Who does it take for the NC General Assembly to move fast? Apparently lawmakers can act swiftly if they want to legalize hemp, a relative of marijuana, especially when four lobbyists are on the job, and when the son of a political insider stands to benefit.
And then there’s the firm linked to a convicted Soviet spy and two former drug dealers that was waiting in the wings for hemp to become legal. All these players add to the oddity of the very same legislators who overshot the budget deadline by months managing to pass “the hemp bill” in the space of a couple of days.
In fact, there is no better example of how legislation is introduced and passed in the final hours of an eight-month legislative session than Senate Bill 313 (Industrial Hemp). The legislation started out as a license plate bill for retired registers of deeds in March, but mysteriously became “the hemp bill” on September 28. That’s when SB 313 surfaced as a committee substitute. It passed second reading in the House a few hours later at 8:53 p.m. The Senate passed the motion to concur at 11:35 a.m. the next day – September 29 – and the bill was ratified. The following the day, the General Assembly concluded this year’s legislative session.
The following timeline will help to show the behind-the-scenes work that ultimately pushed the legislation through the day before the marathon legislative session ended. It involves the relative of a powerful political consultant and a team of four lobbyists, including two hired in the six weeks prior to passage and one hired just four days prior to the bill emerging from committee.
December 17, 2014: Articles of Incorporation filed for the North Carolina Industrial Hemp Association, Inc. (NCIHA)
January 30, 2015: Thomas Shumaker registers as executive director and Jason Deans as a lobbyist for NCIHA with N.C. Secretary of State
January 30, 2015: Amanda Styron files as lobbyist for NCIHA with Secretary of State
August 18, 2015: Joshua Ryan Ehrich files as lobbyist for NCIHA with Secretary of State
September 10, 2015: Hemp, Inc. announces David Schmitt, chief operating officer of its subsidiary Industrial Hemp Manufacturing, had been elected to the NC Industrial Hemp Association’s board of directors
September 24, 2015: Johnny Tillett files as lobbyist for NCIHA with Secretary of State
September 28, 2015: SB 313 surfaces as a committee substitute
September 28, 2015: Passed second and third readings in the House
September 29, 2015: Senate passed motion to concur – bill was ratified
This rush job troubled some. A News & Observer article noted:
“Rep. Leo Daughtry, a Smithfield Republican, voiced a concern about the process. The proposal hasn’t appeared in any other bills this session, and the House’s deadline to file legislation was months ago. ‘This may be a great bill,’ he said, ‘but if you’re in Rules two days before we adjourn’ the plan could need review from the House Agriculture Committee.”
Civitas is not quite sure whether Rep. Daughtry made this statement before or after he voted for the bill.
So much for process. The bill passed in the House 101-7 and in the Senate 42-2.
Intended consequences of SB 313?
The legislation also creates the five-member North Carolina Industrial Hemp Commission. The rationale is that it is in the best interest of the state to promote and encourage the development of industrial hemp.
The first question is: If hemp is so benign and good, why does the commission require the appointment of two active law enforcement officers, one a sheriff and the other a chief of police? Are SB 313’s backers anticipating a problem with allowing the cultivation of a plant that was previously illegal?
The commission is allowed to spend up to $200,000 a year for staff support to the commission. An interesting provision of the bill seems to assume that someone is going to contribute a big chunk of money to get this commission running, as the bill says:
The Commission shall not meet or undertake any of its powers and duties under this Article until it has obtained funding from sources other than State funds of at least two hundred thousand dollars ($200,000) to support operations of the Commission. Funding from non-State sources for the Commission’s activities may be returned to the donor or funder if not spent or encumbered within 12 months, upon request of the donor or funder.
Who out there will be providing this money? Would lawmakers insert such a clause if they weren’t confident a funder was out there somewhere?
And you don’t have to worry about the commission once that funding is in place. The state is guaranteeing the eternal life of the commission by taxing the new hemp growers. The legislation says:
(3) To support the Commission’s activities, and to reimburse the Department for expenses associated with the issuance of cultivation licenses under subdivision (2) of this section, the Commission may charge the following fees: a. An initial, graduated license fee, to be paid by each cultivator, based upon the number of acres proposed for cultivation of industrial hemp, not to exceed ten thousand dollars ($10,000), with incentive provisions to encourage the participation of small acreage farmers. b. An annual fee that is the sum of two hundred fifty dollars ($250.00) and two dollars ($2.00) per acre of industrial hemp cultivated.
So with funding being lined up for the newly created North Carolina Industrial Hemp Commission, who would be likely to become a paid staff member?
A favorite would have to be the son of a longtime NC political insider: Thomas Shumaker, the head of the non-profit organization that organized the lobbying effort. Thomas Shumaker’s LinkedIn account says he was “on loan to the North Carolina Industrial Hemp Association, serving as Executive Director since January 2015.” On loan, we gather, from Innovate Naturally, a venture whose general manager is Bob Crumley. Crumley is a personal injury lawyer who ran for N.C. attorney general in 2008. He employed Thomas Shumaker’s father, Paul, as his consultant for the campaign. Paul Shumaker, according to State Board of Elections reports, was paid over $120,000 for his services with the Crumley campaign, though candidate Crumley garnered only 39 percent of the vote.
