijuana producers to 2 million square feet. If the qualifying applications for producers exceed that limit, each producer license issued will have the square footage reduced proportionately.
*
What else do I need to know?
*You should know:


Why the Liquor Control Board may deny an application.
Whether the local jurisdiction at your business location will allow marijuana businesses. Contact your local jurisdiction.
The distance restrictions for your business location.
The number of marijuana retailer licenses available in any city or county is limited. If the number of applications exceeds the licenses available, the Liquor Control Board will hold a lottery for the eligible applicants.
That no individual (principal) or business (entity) may have more than three marijuana licenses. Also, no individual or business can hold more than 33 percent of the retail licenses in any county or city that is allocated three or more licenses.
Retail marijuana licenses cannot be combined with producer or processor licenses. However, one owner may have both a producer and a processor license.
The LCB will approve or deny all completed applications submitted on time.
Information regarding medicinal marijuana can be found on Department of Health&#8217;s website.
*
When will the LCB begin issuing licenses?*
There is no timeline established for the issuance of licenses. Visit the LCB I-502 web page or join the LCB listserv for the latest information.

*What happens if I am approved for a marijuana license?*
You will receive an electronic billing statement requesting payment of the $1,000 license fee for each license. Applicants approved for both a processor and producer license will need to pay $2,000. This covers the license fee(s) for your first year of operation.

*See also:*



Get licensing contact info and forms
File a Business License Application 

Washington State Business Resource Guide







Plan for and pay your taxes: A new businesses&#8217; introduction to Washington State taxes (Department of Revenue video)


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## deebickle (Nov 6, 2013)

Anybody want to guess at how many grower apps the LCB will get in the 30 days?

I think it will be over 1000.


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## nyzhia (Nov 6, 2013)

Great info, im in seattle area and trying to get my ducks in line so i can get my producer and processor lic. from what ive read you have to have a location to gow at befor you can get your lic, thats whats killing me right now


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## Oldcourierguy (Nov 6, 2013)

nyzhia said:


> Great info, im in seattle area and trying to get my ducks in line so i can get my producer and processor lic. from what ive read you have to have a location to gow at befor you can get your lic, thats whats killing me right now


Just a location, not a signed lease to apply.


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## Oldcourierguy (Nov 6, 2013)

Link to the PDF they used at the recent seminars. Also the lcb said the video should be up next week.

http://www.liq.wa.gov/publications/Marijuana/Application_Process_Final.pptx


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## Two Year Old Sasquatch (Nov 8, 2013)

I'm in! My business plan is almost complete. I've defined all the regs I need and I've just started a forum for this very discussion. www.legalpotforum.com please join as I just started it up and I go through a lot of the questions. I have property and plan on two level 3 producer and one processor license. I am looking for anyone who has capital that wants to see my business plan. I'm also looking for an experienced OUTDOOR grower who has knowledge and experience growing in Eastern Washington. Bought my business license Green Source and other trade names. Let's do this thing!


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## Two Year Old Sasquatch (Nov 8, 2013)

You will need a complete operational set up before they'll honor the license. Before that they'll offer a commitment letter once you clear everything.


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## Two Year Old Sasquatch (Nov 8, 2013)

Probably a good guess. I'd say a bit more want to but once they read the WAC rules 60% will back out. More won't clear. Problem is they're putting a 2mil cap on production so my guess is everyone will be scaled back accordingly.


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## Two Year Old Sasquatch (Nov 8, 2013)

Insure Bud in Quincy. He's on my forum www.legalpotforum.com if you want to connect his membership is Insure Bud!


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## Two Year Old Sasquatch (Nov 8, 2013)

deebickle said:


> Yeah, you're right, they can do what they want ultimately. But, under that reasoning, no one should get into 502 industry, because (regardless of 99 plant minimum sentencing) the Feds can bust your chops for any 'bogus reason', and deliver some severe penalties. A la Montana MMJ just recently. So why should anyone feel safe under 502?


The feds have a hands off policy right now and as long as you keep it legit you'll be OK.


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## Two Year Old Sasquatch (Nov 8, 2013)

nyzhia said:


> Great info, im in seattle area and trying to get my ducks in line so i can get my producer and processor lic. from what ive read you have to have a location to gow at befor you can get your lic, thats whats killing me right now


I have acreage in Spokane and working on two Producer and one processor license. Message me if you like.


