The politics of pot: Ballot initiatives on marijuana could cost $40 million in 2016

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(Photo credit: Alexodus/Flickr)

Ohioans will vote this November on a constitutional amendment to legalize marijuana now that a group backed by cannabis-industry speculators has collected enough signatures to put the issue on the ballot, the office of Ohio Secretary of State Jon Husted announced Wednesday.

Ten investment groups put up a combined $3.4 million to bankroll the initiative through a state-level group called Responsible Ohio, records show. In addition to legalizing the use of marijuana for adults over 21 and for medicinal purposes, the constitutional amendment would limit marijuana growing to just ten plots of land throughout the state. The investment groups backing the amendment own or hold options on all of that land.

As the nascent cannabis industry becomes more involved in shaping the laws under which it will operate, a mix of traditional reformers, cannabis speculators and grassroots activists in as many as nine other states are also exploring plans to put initiatives on the ballot in 2016. And with candidates from both parties discussing drug policy reform at the presidential level, it’s clear that a massive change in law, culture and business is already underway.

Initiatives like the one in Ohio, which set the precedents that state and federal lawmakers have available to them while writing new laws, have the potential for outsized impact on what comes next. They are happening as advocates who have worked on drug policy issues for years are trying to figure out if the businesses emerging to capitalize in the new marijuana market are allies, or something else.

For years, national groups like the Drug Policy Alliance, founded with the help of wealthy individuals like the investor George Soros; Peter Lewis, the late chairman of Progressive Insurance; and John Sperling, who founded the for-profit University of Phoenix, carried the torch alone. But Lewis passed away in 2013, and Sperling passed away last year. Meanwhile, many states have legalized at least medicinal marijuana, creating a new cannabis industry with an active interest in growing its market. The people who planted the seeds of the movement to legalize marijuana are now wondering where and how to find common ground as they build relationships with new supporters themselves.

If activists in other states are looking for an example of an activist-industry alliance, this isn’t the one to use. Ethan Nadelmann, executive director of the Drug Policy Alliance and its political arm, Drug Policy Action, called the Ohio plan a “constitutionally mandated oligopoly” which “sticks in everybody’s craw.”

Meanwhile, Nadelmann and other activists are preparing for a busy election year in 2016. They expect to see industry groups and other new players funding ballot initiatives and related legislation from California to Florida — for good or ill, a much more diverse crowd will be involved in planning and funding the politics of pot.

“The cumulative cost of these campaigns is going to be $40 million, $50 million, I mean, who knows,” Nadelmann said.

Soros continues to support Drug Policy Action, which reported raising nearly $40 million itself in its 2013-2014 fiscal year, according to Internal Revenue Service data maintained by Guidestar.org. That figure reflects a $5 million per year commitment over multiple years, and was disclosed all in the same year to comply with accounting rules, Nadelmann said. Drug Policy Action is a 501(c)(4), which can raise and spend unlimited amounts on policy advocacy and is not obliged to disclose its donors.

A longtime adviser to the late Peter Lewis, Graham A. Boyd, runs a 527 group called New Approach PAC. As a 527, which are named for the section of the tax code under which they are incorporated, New Approach can involve itself more in elections, but has limits on when and how it can expressly advocate for specific candidates.

According to IRS filings, New Approach raised $4.4 million in May and June, most of which came from just three people. According to IRS disclosure reports, Peter Lewis’ brother, Daniel, and son, Adam, gave a combined $3 million, while Cari Tuna, the former Wall Street Journal reporter who is married to Facebook co-founder Dustin Moskovitz, gave another $1 million, filings show.

Boyd did not immediately respond to requests for comment.

Faith Oltman, a Responsible Ohio spokeswoman, called the “oligopoly” claims an unfair characterization. A state commission could license additional growing facilities, she said, and restrictions on who grows pot and where were written into the amendment to protect public health, among other reasons.

Responsible Ohio has disclosed a list of investors that so far holds 22 names. The people on that list include former Cincinnati Bengal Frostee Rucker, now defensive end for the Arizona Cardinals; the fashion designer Nanette Lepore, a native of Youngstown, Ohio; entrepreneur and philanthropist William Foster; and Nick Lachey, the former 98 Degrees singer. They have put their names and reputations forward, as well as their money, to support an industry that is still illegal under federal law, Oltman said.

“They’ve put up a lot of money to fund this multimillion dollar industry that’s possible in Ohio,” said Oltman.

“I think it’s a mischaracterization to say it’s going to be an industry for a few folks,” she added later in the conversation.

Ballot initiatives to expand marijuana laws are likely in California, Arizona, Maine and Massachusetts, and are also possible in Missouri and Michigan. Medicinal marijuana laws may be considered in Florida and even in Arkansas, according to Nadelmann, the Drug Policy Alliance executive director.

In Ohio, the state Ballot Board must now meet to approve language that voters will consider during that state’s Nov. 3 general elections.