Political Profiteers Push Ohio’s Pot Vote

Columbus, Ohio – Thousands of hastily scribbled signatures fill boxes in the basement of Ian James’ 7,800-square-foot restored Victorian home in the historic Franklin Park neighborhood. James needs these names to win a place on Ohio’s November ballot for a measure to legalize medical and recreational marijuana.

But the political consultant isn’t just gathering the signatures. He came up with the idea for the measure. And he recruited a lawyer to draft a constitutional amendment that would put Ohio’s future marijuana market in the hands of only 10 growers — an arrangement that critics are calling a monopoly.

Meanwhile, he plans to pay his own firm nearly $6 million to run the campaign.

Though James is an extreme example, he’s a member of a much larger and little-known class of professionals that form what could be called Ballot Measure Inc.: a powerful electoral-industrial complex funded by moneyed interests that belies the quaint notion of “citizen democracy” that such efforts are assumed to represent.

Active in the 26 states that have citizen-initiated ballot measures, the network of pollsters, direct mail specialists, lawyers, consultants, signature gatherers and voting data whizzes were paid at least $400 million for 85 statewide measures across the country in 2014, according to a Center for Public Integrity analysis of state records. In presidential election years, state and local measures are a billion-dollar industry, said ballot initiative expert David McCuan.

The growth of the industry means that often only those with money can afford to get into the game. In some big states, such as California, where political consultant David Townsend estimates a controversial measure costs at least $25 million to pass, paid signature gatherers are now virtually a requirement to get on the ballot.

And this process of direct democracy sometimes appears to directly benefit only special interests: such as the Native American tribes who gave $107 million in 2008 to win measures expanding their slot machine operations in California; the agribusiness giant Monsanto, which gave $10.7 million last year to block labeling of genetically modified foods in Colorado and Oregon; or the plastics industry, which is currently fighting a plastic bag ban in California.

“The process has been captured by interests,” said McCuan, a Sonoma State University professor. “It’s been professionalized. It’s expensive.”

This has created a market filled with the promise of profits for those willing to work as mercenaries for a cause — or even come up with their own cause. James isn’t the only one known to have done so. The California lottery was famously created by signature gatherers in 1984, and a Nevada political consulting firm came up with and successfully campaigned for anti-union measures in multiple states, beginning in 2010.

Source: Center for Public Integrity review of state campaign finance filings for the 85 statewide measures from 2014 that had disclosed expenditure amounts. Dollar amounts rounded to the nearest thousand. (Click here to open full-size image in a new window.)

“The honest and most easy response is: I am going to profit from this,” James told the Center for Public Integrity. “If people are upset about me making money, I don’t know what to say other than that that’s part of the American process. To win and make this kind of change for social justice, it does cost a lot of money.”

James’ initiative has drawn considerable heat. The measure would root the 10 marijuana growth sites to particular land parcels, which happen to be controlled by the mysterious companies funding the initiative. They would function as Ohio’s only wholesale suppliers of marijuana, selling to separate retail shops and nonprofit medical dispensaries.

James, a 49-year-old Ohio political veteran, has succeeded at this before. In 2009, he persuaded Ohioans to approve four casinos, also rooted to particular plots of land. For Responsible Ohio, as his marijuana effort is called, James wrangled together investors who are willing to bankroll a $20 million campaign, sink in an additional $20 million to buy the land and $300 million more to build facilities.

The investors have contributed through limited liability corporations with vague names such as Verdure GCE LLC and NG Green Investments LLC, offering few clues as to who’s behind them. Their hoped-for payoff? Guaranteed ownership of a wholesale marijuana market potentially worth more than $1 billion, according to a prospectus to investors outlining the Responsible Ohio campaign budget and obtained by the Center for Public Integrity.

And once the measure passes, James said he plans to open a consulting company helping launch marijuana retail stores.

Investing in pot

Just off Interstate 71 in Franklin County, Ohio, a 19-acre field on a two-lane road will become an oasis of legal pot if Responsible Ohio’s measure passes.