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## deebickle (Nov 10, 2013)

Other than what the regulations say directly, is there any other guidance from the LCB about what they are expecting to be in the Operating Plan? When I submit I would like it to be complete and thorough in their eyes.


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## deebickle (Nov 10, 2013)

Here's a youtube link that shows how to use the PICOL (Pesticide Information Center Online) database to find WSDA-approved pesticides for cannabis grown under I-502. You can look up by pest or whatever, and export to spreadsheet. Pretty cool, looks like mainly organic materials? Narrator's voice, lol, brings you back to high school.


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## Grassineed (Nov 13, 2013)

deebickle said:


> Alright, I hate the bullcrap and rules I see being proposed for Washington 502 adult marijuana use. But, I mean really, this is a chance to be a legal grower, pretty much a first in the world. Hard to pass up, and I think the rules might be doable. So I think I'll throw my hat in the ring and apply for producer/processor ($500 to apply), and $2000 for the two licenses. If I want to quit after one or two harvests, I should be able to cover costs. I want to keep it small, entire space needed would be about 1500 sq ft. My big unknown is our county zoning is undecided, if they don't come out with something soon, it'll be too late. I want to do it on my place, 20 acres of forestland with house. I don't know if the LCB would consider that as at a 'place of residence' or not. If they zone indoor growing in industrial only, then I'm looking at pretty serious rent, and hard to come by too, with everybody and their cousin thinking like me.
> 
> Anybody else thinking of doing this please join in with ideas. Like the required operational plan that needs to be included with the application. I think the LCB will give more guidance about what should be in the plan besides what's in the rules, but not sure.
> 
> ...



HI,
Im planning on moving to seattle and start a grow operations. Would you be able to assist with information?
im planing to rent a home would that be safe with the landlord?
if you could also give me some more info on:

electricity problems?
growing in basement or no basement?
And ways to start the grow operation, that'll be great thanks.

Basically as much info as needed to start my own grow operations in a rented home.
Thank you so much


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## Dannoo93 (Nov 13, 2013)

Grassineed said:


> HI,
> Im planning on moving to seattle and start a grow operations. Would you be able to assist with information?
> im planing to rent a home would that be safe with the landlord?
> if you could also give me some more info on:
> ...



Dddummmbbbbb asssssss ....how bout u use google and read up on wadhington laws u lasy fuck 


Dannoo93


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## Stegjven (Nov 18, 2013)

I guess if you're in an agriculture zone, you might figure you'll be safe no matter what. But I would check with your county planning department.


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## profoundstoner (Nov 18, 2013)

Dannoo93 said:


> Dddummmbbbbb asssssss ....how bout u use google and read up on wadhington laws u lasy fuck
> 
> 
> Dannoo93


Damn, why you no nice??


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## colonuggs (Nov 18, 2013)

Before you even apply to get your mj license... you have to have a business address in a zoned area with a lease agreement and carry liability insurance

You also have to present your business plan to the LCB ..... they have to approve it

OH yea 1 other thing ..... Plan on being audited by the IRS....Lifestyle audit they call it.

No grows in homes...police, LCB or a agriculture agent are granted entry at any time without notice during business hours


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## mustang519 (Nov 24, 2013)

Application is in..... now time to jump thru some hoops. You do not need insurance to apply but will it need before operation starts. whoot whoot


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## deebickle (Nov 24, 2013)

Do you know anything about privacy of financials and location? I wonder if that is open to public access...


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## mustang519 (Nov 26, 2013)

I don't know for sure, but I would think all of that will be public record. They post in the local paper when applications for liquor license are pending. Part of doing business.


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## PurpleBuz (Nov 26, 2013)

deebickle said:


> Do you know anything about privacy of financials and location? I wonder if that is open to public access...


privacy ? what privacy ? if you applied everybody that cares knows.

http://liq.wa.gov/records/frequently-requested-lists

glta


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## deebickle (Nov 27, 2013)

Hmm, yeah, I'm on the listserv and got that too. So location being public kind of makes sense, but really not. The state is giving anyone the information of where the Tier 3 growers are, and everybody else. For 30,000 sq ft at say 30 grams/sq ft that is over 2 million dollars sitting there at harvest time (at $1200/lb). And you can't have firearms involved for protection. Methinks there be some danger for those going big.

But is the operating plan and financial info part of public record also?


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## mustang519 (Nov 27, 2013)

Thanks for the link purplebuz. I found myself on the list. I also found out today, that Grant county is not going to oppose the process. Wow, I do believe this is going to happen. I have to get my ass in gear and get the rooms finished. Full speed ahead.


