I wrote about the effect of big money on the legalization movement a few weeks ago, but feel the topic deserves additional discussion.
The basic problem we are dealing with is the need to raise significant amounts of money to gather the required number of signatures to qualify a legalization proposal for the ballot, and then to run a professional campaign. At one time, those states that provide voters the opportunity to bypass the state legislature and enact new laws by a vote of the people, intended this to be something ordinary citizens could accomplish with a dedicated team of volunteers. It was an outgrowth of the progressive movement. But those days are gone forever.
State legislators, who understandably dislike the voter initiative process and prefer to maintain their control over the process of adopting new laws, have raised the bar for qualifying an initiative for the ballot, requiring more and more signatures; and sometimes requiring that a minimum percentage of those signatures be gathered from voters in every county in the state, making it impossible to qualify by simply focusing on the major population centers.
The result is that voter initiatives have become unrealistic as a vehicle to change public policy unless the sponsoring group has the ability to raise substantial sums of money. Political commitment and hard work are no longer sufficient.
We have had a handful of big donors supporting legalization initiatives going back to the successful Prop. 215 campaign in CA in 1996, and continuing through the two successful legalization initiatives approved in 2014. But those funders were motivated by their desire to end marijuana prohibition, and were not attempting to directly profit from those changes. Their motivation was high-minded.
And the need to earn the support of this group of philanthropic funders tended to assure that the language contained in those initiatives was similarly high-minded, seeking to establish legalization systems that were open to all entrepreneurs, both big and small. Until now, none of the successful initiatives attempted to establish “cash cows” to benefit the funders.
We have seen some ill-advised regulations adopted by the implementing state agencies in a few states that clearly favored those with big bucks, such as the medical marijuana regs in Massachusetts that required those seeking to apply for a license to commercially cultivate marijuana to put $500,000 in escrow before their application would be considered.
And in Florida, the medical marijuana bill that was passed by the legislature last year, permitting only low-THC, high-CBD marijuana, established only five licenses to cultivate for the entire state, and only applicants who could post a $5 million performance bond and pay a $100,000 application fee, and who had been in the nursery business in Florida continuously for a minimum of 30-years, could apply. A cynic might suspect the legislative leadership must be receiving some sizable contributions from the nursery industry.
New Investor Driven Voter Initiatives
But we are now dealing with a different, and potentially more significant, problem in which those who put up the funding to qualify a legalization initiative for the ballot seek to include specific language in the proposal put before the voters that assures them of a favored position in the soon-to-be legal market, and that essentially assures them of a huge “return on their investment.” For these individuals, who have not previously been involved in the legalization movement, this exercise is only incidentally about ending prohibition and stopping the arrest of smokers; it is really about getting rich in a newly legal industry.
On a purely political level, we should welcome these new developments, as these moneyed interests obviously have valuable political connections that could be helpful in ending prohibition more quickly than we could accomplish, at least in some states, without their help. And ending prohibition means stopping the barbaric practice of arresting responsible marijuana smokers, which must remain our highest priority. We have paid far too high a price for prohibition, in wrecked lives and careers.
But the arrival of these new potentially powerful interest groups, primarily motivated by greed instead of policy goals, causes most of us some concern, and some discomfort. Or as Drug Policy Alliance director Ethan Nadelmann recently told a journalist, when asked about this latest phenomenon, “This thing sticks in my craw.”
But whether we like it or not — and most of us do not — as a movement, we will shortly have to decide whether we can embrace proposals to end prohibition and implement legalization in states in which it appears likely those changes will directly enrich a small group of investors, and may erect market barriers for the small and mid-size entrepreneur.
The Loss of Innocence
As a movement, we have lost our innocence. For most of us, legalizing marijuana has been only incidentally about marijuana; it has really been about personal freedom. We are entering a new phase of the legalization movement in which some of the most powerful interests will be profit driven.
Last week, a group called Responsible Ohio announced it had raised $36 million to put a constitutional amendment on the ballot this November to legalize marijuana in the state. They reportedly required investors to pony-up a minimum of $4 million each, for which these investors would be assured one of a handful of commercial cultivation licenses, authorized to grow medical marijuana in the state. The initiative language would establish an oligopoly who would largely control and profit from legal marijuana.
According to an article published in the Columbus Dispatch, one of their principal investors was recently recorded at an investment seminar as saying the business opportunities presented by their proposal are “beyond your imagination. … Let’s hop on this tsunami of money and ride the top of that wave to some enrichment for us.”
Talk about unabashed greed! These are not high-minded individuals. It turns out one of the investors reportedly made his fortune dealing with off-shore asset protection, and another likely investor is a federal felon who was convicted of 19 counts of insider trading in 2005. Legalizing marijuana is simply another get-rich-quick scheme for these scammers.
And rumors continue that a group of venture capitalists has formed in Michigan with the intent of qualifying an initiative for their ballot that sounds awfully similar to the Ohio approach. Investors put-up the money to pass an initiative, and they directly profit from that investment by being assured of licenses under the new system.
Different people will come to different conclusions. I continue to feel we should keep our eye on the prize of legalization, and not get sidetracked fighting over who will profit from legalization. After all, we live in a free enterprise system and we should not expect legal marijuana will be different.
But we may have our limits tested in the months ahead. Are we willing to be complicit in the establishment of oligopolies, which would likely lead to fewer choices and higher prices for consumers; or should we insist on the opportunity for small and mid-sized entrepreneurs to participate in this newly legal market?
The bottom line for me is to stop arresting marijuana smokers as soon as possible, in every state. And each year we defer ending prohibition, for whatever reason, we permit thousands of marijuana smokers to continue to be arrested; nearly 20,000 marijuana arrests annually in Ohio and in Michigan. That’s an enormous price to pay if we have the ability to end prohibition now, even if we do not like all the terms of the system to be established.
Big money has entered the picture, and we will have to deal with that. I prefer to keep the focus on personal freedom and stopping the arrests, but in some states we may have to swallow hard and accept legalization that is profit driven.
This column was originally posted to Marijuana.com.