Marijuana group quietly gave cash to Michigan lawmakers’ nonprofits

Lansing — A group that represented Michigan’s largest marijuana companies quietly contributed $160,000 to lawmakers’ nonprofit accounts as legislators crafted proposals that would have been a boon for the industry, according to documents obtained by The Detroit News.

The Michigan Cannabis Manufacturers Association’s tax filings for 2020 and 2021 show how interest groups are permitted to provide money to benefit officeholders in secret and shine a light on the financial interactions of policymakers and business leaders as the state’s recreational adult use marijuana market got off the ground.

Already, state Attorney General Dana Nessel’s office has been investigating former House Speaker Lee Chatfield’s ties to the industry and his use of a nonprofit account, and a federal grand jury has been probing whether Rick Johnson, the ex-chairman of the state’s medical marijuana licensing board, received bribes during his tenure on the influential panel.

There is currently no indication the giving of the Michigan Cannabis Manufacturers Association (MCMA) Advocacy Fund violated state statutes or is subject to law enforcement scrutiny. But critics said the group’s actions showed flaws in disclosure laws and a quiet effort to use money to influence policy.

“It shouldn’t take an investigative report for this to come to light,” said state Sen. Jeremy Moss, a Democrat from Southfield and chairman of the Senate Elections and Ethics Committee.

The annual tax filings from the Michigan Cannabis Manufacturers Association revealed the group, which abruptly dissolved in December, used a separate nonprofit organization, MCMA Advocacy Fund, like a traditional political action committee.

It’s a strategy that appears to be allowed under Michigan law but circumvented the transparency standards tied to normal political giving and enabled state lawmakers to conceal their connections to the group.

In 2020, the MCMA’s Advocacy Fund gave $20,000 to Chatfield’s nonprofit Peninsula Fund, according to a tax filing released for the first time Monday.

Likewise, in 2021, the MCMA Advocacy Fund gave $50,000 to MI Vision, an organization tied to then-House Speaker Jason Wentworth, a Republican from Farwell, and $5,000 to Michigan First Fund, a nonprofit led by former aides of ex-Rep. Jim Lilly, a Republican from Park Township. Lilly sponsored part of the package that would have boosted marijuana businesses by requiring those who grow medical marijuana for patients to be licensed and regulated.

Wentworth and Lilly didn’t respond Monday to requests for comment.

The association, which was active from 2020 through 2022, described itself as the “General Motors, Fords and Chryslers of the cannabis industry.” The group’s board once included executives from marijuana companies like Green Peak, Pleasantrees and Common Citizen.

How money evaded timely disclosure

Under Michigan law, if an organization’s PAC, set up to influence elections, gives money to a lawmaker’s committee, the transactions would be disclosed through a searchable state database within months by both the organization and the lawmaker.

By flowing money through nonprofits, the contributions can’t be directly used to sway voters, but they don’t have to be disclosed by the lawmaker’s nonprofit and don’t have to be reported by the organization giving the money in a timely fashion.

In addition, the connections between a nonprofit organization that’s used by a lawmaker and the lawmaker can be difficult to trace. The tax filing documents are handled by the Internal Revenue Service. As of Friday, there were no disclosures posted in the public IRS database for the MCMA Advocacy Fund, which formed in 2020.

The 2020 tax filing from MCMA Advocacy Fund was dated November 2022. The 2021 tax filing was dated Feb. 3, 2023, the day The Detroit News first requested it from the organization. The documents are usually supposed to be filed within a year of the conclusion of the period they cover.

Lawmakers can use their nonprofit accounts to give money to charities in their districts as well as pay for expenses related to their legislative positions or other general activities that purportedly benefit the “social welfare” as the IRS refers to the accounts as “social welfare organizations.” But few details have to be reported publicly.

In 2020, the Peninsula Fund of Chatfield, a Republican from Levering, disclosed it spent $454,337 on food, dining, travel and entertainment.

Shelly Edgerton, former chairwoman of the Michigan Cannabis Manufacturers Association, said she wasn’t fully aware of why MCMA Advocacy Fund’s tax filings were submitted when they were. The group worked to promote legislation and maintain the industry’s stability, she said.

Many of the political activities occurred under the supervision of the association’s former executive director, Steve Linder, who departed in 2022, Edgerton said. She previously served as director of the state Department of Licensing and Regulatory Affairs.

Edgerton said most lawmakers have set up nonprofit organizations to receive contributions from interest groups and the giving by the MCMA Advocacy Fund wasn’t unusual.

“It’s a game played by both the Democrats and the Republicans,” Edgerton said.

‘Invested nearly $1 billion’

Linder, a longtime Republican political consultant and fundraiser, was the leader of the Michigan Cannabis Manufacturers Association when it launched in 2019. He declined to comment for this story, saying he was no longer authorized to speak on behalf of the organization.

In 2016, the Michigan Legislature approved a law that established a licensing system for medical marijuana businesses. Two years later, voters approved a constitutional amendment allowing for recreational marijuana sales.

The Michigan Cannabis Manufacturers Association formed its separate MCMA Advocacy Fund, which the association provided all the money for in 2020, tax records show.

“Our members have invested nearly $1 billion in Michigan’s cannabis industry, hired thousands of employee and laid the groundwork for a vibrant, regulated cannabis marketplace,” the website of the manufacturers association said in 2020.