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## colonuggs (Nov 30, 2013)

mustang519 said:


> Thanks for the link purplebuz. I found myself on the list. I also found out today, that Grant county is not going to oppose the process. Wow, I do believe this is going to happen. I have to get my ass in gear and get the rooms finished. Full speed ahead.


Call me when the tax man audits you..
Don't take any business tax deductions


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## deebickle (Dec 1, 2013)

Why do you say that, about not taking any business tax deductions? The IRS 280E clause does nail a business for expenses, but not for cost of goods sold (COGS). So for a producer, almost all of the business expense can be allocated to COGS. For a retailer, it's going to be tougher. Bad enough to make it just not work at all, unless something changes. We'll have to wait and see if the IRS or congress will give something up.


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## colonuggs (Dec 2, 2013)

It doesn't matter if your a grower, producer or retailer ...you still have to have licensed address with all required security right?

paying rent ??? have any employess? that's not deductible

I'm looking at 8000 sq ft warehouse @ $4000 month thats almost $50K out my pocket for the year...plus all utilities

then 25% taxes to the state plus B&O and 30% to the Feds shittttt what we get to keep out of a $1?? .25......(End Rant)



> write-offs disallowed by the IRS include standard operating costs such as rent, utilities, payroll, employee health insurance and licensing fees.


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## deebickle (Dec 2, 2013)

Colon, I think you have it wrong. Check out what Cost Of Goods Sold(COGS) means. Here's the deal - the IRS has allowed cannabis businesses to deduct COGS despite the 280E clause. From the Forbes article: "What about the cost of the actual illegal product, the marijuana? Interestingly, _that_ was okay. For purposes of figuring the tax, it was considered the cost of goods sold and therefore properly an adjustment to income &#8211; not a deduction or credit subject to §280E. The IRS allowed it."

So this means for a producer, virtually all your costs (rent, labor, insurance, materials, utilities) are all allowed expenses, because they are required to produce your goods. Your delivery, marketing and sales cost are not allowed, from what I understand, but those will be a small percentage. So a grower is good to go on that front.

For a retailer, the cost of purchasing marijuana would be allowed, but labor, insurance, etc. are not, because they are not part of a retailer's COGS. Basically, that kills the retail business, if you can't deduct those expenses you run in the red. That's why I was saying something in the regulations have to change or it won't be a viable business model. This is explained in the consultant's 'white paper' on the LCB site.


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## colonuggs (Dec 2, 2013)

um.... no haborside from California was fined MILLIONS by the IRS because they took these deductions Im talking about

Dispensaries run by cost of goods sold or non profit.. they purchase goods, sell them at a higher price and are only responsible for taxes on the difference

but they can NOT take normal deductions that ALL legal businesses can Federally




> SAN FRANCISCO -- The federal government has found a new weapon in its war on marijuana &#8211; the tax man.
> 
> A San Francisco Bay area medical marijuana dispensary that promotes itself as the world's largest has been hit with a $2.4 million tax bill following an audit by the Internal Revenue Service, the dispensary founder said Tuesday.
> 
> ...


ITS TIME FOR THE FEDS TO CHANGE LAWS


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## deebickle (Dec 2, 2013)

umm... right, think that's what I just said. Laws have to change for retailers. Growers have different situation.


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## colonuggs (Dec 2, 2013)

deebickle said:


> umm... right, think that's what I just said. Laws have to change for retailers. Growers have different situation.


 it dont matter be it a grower processor or retailer.... they are all in the same boat when it comes to taxes and deductions until the feds change


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## deebickle (Dec 3, 2013)

Well, I don't claim to be any expert, but at the risk of repeating myself:

*So this means for a *producer*, virtually all your costs (rent, labor, insurance, materials, utilities) are all *allowed* expenses, because they are required to produce your goods. Your delivery, marketing and sales cost are not allowed, from what I understand, but those will be a small percentage. So a grower is good to go on that front.

From the BOTEC white paper 1 on the LCB site, page 4:

*We	have	also	assumed	that	a	minimal impact	of	IRS	Section	280E,	which	generally	allows	most	expenses	for	producers	since	most	of	the	expenses	may	be	properly	treated	as	
Cost	of	Goods	Sold. Delivery	and wholesale	selling	costs	are	not	very	material	to	the	overall	

operation. 

