Former lawmakers are cashing in on Michigan's lucrative marijuana industry – Detroit Free Press
The medical marijuana industry is poised to explode with new state regulations and taxes on the dispensaries that will sell the weed. Kathleen Gray/Detroit Free Press
Even as lawyers, accountants and public relations professionals have flocked to the marijuana industry to cash in on the budding business, there is another group also making a buck off it.
Nearly a dozen former members of the state House of Representatives and Senate have answered the call to make some money on the industry.
And it’s a lucrative business that has already seen sales of medical marijuana skyrocket to $229.3 million in the past year. Those numbers are expected to jump to near $1 billion annually once sales of marijuana for adult recreational use begin later this year or by early 2020.
There’s nothing that says former lawmakers can’t work, consult or lobby in the marijuana industry after they leave office. But, in an effort to ensure they aren’t immediately cashing in on the influence they had as legislators, most states have instituted “cooling-off” periods that range from six months to six years so lawmakers have to wait before becoming a lobbyist.
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Michigan is one of only nine states, along with Washington D.C., that has little or no cooling-off period between when lawmakers leave office and when they can register as a lobbyist, according to the National Conference of State Legislatures. States that have no cooling-off periods are Idaho, Nebraska, New Hampshire, North Dakota, Texas and Wyoming. Washington D.C. also does not have a cooling-off period. Oklahoma and Kansas don’t allow lawmakers to have any interest in state contracts for one or two years.
The only restriction in Michigan is that if lawmakers leave office before the end of their term, they are prohibited from becoming a lobbyist until after the end of that term.
Michigan is ranked at the bottom of the ethical heap by the Center for Public Integrity, primarily because the state doesn’t require the governor or legislature to disclose financial information or release documents under the Freedom of Information Act. But the lack of any significant lobbying guidelines has also contributed to the state’s score of “F.”
“We’ve rated them as being at the bottom of our site,” said Kristian Hernandez of the center. “They don’t have to disclose anything.”
Former GOP leader set the tone
In the marijuana business, it makes little difference whether the lawmaker supported or opposed legalization of marijuana, especially recreational pot.
Former Speaker of the U.S. House John Boehner, R-Ohio, set an early example. He was an ardent opponent of marijuana legalization. Until he wasn’t. He’s on the board of New York-based Acreage Holdings, one of the largest cannabis businesses in the industry.
He told an audience at the Detroit Regional Chamber’s Mackinac Policy conference in 2018 that his transformation from pot foe to friend evolved over time.
“Especially in the last four to five years, the number of people that I know who are using cannabis in some form to relieve some medical issues has really gone up,” he said. “So I got into looking into the medical benefits of cannabis and it’s really pretty incredible.”
He turned that into a lucrative entry into the marijuana business, and so have many former lawmakers in Michigan.
Former state Sen. Randy Richardville, R-Monroe, worked as a spokesman for the anti-recreational marijuana legalization campaign — Healthy and Productive Michigan.
But he now is helping clients who want to open a medical marijuana dispensary.
“I’ve got a medical marijuana client who wants to put a dispensary in a town,” he said. “It would look almost like an Apple store and pharmacy, and I’m helping them to navigate the industry.”
He’s still opposed to legal weed beyond medical marijuana, saying last year’s ballot proposal, approved by voters 56% to 44%, was poorly written and that it will increase access to pot by kids. However, most medical marijuana dispensaries are expected to apply for recreational licenses when the state starts accepting applications on Nov. 1.
Likewise, former Senate Majority Leader Arlan Meekhof, R-Grand Haven, opposed the legalization proposal and worked hard to amend the issue once it passed. He wanted to put a stop to a provision that allowed people to grow up to 12 plants in their homes for personal use and he proposed keeping the politically appointed licensing board, instead of the state Department of Licensing and Regulatory Affairs, to make the decisions on who could get into the business.
He couldn’t get those changes made, but soon after leaving office in 2018, he started his own consulting firm — ARM Consulting — and took on a cannabis client who was hoping to open three marijuana dispensaries — Power Play Sports in Detroit, Lapeer Infused in Lapeer and Chesaning Elite in Chesaning, all owned by Troy businessman Joseph Aiello.
