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Marijuana legalization backers anxious as costs mount, donors waver

The 2016 election promises to be an expensive one for the pot legalization movement

After decades helping lead the fight against the national war on drugs, Ethan Nadelmann recently joined thousands of marijuana entrepreneurs here celebrating legalization — and found the scene kind of irritating.

The rapidly expanding legal pot industry has started to make some people rich, but the new pot capitalists are stingy about keeping the momentum for legalization building, Nadelmann said.

The wealthy donors who have long bankrolled groups like Nadelmann's Drug Policy Alliance, anchored by billionaire George Soros, have taken notice. They got involved because of concerns over racial justice and civil liberties. If those issues are going to be overshadowed by the opportunity to sell cannabis candy bars to college kids, they're starting to say, then maybe the people making the money should bear the cost.

"I have donors saying, 'I see lots of people making money from this. Why aren't they stepping up and paying for these campaigns?'" Nadelmann said over runny eggs at the Hash House coffee shop off the convention floor at the Rio Las Vegas Hotel and Casino, where the Marijuana Business Conference was taking place.

"They are increasingly saying, 'Isn't it time to move on? Shouldn't we be focusing our efforts on mass incarceration? Addiction?'" he said.

The tension has surfaced at a time when pot advocates are particularly anxious about fundraising.

The 2016 election promises to be expensive for the legalization movement, with ballot measures likely in California, Nevada, Maine and Massachusetts. Arizona and Missouri are being contemplated as well.

There is talk of trying to place a medical marijuana measure on the ballot again in Florida, where this year it fell just a few percentage points shy of the state's 60% threshold for passage.

"The expense is scaling up dramatically," said Graham Boyd, founder of New Approach, a pro-legalization political committee.

The California measure alone will cost more than the combined tab for this year's pot campaigns in Oregon, Alaska and Washington, D.C., as well as Florida. Even smaller states could prove far more costly than in the past, now that Sheldon Adelson, the Las Vegas casino tycoon who helped sink this year's Florida measure, is threatening to give millions of dollars to anti-legalization campaigns nationwide.

"In order for all this to happen, there has to be more funding from somewhere," Boyd said.

A former head of the ACLU Drug Law Reform Project, Boyd is from the same old guard of the legalization crusade as Nadelmann. Nadelmann advised Soros, Boyd counseled the other billionaire at the core of the legal pot movement, insurance industry titan Peter Lewis.

Lewis died last year, just as the Oregon campaign was getting underway. His death made clear just how dependent the effort was on a small group of rich people. The Oregon campaign almost unraveled. Its entire staff was laid off.

Boyd and Nadelmann scoured their contact lists and hit the road. They managed to raise enough money to revive the campaign. But it was dicey. And contributions from the new marijuana capitalists covered barely 10% of the bill.

At the Las Vegas conference, Nadelmann chastised the pot entrepreneurs, sounding like an exasperated high school principal scolding truants, except that he swore a lot.

"All of you came that close to seeing this thing blow up in our faces," he told them, referring to the near-crisis in Oregon. "I am looking for you guys to step up and step up soon.

"You wait for some goody-two-shoes who is interested in civil rights to say, 'Let's legalize,' then we will come in and hire our lobbyist for our own interests. It is shortsighted. It is narrow-minded."

During a keynote address focused on the virtues of building a socially responsible industry, Ben Cohen, the Ben of Ben & Jerry's ice cream, suggested a creative solution: Perhaps sales of drug paraphernalia would get a boost if they had the Drug Policy Alliance's logo stamped on them. The alliance, in turn, could get a cut of each stamped bong, pipe or other product sold, he said.

It was not quite what Nadelmann had in mind. And probably not something that would go over well with the button-down types on his board.

A few firms are heeding the call. Ghost Group, the Newport Beach investment firm behind WeedMaps, a sort of Yelp of pot dispensaries, has given tens of thousands of dollars to legalization campaigns.

Aaron Houston, the firm's lobbyist in Washington, said the marijuana industry would be wise to learn from the example of Silicon Valley, which neglected politics in the mid-1990s at its own peril.

"We do not want to repeat those same mistakes," Houston said.

At ArcView Group, a San Francisco firm that matches investors with promising marijuana-related start-ups, co-founder Troy Dayton said the "donation gap" is one of the biggest threats facing the fledgling industry.

"The people who have been paying for the legalization campaigns are starting to back off," he said. "They see the industry growing and figure we will take it from here. But so far, the money has just not been there."

At conferences the firm holds every few months for financiers, Dayton leaves time for legalization activists to appeal for donations. He then backs up their pitches with the enthusiasm of a carnival barker.

The pitches have raised roughly $500,000 total over the last few years, he said. But lately, contributions have been on the wane.

In Vegas, where ArcView this month held its biggest conference ever, Dayton said he was "pretty disappointed" with the pledges, which totaled about $75,000.

The amount was underwhelming, he said, considering the nearly 300 millionaires in the room, all looking to make money off marijuana legalization.

"We are kind of back to the drawing board," Dayton said, "figuring out how to inspire this crowd."

evan.halper@latimes.com

Twitter: @evanhalper

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