Cash crunch holds up Michigan pot legalization push

Lansing — A group seeking to legalize recreational marijuana in Michigan says it has collected enough signatures to qualify for the 2018 ballot but is struggling to pay off the professional firm it hired to gather them.

The Coalition to Regulate Marijuana Like Alcohol had planned to file petitions with the state as early as Tuesday, but National Petition Management of Brighton will not release final signatures from paid circulators until the group settles its debt of roughly $30,000, spokesman Josh Hovey confirmed Monday.

The committee is “raising the final funds needed to pay off that bill, and then we’ll be good to go with the state,” he said.

Organizers anticipate they will still submit signatures to the Michigan Secretary of State next week, if not sooner, once they secure enough funding to pay National Petition Management, as required by a vendor contract.

“I wouldn’t call it a problem,” Hovey said of the cash shortfall. “We need to pay off our final balance to them and then make sure we double check all the signatures before turning them in. If anything, it’s giving us extra time to make sure that work is done and done right.”

The pot proposal would regulate commercial marijuana production and retail sales in Michigan. Smoking would not be allowed on public sidewalks. Local communities could decide whether they want to allow marijuana businesses.

Retail sales would be taxed at 10 percent, plus sales tax, with the new revenue going to K-12 schools, road repairs and participating cities and counties.

As of Thursday, paid circulators had collected 250,288 valid signatures and volunteers had collected another 25,732, campaign outreach coordinator Lisa Satori told advocates Sunday at a board meeting for the Michigan chapter of the National Organization for the Reform of Marijuana Laws.

That’s nearly 10 percent more than the 252,523 signatures the group needs to collect in an initial 180-day window that will start closing Nov. 22. If organizers don’t submit by that sliding deadline, old signatures would become invalid at a rate that could be “terminal to the project,” she said.

“So this is not a done deal, guys, and while we should absolutely be celebrating that we got all these signatures in hand, we are now postponing turn-in that was scheduled for Tuesday,” Satori said, according to video from the meeting.

Campaign finance records show the committee had $6,297.05 left in the bank as of Oct. 20. The group has raised $606,932 in direct contributions but spent $600,635, including more than $307,000 in payments to National Petition Management.

The pot legalization committee has also benefited from nearly $700,000 in “in-kind contributions” from supporters and organizations who donated services, including signature collection. The largest backer is the national Marijuana Policy Project, whose nonprofits have kicked in $342,794 in direct and in-kind contributions.

All told, the ballot committee has raised more than $1.3 million and spent the equivalent of $782,828 on signature gathering, said Craig Mauger of the Michigan Campaign Finance Network.

Organizers of successful Michigan petition drives often spend $1 million or more to gather signatures, Mauger said. A group called Protecting Michigan Taxpayers, which submitted 380,000 signatures to the state this month, had spent $1 million on paid circulators through Oct. 20.

While some law enforcement officials have raised concerns with the marijuana proposal, it has not yet faced any significant organized opposition. A group called the Committee to Keep Pot Out of Neighborhoods and Schools had raised $5,000 through Oct. 20, according to state records.

The Michigan Responsibility Council, a marijuana industry trade group, was the lone donor to the opposition committee and did not return a call seeking comment on Monday.

The early fundraising struggles could spell trouble for the legalization effort, although organizers say qualifying for the ballot will open up new donor streams. Campaigns in other states have cost millions of dollars.

“If this gets on the ballot, I would expect it to potentially be an expensive one,” Mauger said.

Satori blamed the group’s recent fundraising crunch on a variety of factors, including “friendly fire” among pro-marijuana groups and uncertainty over new medical pot regulations being developed by the state.

Rick Thompson, a board member of MI NORML and the MI Legalize committee that is assisting in the petition drive, said uncertainty over federal enforcement has also “dampened” fundraising efforts.

Marijuana remains illegal under federal law. U.S. Attorney General Jeff Sessions has hinted at a potential crackdown that would reverse a hands-off policy adopted under former President Barack Obama’s administration.

“Some people are really holding their breath waiting for the best opportunity to get into the industry, and as long as Jeff Sessions continues to disrespect the marijuana industry, some folks are going to keep their money in their pockets,” said Thompson, owner of the Michigan Cannabis Business Development group.

Still, Thompson predicted success for the ballot issue.

“The fact is we’ve got a huge base of support among activists and medical marijuana patients, as well as a national base of support from other players who want Michigan to be successful,” he said.

Voters in eight states have approved recreational marijuana laws. Colorado was the first state to implement legalization, with retail sales beginning in 2014. Maine Republican Gov. Paul LePage this month vetoed legislation to regulate and tax the drug despite voters last year approving a legalization measure.

Many other states, including Michigan, have legalized marijuana for medical use.

joosting@detroitnews.com