The field’s owner, Kenneth Campbell, said he signed a contract early this year to take the plot off the market and give an unknown buyer the exclusive right to purchase the field by the end of 2015. When Campbell’s name and plot of land started showing up in news reports on marijuana legalization, he was as surprised as anyone.

“People saw my name,” Campbell said. “They said, ‘Hey Ken, you’re growing some pot!’ And I said, ‘I am?’ ”

Around the state, at least four other sections of land were reserved in the same way — to LLCs that paid for the exclusive right to buy the land by the end of the year or early into 2016. All 10 land parcels will be written into the state constitution should Responsible Ohio get its way.

The Responsible Ohio campaign has trumpeted some of the investors, including minor celebrities such as Nick Lachey, former 98 Degrees boy-bander and ex-husband of singer Jessica Simpson; fashion designer Nanette Lepore; and Arizona Cardinals defensive end Frostee Rucker. Others — such as Chicago investor Ben Kovler and Dayton pain specialist Dr. Suresh Gupta — can only be found after digging through documents. These investors declined or did not respond to requests for comment for this story. James said he’s not an investor.

Responsible Ohio investor Alan Mooney, a financier who specializes in off-shore corporations, said the limited set of investors would ensure Ohio’s marijuana market has the capital to get off the ground.

“I don’t want to throw open the doors like they did in California,” he said. “I know a lot of the street people, the hippies and stoners would love that. This has got be professional business people.”

The pre-arranged, limited list of investors doesn’t sit well with some Ohioans. Words such as “monopoly,” “cartel” and “oligopoly” appear frequently in critics’ speeches and newspaper columns.

Responding to such concerns, some state legislators are working on a counter ballot measure that would block initiatives benefiting only a small group. As lawmakers, they can refer an item to the ballot without gathering signatures.

Major pro-legalization groups such as the Marijuana Policy Project and the Drug Policy Alliance also have distanced themselves from the initiative, despite supporting legalization measures in other states including Colorado, where the number of pot cultivators was not capped.

And some longtime supporters of marijuana in Ohio are actively opposing Responsible Ohio, alongside anti-drug activists.

“This is egregious to me on many levels,” said Marcie Seidel, an anti-drug activist who opposes all forms of legalization and heads Ohio’s Drug Free Action Alliance. “This is basically wealthy individuals, the 1 percent that we always hear about, that are wanting and asking us as Ohio citizens to guarantee in the constitution that they are going to make millions and millions more dollars so they can become even more wealthy.”

(Click here to open full-size in a new window.)

Behind the Money

It’s not uncommon in the U.S. for moneyed interests who will benefit financially from the outcome of ballot measures to back their campaigns or opposition movements. Corporations and business trade groups gave more than three-quarters of the $266 million contributed by top donors to ballot measure groups in 2014, according to a Center for Public Integrity analysis published earlier this year.

For example, in Colorado, competing casinos gave more than $36 million in a fight over a 2014 measure to expand gaming at racetracks.

And Monsanto and other food-company allies raised $36 million to successfully block measures last year to label genetically modified foods in Colorado and Oregon, while pro-labeling groups fueled by money from natural foods businesses raised $7.5 million in the two states.

Ballot measures were the darling of early 20th century progressives, who saw them as a way to circumnavigate corrupt legislatures. South Dakota became the first state to add initiatives and referenda to its constitution in 1898, borrowing from the ideas behind robust ballot measure politicking in Switzerland. By 1918, 24 states and many more cities had adopted ballot measures, according to the University of Southern California’s Initiative and Referendum Institute.

But the provisions played a minor role in American political life until 1978 when Proposition 13, California’s anti-tax initiative, heralded the “taxpayer revolt” and new popularity for ballot measures. Now, measures promoted with expensive TV ad campaigns often bankrolled by wealthy interests or activist groups are a way of life in California, where the ballot measure is most popular, followed closely by several other western states, such as Oregon, Washington and Arizona. Ohio typically sees one or two statewide measures per year.