Seems pretty clear that producers aren't in the same boat as retailers in regard to IRS Section 280E. Not that there aren't plenty of other problems.


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## PurpleBuz (Dec 3, 2013)

I believe the IRS ruling as to what includes cost of goods for a grower has not been tested. There are a lot of gray lines as to what would be cost of goods versus general business operations\expenses. For example is the delivery cost of the wholesale product a cost of goods or a general business expense\deduction. The only consistent modus operandum for the IRS is to collect MORE money, by any practical legal means possible.

In the past the IRS has also been used by the feds to crack down on what the feds think are bad enterprises. I expect that to be true for growers of Cannabis, until its removed from Schedule 1. In this regard Cannabis growers are more akin to bootleggers during prohibition. 

Do you really want to test the IRS to see if they come after you or not ? You do realize that one of the recent fed busts of dispensarys included IRS agents ?


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## deebickle (Dec 5, 2013)

What are you trying to say?

Kind of confusing.

I very specifically stated what has happened previously with the IRS regarding allowable exemptions.

I am very clear in stating that producers and retailers are different.

Am I trying to 'test' the IRS in being a producer and claiming all allowable cost of goods sold? What does that mean?

Why don't you address the issue instead of going off on some tangent?


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## PurpleBuz (Dec 6, 2013)

deebickle said:


> What are you trying to say?
> 
> Kind of confusing.
> 
> I very specifically stated what has happened previously with the IRS regarding allowable exemptions.


show me where the IRS made a judgment that the various deductions are allowed for a grower of cannabis as a part of the cost of goods.
Until the IRS actually states that it is an untested ruling.

Even the white paper that you cited "ASSumes"

just saying ... thats not a tangent.


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## deebickle (Dec 6, 2013)

Yeah, the white paper is kind of bullshit, but they are making assumptions based upon what the IRS has done in the past. You want to see where the IRS made the judgement look no further than the high profile Harborside itself. See the link to the Forbes article I put up earlier or just google it. In the Harborside case, the IRS allowed the cost of goods sold as a deductible expense. In the case of a retailer/dispensary, you're screwed, because all of your other expenses aren't allowed. If you are a grower, 95% of your expenses are under the cost of goods sold category, so you can survive with that.

But anyway, the issue is that the IRS needs to change the 280E clause or the Feds need to get cannabis off the Schedule 1 list, or the retailers won't have a viable way to make it in Washington. Seems to me.


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## PurpleBuz (Dec 6, 2013)

the harborside case says NOTHING for a grower. while its arguable that cost of goods should include growing costs, there is a lot of grey in what the IRS will actually allow for a grower.

Its actually clearer for a retailer now and easier to run a business because of harborside, since its pretty easy to show that if they paid X dollars for the product that that is their cost, and they know what will be tax deductible, and thats what the IRS has made an actual ruling.


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## deebickle (Dec 6, 2013)

yeahh, right, okay

It's obvious that you know what's going on...


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## Subu (Dec 7, 2013)

Demurrer said:


> The license application window will be very short to prepare the application package. Especially the Ops plan for those who haven't done one before. I'm offering a 2 day workshop in Bellingham, Seattle, Vancouver, and Spokane on drafting the Business Plan. anyone interested can check out my website www.mjbusinessplan.com


Get a job.


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## mustang519 (Jan 19, 2014)

Application and all supporting documents are in. Finger prints submitted. County has approved us and our location. I am ready to get this show on the road.


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## PurpleBuz (Jan 20, 2014)

good luck let us know how it goes!


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## colonuggs (Jan 24, 2014)

City/county bans, moratoriums and zoning for marijuana businesses http://blog.seattlepi.com/marijuana/2014/01/14/bans-moratoriums-and-zoning-approvals-for-marijuana-businesses-as-far-as-we-know/#18413103=0&18853101=2

A lot of Bans


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## Eat Your Weedies (Feb 2, 2014)

