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Why Marijuana Legalization Campaigns Could Fail in 2016

The $7 billion legal weed industry isn't helping to advance the cause.

This was supposed to be the year of Pot-Palooza, when five states are set to hold ballot initiatives that would make marijuana legal for recreational users. If all passed, it would bring the number of states offering pot for sale to nine, following similar measures that passed in Colorado and Washington in 2012 and in Alaska and Oregon in 2014.

Legalization advocates saw it as another potential leap in their march to slow the decades-long war on drugs: The rest of the country would see that the nine legalized states were awash in tax revenues, and that fears of stoned drivers flooding the roads in search of late-night Mallomars had been overblown. Other states, they imagined, would quickly follow suit, bringing the country ever-closer to its marijuana tipping point, when the federal government would finally be forced to step in and end pot prohibition once and for all.

But as the legalization movement heads into the 2016 election, with the marijuana issue on the ballot in five states—Arizona, California, Maine, Massachusetts, and Nevada—the fantasy of a New Green Rush is coming up against unexpected resistance, its momentum slowed by a lack of funding that advocates were not prepared for.

Advocates with the Marijuana Policy Project, a pro-legalization group helping to spearhead the ballot initiatives, say that fundraising is down 25 percent from what they need to compete on Election Day. "We are polling well in all of the states we are working in,"said Rob Kampia, the group's executive director. "But we know that without advertising on our side, the level of support is going to drop between now and Election Day. The money reminds people why they support this in the first place."

Kampia cited a bill to pass medical marijuana in Arizona in 2010, which had support from nearly two-thirds of voters in early polls. Without funding or an active campaign to support the measure, though, the initiative ended up passing with just a hair over 50 percent of the vote, and only after write-in and provisional ballots were counted in the days after the election.

Past legalization campaigns—including the statewide ballot initiatives that passed in 2012 and 2014—were funded in large part by a handful of wealthy philanthropists,including George Soros, Progressive Insurance founder Peter Lewis, Men's Wearhouse magnate George Zimmer, and John Sperling, the founder of the University of Phoenix.

In recent years, though, both Lewis and Sperling have passed away, Soros has pulled back on his pot-based philanthropy, and Zimmer finds himself with a diminished fortune after being fired from the company he founded in 2013. And so advocates, who expect campaigns for the five legalization initiatives and four other medical marijuana ballot measures to cost in the $40-50 million range, are counting on the $7 billion legal marijuana industry to fill the fundraising void. But so far, the industry has mostly taken a pass.

"There has been a bit of a free rider problem with this thing,"said Ethan Nadelmann, executive director of the Drug Policy Alliance, which still receives funding from Soros and other wealthy donors.

"People are making a shitload of money on this stuff without them spending any more to get where we are,"Nadelmann told an audience at the Marijuana Business Conference and Expo, a bi-annual trade association event, this May. "They are using the opportunity of legalization to make a fortune without doing anything to create that opportunity. The marijuana reform movement is spread incredibly thin right now. And the question for 2016 is whether the industry will be there or not."

And so far, they haven't been. At a recent cannabis industry investor summit sponsored by the ArcView Group, which connects investors with entrepreneurs in the legal marijuana industry, executives boasted that they had helped raise $70 million for marijuana-related start-ups; but the same slide showed that the investor network had contributed less than $1 million for legalization efforts—a discrepancy that activists in the room were quick to point out.

"That is 1.4 percent,"Ben Pollara, a Florida political operative, told the assembled investors. "That is just pathetic."

Except in Arizona, where a recent poll found support for legalization at below 40 percent—and where business forces are funding the campaign against legalization—marijuana advocates are heavily outraising their opponents in the states where recreational marijuana is on the ballot. In California—which legalization advocates see as the biggest 2016, and where recent polls show sixty percent of voters favor legal weed—the pro-side has raised 60 times more cash than those campaigning against legalization.