Moneyed interests don’t always win ballot measure fights, of course. In 2010, voters rejected California’s Proposition 16 that would have made it harder for municipalities to create their own power companies, despite $46 million spent by Pacific Gas & Electric in support, and less than $100,000 spent by opponents. But if big business is going to win, it needs help to create the network that a true grassroots movement would have at the ready. That’s where the pros come in.

“Not a Process for Amateurs”

At Responsible Ohio’s headquarters in James’ Victorian home, July 1 looms. That’s the day the campaign must turn in its signatures to the secretary of state — at least 305,591 to get the measure on the ballot. The team has already surpassed that number, but James is hoping to obtain 800,000 signatures and register thousands of new voters — then remind them all to go to the polls in November.

To do this, James has assembled a cadre of professionals. The prospectus for potential Responsible Ohio investors outlines a preliminary $20 million budget for the campaign: $5.6 million for signature gathering, canvassing and operations, paid to James’ firm; $702,000 for lawyers and bookkeepers; $278,000 for polling; $350,000 for public relations; $1.5 million for data analysis by veterans of Barack Obama’s two presidential campaigns; $4 million for direct mail and a vote-by-mail program; $7.1 million for TV and radio advertising; and $440,000 for lobbying.

In Ohio, this is what it takes to run a ballot measure campaign: more than 500 people working full-time, and election pros running the whole show.

“This is a business,” James said. “What we’re doing in changing the constitution to legalize marijuana will lead to more than 10,000 people working in the state, billions of dollars being generated in new revenue. That money is also going to flow into local communities. But no one creates an industry of that magnitude without being paid for it.”

James has worked on eight state and local ballot measures in Ohio. He got his taste for politics as a kid going to union meetings with his mother, a teacher. Starting in high school, he volunteered or worked on about a dozen candidate campaigns, he said, and later took jobs in the Ohio statehouse and as a lobbyist for the late entertainer and casino mogul Merv Griffin. He focuses now on ballot measures and said he works 80 hours a week on Responsible Ohio’s campaign.

Many other politicos also work exclusively on ballot measures for hefty price tags. Barry Fadem, a California-based attorney, has spent his three-decade career writing ballot measure language. His clients typically need to spend $100,000 even before the measure is filed with the state, he said, just to conduct opinion polls, hire consultants to start organizing the campaign and pay him to craft the legalese.

“The initiative process is just not a process for amateurs,” Fadem said. “It’s really not. Because it’s so hard to win.”

Some industry members claim only to work for causes they care about, but most combine work that supports their political principles with work that lines their pocketbooks, taking on gambling, land-use or other types of measures that pay well.

But industry members said they aren’t getting rich. Michael Arno leads a major signature gathering company, Arno Petition Consultants, that has been paid more than $9.5 million since 2010, according to data from the Lucy Burns Institute and state records.

“If I had a nickel for every nickel people thought I’d had, I’d be retired by now,” he said. “We go through long stretches we don’t have any work.”

Foot Soldiers

With clipboards and pens in hand, Donnie Dawson stood on the sidewalk outside the Franklin County Government Center on a recent afternoon, calling to people shuffling into the revolving doors to pay speeding tickets and lawyers leaving to catch a smoke break.

“Legalize marijuana, bro?” he called out to a man in bright red pants.

“I don’t smoke,” the man said as he kept walking. “I sell.”

The man had a point: His current illegal business would be doomed under Responsible Ohio’s initiative, because only the 10 for-profit companies that are also funding the campaign would be allowed to grow and sell pot wholesale, though others could set up retail shops.

But voters may not know that from listening to Dawson try to collect their signatures. “Basically the 10 companies are for the nonprofit medical marijuana, for research for the medical marijuana,” said Dawson when asked what he tells potential signers curious about the alleged monopoly. “They’re there to do the research and invent different strands of weed to help.”

That leaves out a piece of the picture. Though it’s true the 10 wholesalers would supply nonprofit medical dispensaries, the wholesalers are presently organized as for-profit LLCs and would also supply for-profit retailers. “While maybe not artful, it is accurate,” James said of Dawson’s words.

