Pot producer on San Juan closes down

At the height of production, San Juan Sun Grown had as many as 16 employees. Now, it has none.

At the height of production, San Juan Sun Grown had as many as 16 employees.

Now, it has none.

Besieged by lawsuits and faced with a new round of regulatory hurdles, the embattled marijuana producer shut down “active operations” at its westside facility on San Juan Island in mid-December. Company owner David Rice said the cost of looming legal battles and weight of regulatory uncertainty proved too much for the fledgling enterprise to overcome.

“We are in the process of transition and have laid off our San Juan Island production staff,” he said.

Meanwhile, the San Juan County Council on Monday held the first of two workshops in which it will gather information to consider whether to impose a six-month “emergency” moratorium on the processing of land-use and building permits for marijuana-related facilities. The potential of a moratorium follows an outcry by some islanders and concerns raised by several council members that local rules on agricultural uses are insufficient to safeguard against impacts of pot production’s new frontier. The second workshop is slated for Jan. 26.

In the meantime, applications for agricultural-use permits will continue to be evaluated under rules as they exist today, according to Sam Gibboney, director of the San Juan County Community Development and Planning Department.

“We’ll be working with the council and waiting on its direction in evaluating what changes, if any, are needed,” Gibboney said.

In early December, the county hearings examiner overturned San Juan Sun Grown’s land-use permit and revoked its building permit as well, ruling that county planners erred by not adequately evaluating impacts of the facility on surrounding properties. In the decision, prompted by an appeal filed by neighbors of the Mitchell Bay area grow operation, the examiner cited noise, odor, traffic and pesticide use as the kind of impacts that required better evaluation.

Friday Harbor-based attorney Douglas Strandburg, representing neighbors of the marijuana-grow facility, said the lawsuit over the use of Fieldstone Stone Road, a privately owned and shared gravel driveway, will proceed even if the operation is said to have shut down. The dispute centers on an easement that reportedly prohibits commercial use of the shared road and, Strandburg notes, no assurances have been given that Sun Grown’s commercial activity has ceased.

“This is not about a marijuana operation,” he said. “It’s about an easement for use of the road.”

Rice said San Juan Sun Grown’s products were well-received and the company gained a foothold in the marketplace in the first few months since its business license was approved by the state Liquor Control Board. It began actively marketing and delivering island-grown products to various retailers, including Orcas Island’s Token Herb, the only retail pot shop open for business in the San Juan Islands.

“In the short-term it’s not an issue for us on the retail side,” Token Herb owner Theron Soderlund said of Sun Grown’s demise. “But we do have a severe issue with any county-wide moratorium. It’s impacting our economy, not just us. Employees, taxes and the economy, all of it. There are already regulations in effect that mitigate impacts.”

The process of creating the marijuana-grow operation, situated on a one-acre parcel of a 76-acre farm owned by Jenny Rice, sister of David Rice, began nearly two years ago. It’s one of three marijuana production facilities on San Juan. David Rice said the company invested nearly $1.5 million into building the facility and other business-related expenses, like paying contractors and wages, between August 2013 and August 2014.

Still, he said the prudent course is to shut down the Fieldstone Road facility given the facility remains only half-built (with only four of would-be nine greenhouses in operation), that new hurdles would have to be met because of the hearings examiner ruling and the formidable costs of fighting the neighbors’ lawsuits.

A legal defense has recently been created to aid Jenny Rice in her courtroom battle, her brother said.

While the legal battle over use of the shared road may be unique, Rice said the county’s regulatory turnabout remains hard to swallow.

“We felt comfortable moving forward on a 76-acre property that’s zoned for agricultural use,” Rice said. “The planning department was clear with us that we’d be treated as agriculture. The idea that you grow a crop and nobody will be able to smell it, well, it’s just so onerous.”