I applied for a producer's license and expect a phone call from the LCB sometime this month. They will be asking questions to see if I know what the hell I am doing and what my general business plan is for my small tier 1 operation If I pass that muster they will almost certainly be issuing me a license DESPITE my county's zoning objections. They have been very clear that zoning is not their problem .Some 66 of us applied for a producers license in my county and 64 have been zoned out. Not a single tier 1 applicant qualifies
BUT here's the deal. Violating a zoning ordinance is no big deal. I intend to get a wholesale nursery business license- perfectly legal where I live- and intend to tell the county-- if they ask-- that I fully intend to RELOCATE since they do not want me around, but in the meantime, I am going to operate my wholesale nursery to make a living --- and to pay for the relocation that I expect to take a year. Hence my high power bill because I am growing BASIL inside my facilty
And even if caught the county merely shoots itself in the foot. Why? Because if they can somehow PROVE that you are growing pot - requiring a search warrant-- the only consequence is that you must agree to quit, but you can do so claiming mitigating circumstances-- and that means it is going to cost the county a lot in court , win or lose against dozens of law suits. No fine or jail time for the offender, again if he agrees to quit. So why NOT operate until caught And the Big Guys, the Tier 3 dudes? The max fine is $250 a day-- AFTER a citation has been issued-- and they will literally just LAUGH and pay it! So why am I making this known. Because the more people that do what I do , the longer it will take to catch us. Just go steath like always, quiet fans charcoal filter . Got a zoning problem? Get a wholesale nursery license and lie through your teeth. THEY are not playing fair, why should you


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## Eat Your Weedies (Feb 2, 2014)

Will or can they get a search warrant for a mere zoning violation. The usual procedure is to send out an investigator to catch you in the act of operating an illegal business. But if you go stealth and there is no noise or odor-- and you have a wholesale nursery license to explain your high power bill -- if they can even obtain that--- he is going to sense nothing out of the ordinary by which he can issue a citation. Tell me where I am wrong so I can prepare


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## PurpleBuz (Feb 2, 2014)

Eat Your Weedies said:


> Will or can they get a search warrant for a mere zoning violation.


if you are permitted 502 you have given up the requirement for a search warrant to the grow premises. 
You are also already on a list that is available to anyone including the county. If they care they can check everybody on that list for zoning violations.


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## Eat Your Weedies (Feb 2, 2014)

PurpleBuz said:


> if you are permitted 502 you have given up the requirement for a search warrant to the grow premises.
> You are also already on a list that is available to anyone including the county. If they care they can check everybody on that list for zoning violations.


 Once again will it be worth their time and effort to shut me down given all the potential lawsuits over it, and NOTHING happens to me if caught. And I waive a right to a search warrant by the LCB, not the county that is now the LCB's mortal enemy. THEY even now say the obstructionist counties are DIRECTLY responsible for a continuation of a black market. IF I claim its a wholesale nursery they have to go though the expensive motions to prove I am not- The LCB could care less as long as I pass inspection
FIRST they have to have a REASON to believe I am violating a zoning law- and what would that evidence be?? The whole idea is to get a year's worth of sales out of it before being forced to shut down --150k is better than nothing at all
I am going to TRY no matter what the consequences. In fact I look forward to the game


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## Eat Your Weedies (Feb 2, 2014)

Another option is to , just like the big Guys are going to do, just go ahead and PAY the $250 a day fine as a cost of doing business. My production cost is going to be around $12 an ounce thanks to no labor costs- and I can prove it on paper. I could harvest 20- 24 ounces a week off of 6 plants-- or a say $3000 a week in revenue minus $1750 for the weekly fine- equals ony about $1000 a week in profit but still not a bad SS supplement


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## Eat Your Weedies (Feb 2, 2014)

I am optimizing my space by going double decker using short variety plants. T5HO. 8 bulb 432 watt fixtues. Potting soil. In cubicles. Been there done that loved the results. Now to repeat on a larger scale
The ONLY costs are power, the fees, insurance, ADT, and after buying seeds once, a potting soil of choice-- after a $4500 investment in lighting- not spending that until I have a license in hand


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## Eat Your Weedies (Feb 2, 2014)

My understanding is that final inspection by the LCB will mainly involve seeing that you have an operating security system in place- cameras and and an alarm system-, verifying yoiur floor plan and that you are tied into their tracking system with your computer. Along with a double check of the 1000 foot rule
When the county comes snooping around is anyone's guess


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## Eat Your Weedies (Feb 2, 2014)

Over 1000 applied for tier 3. That's a minimum of 10 million square ft. They are permitting only 2 and even if they double it to 4, they are obviously going to have a lottery to weed the tier 3s out. And only about 1 in 10 will get a retail license. The tier 1 dudes should make it through just fine. They will hardly add to the glut with only 600,000 sq ft of canopy applied for in comparison with tier 3s minimum of 10 million. Oops gotta go. Super bowl time. Go Hawks!