A stream of Ohioans signed Dawson’s petition. None of them read the entire 24-page measure; many of them didn’t seem bothered by the wealthy investors behind it.

“It goes hand in hand. It’s kind of like Philip Morris and cigarette companies,” said 36-year-old warehouse employee Jorrel Carse, who also said he didn’t know much about the petition when he signed it. “It’s all just a part of business.”

Josh Sword, a construction worker and self-described “street pharmacist,” said he has grown marijuana in the past and would grow it again if Responsible Ohio’s measure passed.

Ohio’s potential marijuana market even inspired a copycat measure. But the Better for Ohio group seeks to authorize 40 growth facilities instead of just 10. The right to operate those sites would go to owners of certain $100 bills, with their serial numbers listed in the ballot measure. Better for Ohio said it would assign ownership of the bills at a later date.

The backers of the measure aren’t joking — they hired Arno’s California-based firm to gather signatures but will be aiming for the 2016 ballot after running out of money to pay Arno to qualify this year.

Massive signature drives, though fraught with claims of fraud and deception over the years, remain the hallmark of the initiative process. Though some measures can still rely on volunteers for the labor-intensive job, at least $20 million was paid to 21 firms gathering signatures for the 2014 ballot, according to data from the Lucy Burns Institute and state records.

But Dawson, a professional signature gatherer, isn’t making millions. The 42-year-old father of five did not say how much he makes, but James said signature gatherers are paid a base rate of $9.50 per hour, with the chance to earn more if they bring in many valid signatures.

Voices Unheard

Responsible Ohio is attracting a motley crew of opponents, from anti-drug activists to pro-pot voters hoping to get other, less restrictive versions of marijuana legalization on the ballot.

Mary Smith, a marijuana activist and the former owner of what she called a “run-of-the-mill hippie department store” in Toledo, said she isn’t backing it because she doubts Responsible Ohio’s wealthy investors have genuine empathy for medical marijuana patients.

“This is completely about greed,” she said.

But so far opponents are without a broad coalition and have yet to muster significant funding to go up against the $20 million campaign from Responsible Ohio. Anti-drug activist Seidel said she thinks some sort of opposition group will form but doesn’t know where the money will come from.

Vermilion resident Aaron Weaver and about 20 other pro-pot critics of Responsible Ohio are trying to put up a fight. In April, they formed a new nonprofit, Citizens Against Responsible Ohio.

So far the group exists as a website, Facebook pages and Twitter feeds. And they are paying out of their own pockets to promote Facebook posts criticizing the measure. Encouraged solely by a tweet from comedian Drew Carey, an Ohio native who voiced skepticism about Responsible Ohio’s plan, Weaver drafted a letter asking him for money. “With your assistance, we can turn the tide and put a stop to these well-polished thugs in their tracks,” Weaver’s letter reads.

In an initiative process intended to be the voice of the people, the people are struggling to find the money to get their voices heard, while moneyed interests can afford to pay top dollar for the ballot professionals. It’s an irony not lost on the professionals themselves.

“To be quite honest, it’s a lucrative business, but there are certainly questions we all have about the efficiency, and what’s good for democracy and what’s not,” said Paul Maslin, a pollster who has worked on initiatives for 20 years. “Because let’s face it: Sometimes ballot measures can be the purview of special interest groups that may not be linked up with the public interest.”

Others are unmoved, even upon hearing that Ian James plans to pay his own firm $5.6 million to promote the idea he created.

“It’s America,” said David Bruno, an Akron-based consultant who has helped James attract investors. “Good for him. And for the people that want to criticize that, it’s a shame they didn’t try to do it first.”

But for Weaver, Responsible Ohio would crush his version of the American dream: opening a marijuana farm that would double as his business and a retirement plan for his parents if legalization ever came to Ohio.

“It’s an absolutely unfair fight,” the 28-year-old administrative assistant said. “It’s a perversion of our process in the state of Ohio and I think any state, really. I mean putting your business plan into the constitution of a state? That’s unheard of. That’s ridiculous.”