Election 2016

How the Trump Campaign Got Its 'Golden Ticket' to Big Marijuana

Meet Tony Fabrizio, a top GOP strategist, Trump ally and good friend to the lucrative medical marijuana industry.

Photo Credit: Gage Skidmore / Flickr

“I don’t have pollsters. I don’t want to waste money on pollsters. I don’t want to be unreal, I want to be me, I have to be me,” Republican presidential nominee Donald Trump told Meet the Press’s Chuck Todd last year.

The billionaire businessman has made his campaign on doing just that, being himself. But, contrary to his own stated inclinations, Trump’s campaign hired one of the GOP’s most powerful weapons on his quest for the White House, Tony Fabrizio, shortly after making that statement back in May.

When the 2016 elections rolled around, Fabrizio backed pro-cannabis libertarian candidate Rand Paul. When Paul dropped out of the race, Fabrizio pledged his allegiance on Twitter to Trump shortly before joining the campaign on May 17. Now it looks like Fabrizio, along with Gov. Scott, helped engineer a massive for-profit Florida medical cannabis system that, in essence, creates a corrupt state-sanctioned cartel controlled by a small handful of shell corporations that have been designed to manipulate marijuana stocks for profit, most with global ambitions.

Fabrizio, a longtime Republican strategist and pollster, was essential in engineering the racially charged Willie Horton scandal that led George H.W. Bush to victory over Michael Dukakis in 1988 as well as the Swift Boat Veterans for Truth campaign against John Kerry leading to George W. Bush's victory in 2004. In addition to working with the Bush family, Fabrizio worked on both of Florida governor Rick Scott’s gubernatorial campaigns, and even crafted anti-gay ads for Texas governor Rick Perry’s 2012 presidential campaign (despite the fact that Fabrizio himself is gay). He has worked with a who’s who of Fortune 500 companies, including Visa, Hewlett-Packard, Bank of America, AOL/Time Warner, Qualcomm, FedEx, Pfizer and Harrah’s casinos.

Fabrizio and his web of cohorts, investors and competitors plan to cash in on medical marijuana and the path laid by patients and pro-cannabis activists in Florida and around the country for decades -- and they are banking big on the November election.

Fabrizio Family Ties

It seems Tony Fabrizio first took a public interest in the budding cannabis industry after the 2012 election and the failure of Amendment 2, which would have legalized medical cannabis in his home state of Florida but just narrowly failed to meet the 60 percent supermajority required for a constitutional amendment to pass. The “No on 2” campaign sailed to victory after a $5 million donation from Las Vegas casino billionaire and Florida resident Sheldon Adelson. Fabrizio even (correctly) predicted it would lose with 57 percent of the vote.

Fabrizio delivers an annual analysis of conservative opinion through a straw poll he presents at the Conservative Political Action Conference (CPAC). In 2012 and years prior he made no mention of cannabis. In 2014, when Florida’s legislature was designing its cartel system, it was his favorite talking point. The poll showed that even among conservatives, nearly two-thirds favored some sort of cannabis legalization or decriminalization, with the majority in support of medical.

In 2014, the Florida legislature passed a restrictive medical cannabis law that only permitted the use of high-CBD cannabis extracts for patients suffering from intractable epilepsy. In 2016, the legislature expanded this law to include full spectrum (high-THC) cannabis only for terminally ill cancer patients. The expansion also included a provision to protect the state’s regional medical cannabis license holders. Two of the six (and soon maybe seven) nurseries have already been licensed to begin harvesting massive amounts of cannabis to supply a tiny legal market. They can buy and sell product to each other wholesale and the patients who do have access to the current market have limited options only among processed cannabis “products.” They have no access to botanical cannabis, despite it being a plant that is proven safe and is effectively palliating diseases in other states. The current license holders are expected to cash in on a larger market after the election now that Amendment 2 is back on the 2016 ballot.

Sen. Jeff Brandes (R-St. Petersburg) said he objected to the way the Florida system was engineered, telling The Miami Herald, “We have created a regulatory market that is anything but a free market. We have issued the same amount of licenses Willy Wonka gave in golden tickets. You [the bill’s engineers] have made five families wealthy, and they will fight forever to prevent any change in the regulatory structure.”