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## colonuggs (Feb 2, 2014)

Eat Your Weedies said:


> Another option is to , just like the big Guys are going to do, just go ahead and PAY the $250 a day fine as a cost of doing business. My production cost is going to be around $12 an ounce thanks to no labor costs- and I can prove it on paper. I could harvest 20- 24 ounces a week off of 6 plants-- or a say $3000 a week in revenue minus $1750 for the weekly fine- equals ony about $1000 a week in profit but still not a bad SS supplement


Your forgetting about our taxes .....what % are you going to be paying to the State 25?..... how much to the FEDS?? 28%?

what about rent and lights....costs us $2 a g to manufacture


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## Eat Your Weedies (Feb 4, 2014)

colonuggs said:


> Your forgetting about our taxes .....what % are you going to be paying to the State 25?..... how much to the FEDS?? 28%?
> 
> what about rent and lights....costs us $2 a g to manufacture



The 3k on 24 ounces a week assumes a wholesale price of only $125 an ounce-- before tax- a reasonable assumption
As for the Feds, probably closer to 15-18%
As for rent, its part of my existing mortage, no extra cost
Power consumption will be an about 28.5 cents per gram-- or $8.04 an ounce--and THAT is assuming 24 hr lighting in the veg rooms with 8 bulbs per fixture. I COULD go 18/6 and only 6 bulbs in the veg room and still get 40- 45 watts per square ft ( 61 in the bloom rooms is the average assuming 8 bulbs)


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## Eat Your Weedies (Feb 4, 2014)

Here's the math for my power bill
POWER CONSUMPTION FOR 3 VEGETATIVE CUBICLES AND NURSERY CUBICLE $3724
12 lights at 432 watts each = 5.184kw/hr x 24 hours a day = 124.416 kwh per day x 365 = 45411.84 kwh per year
assuming 8.2 cents per kwh that = $3724 a year


Note: if 18 hour days were used instead of 24 hour days, the bill drops by 16.67% to $3102
if 6 bulbs are used instead of 8 the bill drops by 25% to $2326


POWER CONSUMPTION FOR 10 BLOOM CUBICLES: $3054
20 lights at 432 watts each =8.64 kw/hr x 12 hrs a day = 103.67 kw/h per day x 365 = 37839.55 kwh per year x .082 cents per kwh = $3054 per year

ventilation adds about another $1500
It all adds up to about $8400 a year in power to produce 1040 ounces a year -using a reasonable assumption of about 3.3 ounces per plant


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## colonuggs (Feb 4, 2014)

Eat Your Weedies said:


> The 3k on 24 ounces a week assumes a wholesale price of only $125 an ounce-- before tax- a reasonable assumption
> As for the Feds, probably closer to 15-18%
> As for rent, its part of my existing mortage, no extra cost
> Power consumption will be an about 28.5 cents per gram-- or $8.04 an ounce--and THAT is assuming 24 hr lighting in the veg rooms with 8 bulbs per fixture. I COULD go 18/6 and only 6 bulbs in the veg room and still get 40- 45 watts per square ft ( 61 in the bloom rooms is the average assuming 8 bulbs)


remember Federally your not allowed the normal business deductions that business owners get until the FEDs reclassify 

Existing mortgage...you growing from home??

Washington State has Puget Sound Energy with cost of .9 cent a kwh until you hit 1000 then its .11...I go .10 average

Im still trying to figure it all out myself


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## Eat Your Weedies (Feb 4, 2014)

colonuggs said:


> remember Federally your not allowed the normal business deductions that business owners get until the FEDs reclassify
> 
> Existing mortgage...you growing from home??
> 
> ...


 I am growing in a converted outbuilding not attached to my home- so no 4th amendment conflicts as long as I use the facility strictly for growing pot-- and give them a key probably so they can conduct a surprise visit whenever
Puget sound energy schedule 8 applies since the power usage is above and beyond the normal residential usage and that averages 8.2 cents / kwh


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## Eat Your Weedies (Feb 4, 2014)

Another thing I am doing is not choosing a name for my business that obviously shows that I am growing pot. When I go to the bank to open a business checking account, I will simply tell them I am a wholesale nursery, and my business name will back that up-- Northern Lights nursery. 
I am also opening up an entirely different business -a wholesale nursery not growing pot-- for a lousy $34 fee and will call it Northern LIGHT Nursery. When the County eventually comes snooping around to see what I am doing with my LCB license, out comes the Northern LIGHT nursery paperwork to show that I am perfectly legit, if they knock on the door-- maybe even give them a free basil sample 
I had a girlfriend once who was an insurance agent and she said I had the perfect mind for committing insurance fraud-- so be it. The County no play fair, neither do I


