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Group that spent $5M on MT marijuana legalization measures won't have to reveal donors

Commissioner of Political Practices
Posted at 9:48 AM, Mar 12, 2021

HELENA — Montana’s top political cop now says a national group that spent millions supporting the successful voter initiative campaigns to legalize recreational marijuana will not have to reveal its donors.

Last week, Commissioner of Political Practices Jeff Mangan reversed his own decision from last year and ruled that the North Fund is an “incidental committee,” meaning it does not have to identify its contributors under Montana state law.

The decision ends a months-long effort to force the organization to provide more information about where the money is spent in Montana came from.

“The Disclose Act of 2015, as revolutionary as it was in bringing additional transparency to the money spent in Montana campaigns, only requires the disclosure of contributors to committees when the contributions are earmarked, or if the ‘primary purpose’ of the committee is to support or oppose candidates and ballot issues,” Mangan said in his updated decision.

“The Commissioner’s office does not have the ability to change the law no matter how much money an organization pours into Montana’s elections. Additional safeguards and transparency measures can only be proposed through the legislative process to require more disclosure to the people of Montana in instances like this.”

In November, Montana voters approved Initiative 190 and Constitutional Initiative 118, which together set up the legal framework for a recreational marijuana system. The Montana Legislature is currently considering possible changes to that system, ahead of the scheduled implementation later this year.

The North Fund, headquartered in Washington, D.C., contributed around $5 million to New Approach Montana, the committee that backed I-190 and CI-118. The fund was by far the largest contributor to the legalization effort, which raised a total of around $7 million.

In March 2020, the North Fund registered with the Commissioner of Political Practices as an incidental committee – defined in state law as a group that may spend money on a campaign, but which is “not specifically organized or operating for the primary purpose of supporting or opposing candidates or ballot issues.” Incidental committees are not required to disclose their donors unless contributions were directed specifically for a certain candidate or ballot issue.

In September, Mangan decided to reclassify the North Fund as an “independent committee,” which is primarily focused on spending for or against candidates and ballot issues – and which do have to disclose their donors. The North Fund asked for that decision to be reconsidered.

Mangan was still in the process of reconsidering in October when Steve Zabawa – the treasurer of the anti-legalization group Wrong for Montana – filed a campaign practices complaint arguing that the North Fund should be required to reveal where its contributions came from.

Mangan issued a decision on Zabawa’s complaint in December, ruling the North Fund should have filed as an independent committee and ordering them to provide information about their contributors. He argued the organization had not provided enough information about its non-election-related spending for him to confirm it had a different primary purpose.

The North Fund is registered with the federal government as a so-called 501(c)(4) or “social welfare” organization, which is not required to disclose its donors. It does not have a public website, and the address it provided in COPP filings is a “co-working space” in Washington, D.C.

In response to an inquiry from MTN in October, a spokesperson said the group’s mission was “to carry out public education and advocacy efforts regarding progressive policies, through grassroots organizing, legislative lobbying, or ballot measures, on a wide range of issues.”

In a series of letters to the COPP, the North Fund’s attorneys consistently denied that the group should have to reveal its donors, saying that around 70% of its spending wasn’t related to elections, that its spending on the Montana ballot measures was less than 10% of its total budget, and that most of its expenditures had nothing to do with marijuana legalization.

They said donors never specified what they wanted their money to be used for, and it would be unreasonable for the state to demand information on all donations nationwide.

Eventually, on Feb. 10, attorneys submitted another letter to Mangan, breaking down more than $30 million of the North Fund’s nationwide spending. That included more than $16 million in contributions to 70 different organizations around the country – most of them identified as civil rights or social action advocacy groups and most linked with progressive causes.

The letter also identified more than $10 million in direct spending, on media and outreach for issues including get-out-the-vote efforts, Black Lives Matter and racial equality, statehood for Washington, D.C. and gender and reproductive equity.

The North Fund’s attorneys said in the letter that none of that spending was specifically directed to candidates or ballot issues, so that couldn’t be their primary purpose.

“At this point, North Fund has voluntarily provided far more information than is mandated by Montana law to enable your office to properly conclude that North Fund qualifies as an incidental committee under Montana law,” they said.

“Indeed, North Fund has now provided your office with exponentially more information and evidence than your office has required of many other similarly situated committees whose classification as an incidental committee you have not disturbed.”

In his revised decision, Mangan said that, based on the new information from the North Fund, he did not have enough evidence to conclude ballot issue activity was the organization’s primary purpose, and he reclassified it as an incidental committee. However, he was critical of the fund for not providing the information sooner.

“Originally North Fund argued that none of its activity outside Montana was relevant to the commissioner’s determination,” he said in the decision. “As the Commissioner pointed out in the prior decision, applying that interpretation would have resulted in North Fund’s campaign being determined an independent committee.”

Mangan’s full decision is available here.

The Commissioner of Political Practices’ Office declined to comment on this story, as did James Molloy, an attorney representing the North Fund.

Zabawa said he was disappointed at Mangan’s decision, and that voters should have had the chance to see who was backing the legalization campaign.

“We’re kind of totally surprised that he’s done a complete reversal,” he said. “Anybody can come into Montana now and spend $5 million and not tell us who they are.”

I-190 sets up a framework for a recreational marijuana system in Montana, including a 20% tax on sales. CI-118 amends the Montana Constitution to let the state prohibit marijuana sales to people younger than 21.

Zabawa and Wrong for Montana are currently challenging I-190 in court, arguing it is unconstitutional because it appropriates state money through a ballot measure. However, a district court judge put a stay on that case, saying it shouldn’t be heard until after the Montana Legislature decides whether to make changes to the marijuana law.