Meekhof had an in. He had named former Republican Speaker of the House turned lobbyist Rick Johnson as his pick to the marijuana licensing board. According to documents obtained through the Freedom of Information Act, he emailed his client’s attorney in February, saying he had a conversation with Johnson.
“I spoke to Rick Johnson,” Meekhof wrote. “He will communicate with Andrew Brisbow (Andrew Brisbo, the director of the Marijuana Regulatory Agency) to place Power Play Sports, Lapeer Infused, and Chesaning Elite, on the board’s agenda for 3-21-19.”
The e-mails were first reported in Bridge Magazine and by the Michigan Campaign Finance Network.
The dispensaries didn’t get on the March agenda, but in April, at the last meeting of the licensing board before Gov. Gretchen Whitmer eliminated it in favor of the Marijuana Regulatory Agency making licensing decisions, two of the three dispensaries were approved for licenses. The third was pre-qualified for a license.
Meekhof said that has been his only — and likely his last — marijuana client. Even though he acknowledges that his clients will probably apply for a recreational marijuana license, he said he doesn’t want to work for clients in that end of the business.
“It’s a highly regulated industry and even though the citizens voted for recreational, it’s not something that’s very stable,” Meekhof said. “Anyone who approached me who wanted help on the recreational side, I’ve said no. It’s not a business I’m interested in helping.”
Those two examples grate on marijuana advocates, who find it two-faced that lawmakers actively worked against legalization, but are now cashing in on legal weed.
“At best, they’re hypocrites, unless they’re going to come out and say they were wrong, but nobody is saying that,’ said Matt Abel, an attorney and member of the Michigan chapter of the National Organization for the Reform of Marijuana Laws or NORML. “The hypocrisy is just beyond the pale on how people change their attitudes so quickly. Is the money that important that they’ll throw any credibility out?”
Many sought out as consultants
For some lawmakers, their work on crafting the legislation that regulated and taxed the medical marijuana industry has made them sought-after consultants.
Former state Rep. Mike Callton, R-Nashville, has no reservations about working with marijuana clients. He was intimately involved in crafting the medical marijuana legislation and has been working in the industry since leaving the Legislature in 2016 through his MiCannabis Consulting firm.
“At first, the focus was on the development of the rules and how you can you influence that,” he said. “Then it went to helping with licensing and now it’s shifting to all of the 1,773 municipalities in the state.”
He still considers his chiropractor practice his first priority.
“But marijuana work is a nice thing to do on my off days,” he said “I almost feel like the father or baby daddy of certain elements of the marijuana industry in Michigan. I want to keep working with it.”
A significant part of the Dunaskiss Consulting and Development firm’s business in Oxford is dedicated to lobbying for marijuana clients. Former Sen. Matt Dunaskiss, R-Orion Township, his son Justin Dunaskiss, chairman of the Orion Township planning commission, and wife, Diane Dunaskiss, a former member of the Wayne State University Board of Governors, help businesses with their state and local applications for licenses, and Justin Dunaskiss is a frequent speaker on the cannabis conference circuit.
“Since the 2013-2014 Michigan legislative session, Justin and his firm have been at the forefront of medical cannabis policy,” the firm’s website says. “We look forward to transitioning that same energy into the newly recognized recreational marijuana market.”
Former state Rep. Klint Kesto, R-West Bloomfield, also was a chief architect of the medical marijuana legislation passed in 2015. And he has been using that expertise to drum up business since he left office in 2018 because of term limits.
He has been working with the city of Westland to help draft an ordinance that will allow medical and recreational marijuana businesses in the western Wayne County city. The council is expected to vote on that ordinance this week.
At a meeting in September, Kesto told City Council members: “This is an opportunity for Westland to take advantage of something that’s creating a lot of economic development and increasing taxable revenue coming into the city if it’s done the right way. We’ve been hearing a lot of this as a negative perception, but you could redevelop an area even if it’s focused on this industry. You can request, demand certain things and you’re going to be looking at a place that knocks you out of your socks and works with the existing fabric of the city.”