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## Two Year Old Sasquatch (Feb 6, 2014)

deebickle said:


> So the word is that my county is going to allow a 502 grow in residential zoning. Like it's no different than growing tomatoes, which is allowed in residential zoning. That would be great if it happens, I'll post when I hear the official word.On another note I called my insurance agent to ask about getting insurance as a producer/processor, he said there was only limited for dispensary at this point. The LCB rules currently call for insurance, including *product liability*. Don't know who would issue that, or if they did it would be at high prices, as to make it unavailable. Might make it impossible for the little guy.


Got my insurance through Mosaic. about $90 a month. www.legalpotforum.com


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## Two Year Old Sasquatch (Feb 6, 2014)

Eat Your Weedies said:


> Over 1000 applied for tier 3. That's a minimum of 10 million square ft. They are permitting only 2 and even if they double it to 4, they are obviously going to have a lottery to weed the tier 3s out. And only about 1 in 10 will get a retail license. The tier 1 dudes should make it through just fine. They will hardly add to the glut with only 600,000 sq ft of canopy applied for in comparison with tier 3s minimum of 10 million. Oops gotta go. Super bowl time. Go Hawks!


According to my license investigator they'll make an across the board reduction by % of actual canopy. He also stated they can't make that determination until a year or more passes cause they don't know exactly what the canopy is.


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## Two Year Old Sasquatch (Feb 6, 2014)

deebickle said:


> Let me know if you find out something different. In all fairness though, it may just be since there are no final rules in place yet. They would be unwilling to underwrite anything until they know the lay of the land. Once the rules are finalized they might offer something. I would doubt that anyone would offer product liability for marijuana though, so hopefully that requirement will get changed.


The only insurance required is (1) Commercial general liability insurance:


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## Eat Your Weedies (Feb 7, 2014)

I got a call from the LCB asking me the size of my Tier 1 canopy-- it's far less than the 2000 sq ft allowed so if they reduce it down by 80% to 400 sq ft max it's no big deal for me-
Just waiting now for one of the biggest phone calls of my life. It is a weeding out process and once you get that email with the documents you need to fill out, you are almost home free. I'm expecting it by the end of the month since they are doing producers first


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## Eat Your Weedies (Feb 7, 2014)

I asked the LCB last summer when I started converting if my non attached outbuilding was to be considered part of my residence and they said no, as long as you are not LIVING in it and use it strictly for business you should be fine. I think one more stipulation is that they have easy access to it and that the facility is not locked behind a private gate. We shall soon see if that is so


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## Eat Your Weedies (Feb 7, 2014)

Well well well! A WA House bill that would ban bans on pot passed a bipartisan commitee 9-0 and there is a public hearing on it today
Basically any mortorium or zoning ordinance concerning pot businesses become null and void and they must treat marijuana growing just like any other business.That means pot could be produced in Rural Residential zones in Kitsap county because "agricultural uses" are allowed there
They have already done this in King and Spokane Counties- so you can legally grow pot on a multitude of lots on Vashon Island but nowhere on neighboring Bainbridge Island


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## Eat Your Weedies (Feb 7, 2014)

One nice thing about my legislature-- it only lasts two months so everyrthing gets done by the end of Feb. no keeping you hanging on for months and months like congress does. The ban on pot bans WILL have an up and down vote by the end of this month and it becomes effective IMMEDIATELY if passed. And I loved their logic-- Preemption of the cities and counties by the State may well BE illegal, but that will take years for the courts to decide but in the MEANTIME they have no time to diddle around on 502 or it fails. So all the whining this afternoon by the cities and counties about their violated zoning rights will go nowhere. THEY will have to take the State to court and not the other way around


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## Eat Your Weedies (Feb 7, 2014)

Two Year Old Sasquatch said:


> The only insurance required is (1) Commercial general liability insurance:




Why do they need to know you are growing pot? Why mention it? Just say you are a wholesale nursery​


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## SunJ (Feb 13, 2014)

Congrats to all those who got their light hoods all in a row in time to fire up an application! Sucks that I won't be joining you, but it just wasn't my time yet. I still have a lot to learn from about this amazing plant, but I will be joining you guys in the big leagues soon!


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