OPINION: Governor’s ‘Ganja’ Gang – The Gift that Keeps on Giving

When referring to a monopoly within the California cannabis sector, “Ganja” Governor Newsom appears to be as greasy as the hair on his head. Campaign donations are not meant to be transactional, as this legally constitutes bribery, a corrupt solicitation in exchange for influential action. As local farmers within the County of Sonoma are continually denied cannabis permits, Newsom’s campaign donors appear to share special privileges. When in doubt, follow the money!

Based on the guidelines put forth by California’s Fair Political Practices Commision, it appears that Governor Newsom is breaching on murky waters. Candidates seeking a state office and committees that make contributions to state candidates are subject to contribution limits from a single source. (Sections 85301 – 85303.) Contributions from affiliated entities are aggregated for purposes of the limits. (Regulation 18215.1.) According to the California Secretary of State’s campaign contribution database, BigRock Partners, LLC, donated a total of $49,500.00 to Governor Newsom’s campaign in the year 2017.

My previous article, “Doubt the Drought – Rules For Thee but Not for Me,” further elaborates on the ties between Governor Newsom and BigRock Partners LLC, a strategic advisory firm. Mr. Mike Harden, donor to Mr. Newsom’s 2018 campaign is referenced as the founder of the firm. The BigRock portfolio of clients includes some familiar brand names within Sonoma County such as Cannacraft, as well as Governor Newsom’s PlumpJack Group. As cited from Drew Altizer Photography, BigRock hosted a ‘Gavin Newsom for Governor’ event in June, 2017.

*Photo of Governor Newsom & Mr. Harden

As referenced from Mr. Mike Harden’s website: “Prior to shifting his focus to Big Rock full time in 2020, Harden was founder and partner at ARTIS Ventures, a venture capital company specializing in financing early-to late-stage investments in dynamic companies. ARTIS Ventures is renowned for being an early investor in YouTube, which went on to be bought by Google for $1.65 billion. Other notable successes the firm has backed include Palantir Technologies, Versa Networks, Cohesity, Modern Meadow, and Locus Biosciences. As of November 2016, the acquisition of Stemcentrx by AbbVie for more than $8 billion was the largest private acquisition in the history of healthcare venture capital.”

According to Venture Capital Journal, “as a part of the 2016 settlement with the SEC, Partner Mike Harden agreed to a one-year ban from the firm in connection with insider trading from one of Harden’s direct reports in the Artis hedge fund. The SEC found that Harden failed to supervise his employee in a manner that would have helped prevent illegal action.”

*View the full Securities & Exchange Commission press release dated October 13, 2016 here.

It appears that Mr. Harden violated his agreement with the SEC and as a result of his violation, Artis Ventures was denied a state registration necessary for them to operate as an investment advisor. The decision was reached as of August 20, 2018 by Jan Lynn Owen, Commissioner of Business Oversight. Oddly, this thorough investigation and scrutinous decision was overturned on November 27, 2018 with inconclusive reasoning. Shortly after, Commissioner Owen resigned from her position as of May 13, 2019.

Within BigRock’s portfolio resides CannaCraft, 2019 campaign donor to Governor Newsom, and affiliate of Kenwood Investments, founded by Mr. Newsom’s lobbyist Darius Anderson. Mr. Anderson has been referenced in the Globe as having a tight knit bond with Governor Gavin Newsom. Mr. Kirk Anderson, brother of Darius, happened to be the Chief Operations Office of CannaCraft from 2016-2018.

Per the League of California Cities ethics & law handbook, “a bribe involves conferring a benefit on a public official to influence a person’s vote, opinion, action or in-action. Asking for that bribe is illegal, of course, but so is receiving one or agreeing to receive one. Under California’s criminal laws, a ‘bribe’ includes anything of value; it also includes receiving ‘advantages.’ The advantage can be a future one and need not involve the payment of money. The federal law definition of bribery is even broader.”

California Law Penalties

“Bribery Receiving or agreeing to receive a bribe is a crime, punishable by a combination of prison time, fines and forfeiting and being forever disqualified from holding public office. Fines vary according to whether the bribe was actually received. If it was, the fine is a minimum of $2,000 up to either $10,000 or double the amount of the bribe, whichever is greater. If a bribe was not actually received, there still is a fine between $2,000 and $10,000. The specified prison sentence is two to four years in state prison. Those who offer bribes also face penalties. Those who bribe a member of a legislative body of a city, county, school district or other special district face two to four years in state prison.”

Federal Penalties

“If an agency receives more than $10,000 in federal funding, an official of that agency could find him or herself subject to federal prosecution if the amount involved in an ethical violation (for example, a bribe) exceeds $5,000. The penalty for bribery under federal law is a fine of up to twice the amount of the bribe or $250,000 (whichever is greater), up to 10 years imprisonment, or both. Bribery, extortion, or embezzlement can also be basis of a federal income tax evasion charge. Federal prosecutors may treat money that an official receives through illicit means as income to the official. If the official fails to report this income at tax time (which of course, most don’t), the official becomes subject to an action for income tax evasion. Income tax evasion carries with it a possible five-year prison term and a fine of up to $100,000. In addition, prosecutors can require the defendant to pay for the costs of prosecution (in addition to one’s own defense costs). The sometimes-related crime of filing a false tax return is punishable by a maximum three-year prison term and a fine of up to $100,000 (along with the costs of prosecution). A court can also order a convicted official to pay restitution to the agency in the amount of the money or advantage received (or lost to the agency) as the result of criminal misuse of the official’s position.”

As chiefs of the state, Governors serve as the intergovernmental liaison to the federal government on behalf of the state. With so many potential avenues of corruption pertaining to Governor Newsom at the state level, what does this foreshadow at the federal level? Given the information presented in this piece, is Governor Newsom in accordance with the regulations set forth by the FPPC and ethically sound?