Last week, Kesto said he’s not working with any marijuana businesses, but didn’t rule out that possibility in the future.
“I don’t have private-sector clients right now,” he said. “I’m just helping a local municipality come up with the right ordinance.”
He also was just named last week to a state work group that is looking into new licenses that will be offered for the recreational market, including event licenses and licenses for consumption lounges.
Democrats in the game, too
Some of the lawmakers have been vocal and long-term advocates for marijuana legalization, such as former Sen. Coleman Young II, D-Detroit, whose frequent catch phrase during his time in the Legislature was “Free the Weed.”
He’s parlayed that advocacy into a consulting business — Coleman Young Consulting — and was a featured speaker at a recent cannabis conference in Detroit.
“I’ve got a couple of people I’m working with now,” he said of his consulting business. “We primarily provide services to help businesses get started in the cannabis business.”
Sen. Jeff Irwin, D-Ann Arbor, used the two years he was out of the Legislature — after leaving the House because of term limits in 2016 and before he got elected to the state Senate in 2018 — to act on his long-term passion for the legalization of marijuana.
According to state campaign finance records, as the political director for the ballot proposal campaign, Irwin, through his Bellwood Consulting firm, earned more than $51,000 for his work.
“My role tapered off after we got access to the ballot,” Irwin said. “And I knew I was going to have to focus on my own campaign (for the state Senate).”
Former state Rep. Brian Banks, D-Harper Woods, also worked for the ballot committee — The Coalition to Regulate Marijuana like Alcohol — and earned $10,000 for his services, according to state campaign finance records.
“I just helped get the word and literature out into the community. And I oversaw a team that was going to community meetings and putting lawn signs out,” Banks said. “I’ve had clients in the past who were looking to get a license and I’m open to someone if they approach me and need my services.”
Former state Sen. Virgil Smith, D-Detroit, helped run a ballot campaign earlier this year in Royal Oak Township on behalf of a marijuana client who wanted to turn a closed auto dealership on Eight Mile into a marijuana facility.
But township voters had a different plan, defeating the May ballot proposal 266-111.
Former state Rep. Brandon Dillon, D-Grand Rapids, who also was the chairman of the Michigan Democratic Party, picked up some marijuana clients when he opened his consulting/lobbying shop in Grand Rapids earlier this year.
And former state Rep. Tim Greimel, D-Auburn Hills, has taken a more casual role, acting as a resource for people looking to navigate the licensing process in Pontiac.
“I’ve tried to be helpful to some folks, but I’ve got no formal arrangements with anybody,” he said. “I would help out anybody who is trying to meet people in the city.”
A flood of business coming
The business side is sure to start escalating for all cannabis-connected professionals in the near future.
The state will begin accepting applications for recreational marijuana business licenses on Nov. 1, with people already holding medical marijuana licenses getting first dibs on most of the recreational licenses for the first year.
“This is the same pattern we see in other industries, where we see the Legislature-to-private industry pipeline. The cannabis industry is just like any other,” said Rick Thompson, owner of the Michigan Cannabis Business Development Group. “Being a lobbyist becomes a natural extension of their time in the Legislature.”
State Sen. Jim Runestad, R-White Lake, has tried for years to put limits on lawmakers — two years for departing lawmakers and three years for committee chairmen — going straight into lobbying.
“Even if things were clean, which I don’t think they are, there’s a public perception of people taking care of themselves,” he said. “When you’re in the catbird’s seat, you are able to move or slow legislation maybe based on your self interest down the road.”
Adding cooling-off periods could help instill some faith in voters that their legislators are actually serving the public interest rather than private motives, Runestad said. But, so far, he has been unsuccessful. His latest lobbying bill was one of the first introduced this year, but has been relegated to the Senate’s Government Operations committee, where bills are sent to die.
“When I tried to get cosponsors in the House, they weren’t interested because they wanted to become a lobbyist down the road. When you try to limit future opportunities, that doesn’t go over very well.”
Kathleen Gray covers the marijuana industry for the Detroit Free Press. Contact her: 313-223-4430, email@example.com or on Twitter @michpoligal.
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