Fabrizio’s son, Anthony (aka A.J.), might have also been what led Fabrizio to the world of marijuana. A.J. had moved out to the San Francisco Bay Area where he created his own brand of carbon dioxide-extracted hash oil, IVXX (the Roman numerals for “420”), exclusively for Oakland-based Terra Tech Corp. (TRTC). IVXX hash is distributed in two Terra Tech-affiliated dispensaries in the Bay Area; The Green Door in San Francisco and Oakland’s Blum. Blum was the first marijuana dispensary in the world to go public when it partnered with Terra Tech earlier this year, making headlines with a $14 to $21 million initial valuation. It was also the first time a business that sells a federally illegal drug has been publicly traded.

A.J. Fabrizio was also cited as the medical expert who plagiarized large sections of the application for Alpha Foliage, one of Florida’s exclusive medical cannabis license holders. Alpha is a Homestead, Florida-based nursery partnered with Atlanta, Georgia-based Surterra Therapeutics. Entire sections of Alpha/Surterra’s application were flagrantly lifted from Wikipedia or other researcher’s studies and works without attribution. Further, Surterra falsified documentation to meet the state’s 30-year operation requirement for licensing. In late July, a judge tried to remove Surterra’s license for the falsification, but because it is protected by Florida law, opted instead to grant another license to a challenger.

Surterra (Latin for “south land”), is a Georgia-based holdings company pulling from the playbook of publicly traded Oakland, California-based Terra Tech, to capture as much of the U.S. market share as possible and get a leg up on the international competition. The company names of their subsidiary holdings trace the geographic scope of their expanding ambition: Surterra Florida; Surterra Georgia; Surterra Texas and Surterra Global.

While still not publically connected to Surterra’s efforts in Florida, Derek Peterson, CEO of Terra Tech, recently mentioned the state as key to Terra Tech’s strategy on a shareholder earnings call, despite not formally being one of the license holders in the region. What Peterson does have is lots of ties with the most aggressive license holder in Florida: Surterra Therapeutics.

Crossing the Green Line

In 2007, Derek Peterson (aka Derek Oppedisano) was living in Orange County, California and making his way up in the world of investment banking and finance. He spent years working for Wachovia where he managed “portfolios for high-worth individuals and institutions, family funds [and] private office money” before moving on to Morgan Stanley where he “oversaw combined assets of close to $100 million.”

But then Peterson says everything changed when he broke his neck in a surfing accident. After experiencing withdrawal from prescribed opiates, Peterson began using cannabis instead, which was already legally available in California. But he didn’t just use cannabis; he decided to build his future on in it.

Peterson told the Huffington Post he had “learned that a friend’s marijuana dispensary was clearing $18 million a year,” which was “dwarfing Peterson’s $300,000 to $400,000 annual salary at Morgan Stanley. ‘The place was the size of Starbucks and had about 900 patients a day,’ said Peterson.” He said he immediately started thinking about ways he could “prosper from a peripheral business” that could be legally traded by not actually touching the illegal substance. He founded GrowOp Ltd., to sell all-in-one hydroponic grow trailers. It quickly earned a reputation in the “green rush” grow industry and today growopltd.com is a broken URL.

When Morgan Stanley found out about Peterson’s side gig he was given a choice: give it up or he would be asked to leave, with no hard feelings. Peterson said “...[Morgan Stanley] were great about it though, they could have fired me but they asked me to pick a side and I did, and I haven’t regretted it. To be fair, they didn’t want the risk to their already-developed brand.” After parting ways with Wall Street, Peterson doubled down his efforts to make money on the marijuana “green rush” he saw happening all around him in California, so he relocated temporarily to the San Francisco Bay Area and dove right in.

In early 2010, Peterson burst onto the cannabis scene when he and then 27-year-old Oakland taxi-cab heir Dhar Mann set out to start what CNN called the “Wal-Mart of Weed.” It ultimately failed and the two were caught up in a public dispute for years afterwards.

Around the same time as the split with Mann, Peterson acquired Private Secretary (PVST), the stock that would become Terra Tech Corp. (TRTC) and be used to create his very own “Starbucks of Weed.” He already had made the connections necessary to begin launching brands aimed at the cannabis market without explicitly touching the illegal substance, but his true aim was to get in where the real money was: the plant itself.

According to a lengthy researched analysis of Terra Tech Corp; (TRTC), “Terra Tech: A Natural Born Capital Killer” on Seeking Alpha, the stock was designed to be a “pump and dump” stock scheme and even predicted PVST would experience a change in direction and begin heavy promotion.

Private Secretary acquired GrowOp Ltd. and became Terra Tech Corp. (TRTC) in 2010, and according to the article, continued to follow the predicted order of similar stock schemes, which included blitzing the media to pump up the value of stocks.