Remember, there are only two staff members allowed for the Commission, and a logical inference is that Thomas Shumaker, given his present position, is a leading candidate for one of the two staff positions.
Thomas Shumaker graduated from college in 2014. He also lists stints with the Thom Tillis campaign (five months as the coalitions facilitator), and he says that he is executive director of another non-profit, Children Medical Expense Help (CME Help). In another bio found on Asheville Green Drinks, a networking site, we find that Shumaker attended NC State University (graduating in 2014) where he got his undergraduate degree in agriculture business and a minor in biology and “was involved with the Hemp Industry throughout college.”
Hemp, Inc. Comes to NC
While we are troubled about the potential conflicts in the passage of the bill, it remains to be seen if there is another reason for concern – the appearance in the Old North State of a hemp company run by former drug smugglers and a KGB femme fatale. And what did state lawmakers know about this connection?
Las Vegas-based Hemp, Inc. says its goal is to be the leader in the industrial hemp fiber industry in America. According to its website, the company purchased the largest natural fiber manufacturing and processing facility in North America before May 2014. The company relocated the plant to Spring Hope, NC, housed in a 70,000-square foot warehouse.
This Hemp Inc. news release, dated March 10, 2015 (more than six months before SB313 was filed) announces that “after months of waiting,” the company had been given the go-ahead to proceed with the reassembly of its Temafa hemp processing line in Nash County, NC. The company’s plans are to begin with harvesting and processing kenaf (Hibiscus Cannibinus L, a hemp relative) and will convert to industrial hemp when it is legalized.
So who is behind Hemp, Inc.? The company is the largest publicly traded company of hemp stocks in America. Its CEO is Bruce Perlowin, an infamous character in the “hemp industry” as far back as the 1970s. According to a 1992 L.A. Times article, Perlowin, on his resume, called himself an ex-marijuana kingpin. From 1974 to 1984, Perlowin was known for “organizing the largest drug smuggling operation in west-coast history.” He claims to have smuggled more than 500,000 pounds of marijuana into California in that 10-year period. Perlowin was eventually arrested and served nine years of a 15-year sentence in federal prison.
Perlowin has been involved in other hemp-related organizations. He was co-founder, along with Don Steinberg, of Medical Marijuana Inc. – the precursor to Hemp Inc. Steinberg also spent time in federal prison for drug smuggling and has been called the “largest marijuana smuggler in history.”
In this April 2014 Forbes article by Nathan Vardi, “Inside the Pot Stock Bubble,” the author traces the pot stock frenzy to Perlowin. Vardi wrote
“What followed has been a textbook example of how to create buzz through wheeling and dealing with related [stock] vehicles. When Perlowin oversaw it, Medical Marijuana didn’t actually do much, offering educational seminars and consulting services. Then, in 2011, Medical Marijuana sold a huge stake by issuing 260 million shares to a privately held investment vehicle, Hemp Deposit & Distribution Corp., run by Michael Llamas, then 26.
“Llamas became Medical Marijuana’s president. Assets began moving back and forth between the companies he ran, creating at least the appearance of progress. For instance, in April 2012 Medical Marijuana acquired 80% of a Hemp Deposit business called PhytoSphere, which was billed by Llamas in a press release as a biotech outfit that produces hemp-based products for pharmaceutical markets.”
Can this story get any wilder?
Perlowin and Steinberg aren’t the only outlandish characters involved.
Meet Svetlana Ogorodnikov, a Russian spy tried and convicted for espionage in 1985. Ogorodnikov, a KGB agent, seduced and flipped the first FBI agent ever to be charged with espionage – Richard Miller. While in prison, Svetlana met Perlowin and later they married. She is also one of Hemp, Inc.’s largest shareholders.
Ogorodnikov was sentenced to 18 years in prison, and she was released nine years later in 1994. In 1999 Ogorodnikov returned to the U.S. to live with her husband (Perlowin) at a ranch owned by a woman named Kimberly Bailey. The FBI discovered that Ogorodnikov was involved in a murder-for-hire scheme. Ultimately, Ogorodnikov worked with the FBI in its investigation of Bailey of the torture-murder of her boyfriend, a private investigator. Bailey had confided in Ogorodnikov that, in 1998, she had hired several men to kill Richard Post. In an AP article, dated June 27, 2002, Ben Fox wrote:
“Bailey repeatedly asked Ogorodnikova if she could hire a hitman to kill witnesses and others involved in the murder of the private investigator, Richard Post, the Russian woman testified.” Bailey was convicted and sentenced to life in prison.
While we are troubled about the potential conflicts in the passage of the bill, and some of the actors who may benefit from it, the real concern is that a bill that has drastically changed existing law and allowed the cultivation of a plant that is essentially identical in appearance to an illegal plant was brought up and passed in less than 36 hours with no real consideration or debate.
This is not healthy for our form of government and it remains to be seen if it is healthy for our state.