In Maine, wheresupport for legalization stands at 55 percent, the Campaign to Regulate Marijuana Like Alcohol has raised over $400,000—but most of that money has come from outside of the industry, including $50,000 from television host Rick Steves and $140,000 from New Approach, a political action committee funded by, among others, Napster founder Sean Parker and Cari Tuna, the wife of Facebook co-founder Dustin Moskovitz. In Nevada, where support for legalization hovers around 50 percent, pro-legalization forces have reported raising $285,000, or about half what marijuana advocates raised for a signature gathering effort in 2014. And in Massachusetts, where legalization opponents actually outnumber supporters, the pro-legalization side has raised over $300,000—but half of that figure is from a single donor, a man who faced a drug possession charge more than a decade ago.

In those three states, the anti-legalization campaign is virtually non-existent, although campaign finance filings don't show any funding for the anti-legalization campaigns, although most groups did not have to file reports until this spring, at the earliest. Still, marijuana advocates fear that their opponents intend to make a late advertising blitz to sway voters before Election Day. And indeed, the anti-legalization group Smart Approaches on Marijuana announced in July that they would spend $2 million to defeat the recreational marijuana initiatives on state ballots in November.

Their current financial advantage aside, advocates and political operatives seethe that the businesses and individuals who have directly benefited from their efforts are not contributing to the cause. And in interviews with a dozen marijuana industry leaders about the 2016 legalization campaigns, nearly all of them told VICE that they supported the measures, but had not yet given money to any of the state ballot campaigns.

"I support all of these measures morally and emotionally," said Randy Shipley, the CEO of CannaFundr.com. "But most of the people that are doing these campaigns, I am not sure that the money is being spent in the right way. I would like to see more transparency."

Industry leaders gave a variety of other reasons for not donating to legalization efforts: they hadn't budgeted for political spending; that state regulations for legal pot businesses were proving more financially burdensome than expected; they believed the measures were going to pass anyway. Some said that they just didn't want to get involved in politics.

"I live in California. I support the ballot measure—I hope it passes, I will vote for it. But that would be a personal decision, not a business decision,"said David Dinenberg, CEO of KIND Financial, a Los-Angeles-basedfirm that provides software compliance to the industry. "If they have made it to the ballot they are already very well-heeled and well-organized and they have done everything they are supposed to do. You have to be well-funded to make it onto the ballot."

Some industry players seem to prefer the status quo: More states coming on line means more business entering the market; and while most of these are currently smaller startups, large corporations are sure to follow, swallowing those who have been operating in their niche of the market.

"People are concerned about what legalization is going to look like for them,"said Michael Bronstein, a consultant for the American Trade Association for Cannabis. "You would think they would say, 'let's get this federal prohibition out of the way.'But they want stability. So many of them have dealt with instability for so long."

Tensions between the burgeoning cannabis industry and legalization advocates are not new. In 2015, for example, an industry-backed legalization measure in Ohio was defeated, after many political activists backed away from supporting it, arguing that the measure unfairly favored a few connected players at the expense of consumers.

"I love psychoanalyzing the marijuana industry,"said Kampia of the Marijuana Policy Project. "In one bucket you have people who say they are too poor to donate. In another bucket you have people who just hope someone is going to save them from themselves. But any business that budgets zero dollars for political change is being silly because marijuana is actually illegal."

Plus, Kampia pointed out, adding more states to the legalized marijuana column would likely benefit many of the current industry players, since it would vastly increase their customer base. And he worries that failures in 2016 would slow, and perhaps even halt, the momentum that the legalization movement has gained in recent years.

"I like to joke that the worst thing we ever did was legalize marijuana in Colorado," he said. "People say 'inevitable.'I don't like that. The reality is you've got to pay the bills somehow. Because of limited resources, we have let go a lot of states where we could win."

If a handful of measures go down to defeat this November, it could also embolden the federal government to end its hands-off approach to marijuana businesses in the four states that have legalized the drug. Since federal law trumps state law, any president at any time could shut down the farms, dispensaries and thousands of businesses that have cropped up in the wake of legalization.

"Think about what would happen if Oregon and Alaska went down in 2014 because there wasn't enough money in these campaigns,"Nadelmann of DPA, told the conference and cannabis entrepreneurs. "All of the momentum, all of the ways in which people are thinking legalization is inevitable and the way of the future, imagine what would have happened if we had lost. Colorado and Washington would be seen as flukes. The net value of this industry would be fifty percent of what it is today."

"And if California, goes down,"he added. "It sets us back a decade. I don't want to say you are fucked, but..."

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