Peterson founded his own media outlet, The Puffington Host, which he planned to turn into the “Huffington Post of Marijuana.” It featured aggregated marijuana news content and regular original columns from a handful of cannabis industry personalities. The site was left neglected a few months after launch and became malware within a year.

Spending on promotion has been both heavy and consistent since Peterson officially switched careers from Wall Street to Big Marijuana, but it seems with the evolving laws TRTC could become more than a “pump and dump” because where hydro stores and news blogs fail, the plant itself is always a sure sell.

“The real money is in being able to touch the plant, which was something we had to scale into due to the risks involved. The reward in Blum outweighed the risk involved, it was a calculated risk that we had been working towards, then we made that jump over the green line,” Peterson said.

Peterson’s risks have been highly “calculated.” In 2011, Peterson paired up with Salwa Ibrahim, then-assistant to Richard Lee, to obtain a license in Oakland to open a private dispensary.

Richard Lee is the founder of the nation’s first cannabis school, Oaksterdam University, named for its location in the heart of downtown Oakland. Oaksterdam was quickly embraced by the city because it attracted business, tourism and good press.

In 2010, Lee had put up $1.45 million of his own money to get cannabis legalization on the ballot in California. The initiative, Proposition 19, would have made California the first state to go “fully legal,” but was opposed by enough of the industry to make it come up just shy of the 50 percent majority needed to pass. In the meantime, Washington and Colorado passed adult use laws in 2012, followed by Alaska, Oregon and Washington D.C. in 2014. Legalization has become a contested issue in California, and failed to make the ballot in 2012 and 2014 due to divisions in the industry. It’s officially on the ballot again in 2016, thanks to billionaire Facebook mogul Sean Parker.

“I didn’t want to put all my eggs in one basket with cannabis, so I bought… an urban farm in New Jersey. That was our fall back if the Feds ever brought the hammer down,” Peterson said.

In 2012 TRTC purchased New Jersey-based Edible Garden, which would serve as the “straight” brand to reserve market share in places where cannabis was still illegal. Edible Garden “products” are also available in Indiana and Florida. Today, Edible Garden is providing products to Wal-Mart stores and “nutrient-enriched” hydroponically-grown vegetables to grocery chains in the Northeastern U.S. Peterson is careful to emphasize they are “non-GMO.”

New Jersey voters passed a medical cannabis law in 2010, but the same year elected Trump surrogate Chris Christie, who has been staunchly opposed to medical cannabis and has done everything in his power to restrict the market as much as possible. There are currently fewer than 7,000 registered patients able to access five stores in a state with a population of roughly 9 million and patients with the means have left for more friendly states.

In February, Facebook shut down three of New Jersey’s five dispensaries’ pages in a sweep of pages promoting state-legal cannabis businesses across the country. Facebook is Christie’s second highest private campaign contributor after Inserra Supermarkets, which carries Edible Garden’s hydroponic lettuce.

The Garden State is home to some of the world’s top players in the pharmaceutical industry, so it is generally inferred by the national cannabis industry that Christie’s opposition is financially incentivized and Terra Tech has, effectively, made the connections and laid the tracks for expanded northeastern pharmaceutical cannabis markets via the state of New Jersey, complete with legislative support, compliant indoor grow facilities and distribution.

Meanwhile, back in California, Facebook’s Sean Parker is the lead financier of Proposition 64, the Adult Use of Marijuana Act (AUMA), co-opting a coalition of activists including the ACLU, Law Enforcement Against Prohibition and California NORML who had been working towards a separate initiative but are now supporting AUMA, and again, there is vocal opposition among cannabis proponents who feel it would take the state in the wrong direction. Even more so than Proposition 19, this year AUMA has become incredibly divisive in the state’s ingrained marijuana industry.  

Getting a franchise started in time for the California election was an important step for Terra Tech in its plan to dominate Big Marijuana. AUMA includes a “grandfathering clause” that gives preference to collectives in operation before the summer of 2016. With the acquisition of Blum Oakland in 2016, the empire was born and ready to be more than just a “pump and dump.” TRTC has stated their short-term goals are to grow the company through mergers and acquisitions that already have cash flow and the long game is to obtain as many state level licences as possible across the country. They have already started achieving their long game by spending large portions of their funding money on consultants and lobbyists to make sure new legislation favors them.

In early 2016, Peterson made history when he officially pushed TRTC “across the green line.”

Manifest Destiny in the Wild West

Terra Tech Corp. formally acquired Blum Oakland in January 2016, making it the first publicly traded cannabis dispensary in the world, one Peterson hopes to turn into a lucrative franchise model they can duplicate in other places. The single dispensary was valued between $14 and $21 million.  