In 2020, Chatfield’s final year as speaker, House Republicans worked behind the scenes on draft legislation that would have merged Michigan’s medical marijuana and recreational marijuana policies, according to a document obtained by The News. The proposal ultimately wasn’t introduced, and it’s unclear why.

But that same year, as legislators crafted marijuana-related policy, the MCMA Advocacy Fund spent $66,000 on contributions to nonprofits connected to lawmakers.

Chatfield’s Peninsula Fund got $20,000 as did the Great Lakes Job Alliance, which features a board of Senate Republican consultants, according to the tax filing.

Building Michigan’s Future, a nonprofit launched by then-Rep. Rebekah Warren, a Democrat from Ann Arbor, and The Reinvent Michigan Fund, tied to then-Senate Minority Leader Jim Ananich, a Democrat from Flint, each received $10,000.

Overall, Chatfield’s Peninsula Fund raised $753,482 in 2020, his final year as speaker. Few of the donors behind the money have been publicly identified. The organization’s board featured three directors. One of them, state Rep. Cam Cavitt, a Republican from Cheboygan, told The News last year he had been given “no reason to believe” the account was being used.

Lawmaker defends accepting cash

In 2021, the Michigan Cannabis Manufacturers Association championed a controversial proposal that would have licensed and regulated medical marijuana caregivers, individuals who have been able to grow marijuana for patients in Michigan.

Opponents said the legislation would have given big businesses a marijuana monopoly by pushing out caregivers while supporters said the bills would have created a level playing field among caregivers and licensed businesses.

“What these bills do is create a system where all medical cannabis sold is tested to be safe for human consumption by those who are sick. Shouldn’t this be the least that government and industry should do?” Linder said at a committee hearing in October 2021.

On Oct. 26, 2021, the House Regulatory Reform Committee voted 10-2 to send the bills to the full House. The bills were never taken up for a vote there.

The MCMA Advocacy Fund gave $94,500 in contributions to nonprofits tied to lawmakers in 2021, including donations to accounts apparently linked to five of the 10 lawmakers who voted yes in committee. The connections include staff members serving on the nonprofits’ boards and shared addresses.

MI Vision received $50,000 from the MCMA Advocacy Fund in 2021, according to the fund’s tax disclosure. MI Vision, established in 2020, was a fundraising account used by Wentworth, according to a source with knowledge of the group who wasn’t able to speak about the connection on the record.

Wentworth left office because of term limits at the end of 2022.

Likewise, Michigan First Fund received $5,000 from the MCMA Advocacy Fund in 2021. Michigan First Fund’s board featured former aides of Lilly, one of the sponsors behind the bills.

An organization called Fighting for a Better Michigan Fund received $15,000 from the MCMA Advocacy Fund in 2021. Sen. Roger Hauck, a Republican from Union Township, acknowledged Monday the nonprofit was one of his fundraising accounts. In 2021, Hauck was a representative and the chairman of the House Regulatory Reform Committee.

Hauck said he didn’t remember the contribution from the MCMA Advocacy Fund. The money didn’t affect his actions as a lawmaker, he said.

“When people lean on me, I tend to go the opposite way,” Hauck said.

Hauck defended lawmakers’ fundraising through nonprofit organizations, saying he used the money in his nonprofit to make charitable contributions, such as purchasing animals at local 4-H fairs.

But Moss, the Democratic senator, said there should be more transparency around lawmakers’ nonprofits. Fundraising and legislating have become too closely linked in Lansing, he said.

“Policy should move on its own merit,” Moss said.

Association dissolved

The Michigan Cannabis Manufacturers Association dissolved in December amid turmoil within the marijuana industry and multiple criminal investigations probing lobbying focused on marijuana policy.

The News reported last week that Johnson, a former House speaker, was facing a federal investigation into whether he and others exchanged bribes in return for awarding state licenses to operate medical marijuana facilities. Johnson was chairman of the Medical Marihuana Licensing Board from May 2017 through April 2019.

More:Feds investigate ex-House Speaker Johnson for bribery in pot licensing

Johnson hasn’t responded to requests for comment.

Meanwhile, Nessel’s office has been probing Chatfield’s use of political accounts while he was speaker in 2019 and 2020. Chatfield has denied wrongdoing. An aspect of the Chatfield investigation has been his connections to marijuana businesses, including the fact three of his relatives landed jobs at the same cannabis retailer while he was speaker.

Edgerton said the dissolution of the Michigan Cannabis Manufacturers Association had nothing to do with the investigations involving former state officials. Instead, she said, “market forces” were the main factor.

A glut of legal cannabis product and illicit marijuana have driven down prices, causing a financial crunch for the burgeoning industry. One of the first things businesses look to cut during difficult financial times is lobbying efforts, Edgerton said.

“Honestly, the market just tended to get worse and worse,” Edgerton said.

Others in Lansing said the association’s end could have to do with Democrats taking control over state government in January. The group had primarily focused in 2019 and 2020 on building relationships with Republicans.

The association’s main proposal to limit medical marijuana caregivers didn’t move in 2021, said Sen. Jeff Irwin, a Democrat from Ann Arbor. The dissolution might simply have been a sign of a legislative ship running aground, he said.

Source: The Detroit News click HERE to go to article