Grow Op Farms in Spokane Valley expanding its already-huge marijuana business

Workers clad in scrubs scurried last week between dozens of rooms in an old furniture distribution warehouse in Spokane Valley, site of Eastern Washington’s largest legal marijuana farm.

From seed to the production of cannabis-infused sweets, one feature is of primary concern to Grow Op Farms chief executive and co-founder Robert McKinley: grime.

“Cleanliness is godliness to us,” said McKinley, whose facility sells millions of dollars worth of weed each year. “We have 60 people whose only job it is to clean.”

He’s a former marketing firm owner who began growing the drug at the suggestion of friends in September 2014.

Despite conflicting signals from Washington, D.C., the state’s legal marijuana industry continues to grow as it approaches the four-year anniversary of recreational sales. In that burgeoning market, Grow Op Farms is among the largest players, employing more than 400 people and expanding in warehouse space that previously housed another, now-defunct grow, Farmer J’s.

“You always want to be the biggest, but we didn’t set out to make that our goal,” said McKinley, whose products, marketed under the “Phat Panda,” “Sticky Frog” and “Hot Sugar” labels, sell in about 10 retail shops around Spokane County.

The 80,000-square-foot facility makes about 200 deliveries to stores per week. At any given time, hundreds of potential marijuana strains are being tested for market viability. Workers use a food-grade ethanol extraction process to create waxes, oils and other products under the “Sticky Frog” line, and more than a dozen employees fill a working kitchen that produces cannabis-infused sugar, caramel and powders.

This week, stores will receive a new product in conjunction with a California-based candymaker, Flav, that features Grow Op-grown cannabis infused into the products.

McKinley and his wife, Katrina, have been featured in several trade magazines touting their products and the highly automated system they say gives their marijuana a consistent quality retail stores and customers want.

As he toured his facility last week, down hallways lined with nondescript white doors that open into flowery, pungent rooms filled with the more than 100 varieties Grow Op is producing at any given moment, Robert McKinley stopped to point out lighting systems, soil types and – most importantly – an even canopy of the once-illegal plants.

“That’s super important, that they all have the same height,” McKinley said. “You don’t want any stragglers.”

All processes at Grow Op Farms are built for speed and efficiency, he said.

The McKinleys got into the business pushing a price point for a gram of weed they said would get them onto shelves quickly, and other growers appear to have followed suit. The same gram of marijuana that sold for $25 that first day of sales is now down to an average statewide of around $7, according to the Washington Liquor and Cannabis Board, with taxes included.

That decline in price has come with some concern among outfits much smaller than Grow Op’s that, coupled with additional fees for air pollution monitoring and other costs, could put them out of business.

Sam Calvert, who has owned and operated Green Star Cannabis on Division Street near downtown Spokane since August 2014, said he doesn’t stock Grow Op’s products in part because of its mass production model.

“It’s just the new norm. It’s cheap, it’s just pot, it doesn’t have anything special about it,” Calvert said. “Those people are really good at branding and marketing.”

Other retailers said Grow Op provides some of the most popular products on their shelves.

“I think we do a solid, almost like 10 percent of their business,” said Joe Brooks, a shift manager at Greenlight, another retailer that is just north of the train tracks from Grow Op’s operation. “They have a ton of strains. A lot more than the average producers in the state.”

Top sellers are Golden Pineapple, a sativa-dominant hybrid flower that Robert McKinley received a trademark for earlier this month, and OG Chem, Brooks said.

Kevin Oliver is a large-scale outdoor grower who competes with Grow Op under the brand name Washington’s Finest Cannabis. He’s also executive director of the state’s chapter of the National Organization for the Reform of Marijuana Laws, and said the push for lower prices is a consequence of legalization.

That a gram of marijuana now earns a producer or processor around $2 in wholesale transactions, down from about $4 four years ago, shouldn’t be a surprise to businesses, he said, noting that industry experts were predicting that price point in 2009.

“We have about 200 or 300 wineries here in Washington state,” Oliver said, suggesting that the rules in place for pot businesses would likely yield a similar figure in that industry. “We have over a thousand (marijuana) producers and processors. There’s going to be a shearing wind, and I’m surprised it’s taken this long.”

Robert McKinley said he believed there would continue to be a market for smaller growers in Washington state, as long as they’re selling a marketable product. Grow Op already has sale orders for all the flower they grow, and until recently were operating at a deficit of product, he said.

“I think there’s a place for the small grower, if they have relationships where they can’t grow enough,” McKinley said. “Their product is always sold out, too, if they’re growing good product.”

Katrina McKinley agreed.

“There’s a stigma, but you can’t get into everybody’s head,” she said. “You can’t change everybody’s mind.”

The McKinleys were fortunate to have success with their previous marketing firm, which allowed them the capital to get started growing on a large scale. Robert McKinley was quick to point out that just because the company brings in a lot of money doesn’t mean they’re banking massive profits, noting that the company’s payroll is roughly $1 million every month.

“The crazy thing about this industry is, even us, we’re still running paycheck-to-paycheck,” he said.

One of those workers is C. Brooke Smith, director of propagation for the company. Smith oversees the “mother” plants, stalks that are not allowed to flower but provide the clone plants that eventually fill the grow rooms and produce the pot available on store shelves.

Smith, a manager by training but with a background in horticulture, was hired by Grow Op Farms three years ago on April 20, the “420” holiday generally observed by marijuana enthusiasts.

“It was fate,” said Smith, who previously voted against the initiative that made marijuana legal but who now appreciates the plant and its growing process. “I never thought I’d be doing this, but I’m so happy.”