“We are refining the models for us to go in and do this again with other acquisitions, specifically in the State of California. We now have a model we can rinse and repeat, recycle and regurgitate several times over, which ties directly to our short game,” Peterson said in a June 2016 interview with Stock News Now.

Peterson has boasted that Terra Tech is the “largest permit-holder in the entire state of Nevada” and has focused most of his energy there this year. He says that for the time being his plate is full “to get facilities up and running...and focus on the legislative cycle in 2016” which he acknowledges could tip over half the U.S. population into a legal cannabis market.

Terra Tech already has its foot in the door in the Nevada market, with multiple permits in Clark County (Las Vegas) and at least one in Washoe County (Reno). Nearly ninety percent of the state’s three million residents live in those two counties, with the overwhelming majority in the Las Vegas area, which has a population of nearly 2 million and receives over 40 million visitors a year for vacations and business. Nevada’s economy relies on the recreational dollar, and if marijuana is what people choose to recreate with, the state needs its cut too.

Although voters passed a citizen-led medical cannabis initiative in Nevada in 2000, the state followed California’s lead and took a “hands off” approach to regulation while reserving the right to raid and shut down the unlicensed businesses as it saw fit. After the 2012 election, Nevada legislators saw the bigger picture and decided to license dispensaries regionally across the state. Entrepreneurs have flocked to Vegas to get their hands in the soon-to-be-legal pot. A ballot initiative to legalize adult use is looking good to pass in November alongside neighboring California’s AUMA.

”It’s a rollup and integration dream for us to be able to take a state that is very active. [California] is one of the largest economies in the U.S. [actually, the state has the sixth largest economy in the world], we want to make sure we firm up these relationships, grab these acquisitions and have the first mover advantage,” he said.

And he wants to push A.J. Fabrizio’s IVXX to be the national standard.

In an August 15, 2016 call with Terra Tech Corp. shareholders, Peterson said IVXX was the company’s “largest driver of topline revenue” and believes the extraction market will dominate as cannabis extracts become exclusively legalized over the botanical plant in more states. Peterson reported 795% growth in revenue from the IVXX brand so far in 2016 from $130,000 in the first quarter to $1.1 million in the second. Peterson says the jump in sales is due to the acquisition of Blum Oakland, where most of the product was pushed through the counters by staff specifically trained to promote it in addition to being carried in other shops, a model which he hopes to duplicate in other states, like Florida.

“If you are a shareholder you are paying a lot of attention to the legislative cycle... We have got California… Nevada… and a state like Florida, with a huge population base, with expanded medical to take them over and above the CBD rules and regulations they passed the last [legislative cycle, 2014]... This is exciting for us; it’s a tipping point. From our standpoint it feels like the first time we have gotten significant tailwind, and that’s progress from our perch,” Peterson said.

Terra Tech is not affiliated with a Florida license, but definitely has a web of ties through A.J. Fabrizio suggesting a shared path.

IVXX plans to focus on promoting its new line of pre-filled cartridges, which Peterson sees as essential in a market with high demand for “convenience items” and state regulations only permitting cannabis extracts. He says they have total control over the supply chain and plan to continue to push wholesaling the brand to to other shops.

Terra Tech is even preparing for total supply chain control in what they predict to be future cannabis markets by purchasing supplement brands like VitaminWay, Slim Trim and Bikini Ready, among others.

“We wanted to make sure we had our options covered,” he concluded. He said it was imperative for Terra Tech to “be proactive rather than reactive” due to the speed of changing legislation.

When questioned by shareholders about when the company would finally turn a profit, Peterson responded that for now investments must be made in press and lobbying efforts, which would pay off in the long game. He specifically mentioned that Terra Tech had invested money lobbying for California’s Medical Cannabis Regulation and Safety Act (MCRSA) of 2015 and alluded to supporting “other legalization acts.” MCRSA is a controversial clampdown on the state’s existing $3 billion industry prompted by a need for legal standards and regulations for patients.

“We need to make sure we are lobbying to make sure[sic] the legislation lands in the right arenas for us… I want to scoop up as much market share as possible and when we have grown the company to a level we are happy with, we will trim all the fat,” he answered.  

In the long game to be the most dominant cannabis stock in the world, Peterson is getting ready for the day they can join the “NASDAQ or larger.” He just needs to continue prepping the company for the big moment.

“We need to have our tuxedo on when we show up to the ball,” he concluded on the call.

Shareholders vs. Stakeholders

Layers of regulation have been built into state cannabis markets, and while ancillary businesses have certainly benefitted, dealing with the “dangerous and addictive” plant itself has been the stated cause of vertically integrated licenses and increased layers of costly and complicated legislation, despite science and history suggesting otherwise. Trump’s surrogates, Christie, Scott and Fabrizio, are relying on the over-regulation.

The ideology that drives the FDA approval process favors for-profit pharmaceutical companies but has failed to create a means of approval and study of herbal medicines or financially incentivize their study. Cannabis and other plant medicines simply don’t fit because the FDA and DEA continue to take an ideological stance that some drugs are “bad,” dangerous and medically useless while others are “good,” safe and the cornerstone of modern healthcare.

This summer the DEA again reaffirmed cannabis is a “dangerous and addictive drug” by refusing to move it out of Schedule I, yet on the other hand, the FDA is poised to approve publicly-backed pharmaceutical cannabis products like GW Pharmaceuticals Sativex or Epiodolex.

Republican and Democratic politicians are increasingly coming out in favor of medical legalization since the states of Colorado and Washington voted to legalize in 2012. Of course, because cannabis is still such a dangerous drug, the regulation has become so complex whole industries have sprung up around it. As long as pharmaceutical cannabis “products” are legalized, profiteers and political insiders such as those in the Trump Campaign are incentivized and will continue to impede further access to the botanical plant.

“We have to take a look at science and research in a social context, cannabis is a traditional plant medicine that has been around for millennia,” Dr. Sunil Aggarwal said to an audience at Seattle Hempfest on August 20. Sunil Aggarwal, M.D., Ph.D., is a well-known cannabis researcher who recently finished a year long fellowship for the National Institute of Health (NIH).

Aggarwal told the audience that after the DEA’s decision he engaged in email correspondence with Douglas Throckmorton at the FDA’s Center for Drug Evaluation and Research, the body Health and Human Services (HHS) delegated to write the scientific backing for the rescheduling petition shot down by the DEA. They had engaged in a back and forth specifically on the availability of studies pertaining to extracts of cannabis and how the available science was interpreted in the decision, with Aggarwal noting that over 20 of the most relevant studies had been specifically and explicitly omitted in making the decision.

Aggarwal sent the studies to Throckmorton along with a strongly worded letter, which he read to the audience at Seattle Hempfest, “Any scientific team that feels cannabis actually meets Schedule 1 criteria has to pretend cannabis extracts made from liquid [carbon dioxide] and marketed, for example, as Sativex, are somehow not marijuana, even though for us masses it very much is marijuana. Ignoring their trials is not true scientific thought, but rather obfuscatory hairsplitting that tilts heavily to private pharmaceuticalization of a traditional plant medicine. HHS’s primary mission is not for pharma companies, it’s for health and human services... Marijuana plant extracts are marijuana even though pharmaceutical companies like GW would prefer we not call it as such, those 20 excluded studies are some of the best clinical trial data we have… to arbitrarily exclude them is a disservice to science.”

He continued, “This is the key thing. Cannabis belongs to no government or private entity. Licensed producers that make extracts in the private sector have a rare and coveted wide latitude of scientific freedom to explore and discover in a rigorous way many of the medicinal benefits inherent to cannabis. Does the government have the right to ignore rigorous peer-reviewed published evidence about marijuana’s medical utility, accumulated in the pharmaceutical sector which enjoys privileged access to marijuana for research and development?”

*In the interest of full disclosure: In 2011, for approximately three months, I was the freelance editor of ThePuffingtonHost.com. The site’s design and maintenance were outsourced to developers in India who refused to keep working on the site after payments stopped coming to them. I also stopped working on the site after monthly payments of $500 stopped arriving and phone, text and email communications suddenly stopped. The site was getting moderate traffic and good feedback on social media. My knowledge of Terra Tech, GrowOp and WeGrow was superficial.

Ellen Holland and Jeremy Daw contributed to the reporting of this series.

Angela Bacca is a freelance writer and the former editor of Cannabis Now Magazine. Her work has appeared in AlterNet, Cannabis Culture, SFCritic Music Blog, Skunk Magazine, West Coast Cannabis and Opposing Views, among others.

Sign Up!
Get AlterNet's Daily Newsletter in Your Inbox
+ sign up for additional lists
[x]
Select additional lists by selecting the checkboxes below before clicking Subscribe:
Activism
Drugs
Economy
Education
Environment
Food
Media
World