On April 6, U.S. Attorney for the Western District of Michigan, Mark Totten, announced former Michigan House Speaker Rick Johnson, 70, and three others are facing federal bribery charges in a scheme where Johnson received more than $110,000 bribes in exchange for favorably reviewing license applications for at least three medical marijuana businesses.
“Johnson accepted these bribes corruptly, which is to say that he accepted them with the understanding that these bribes were offered to influence him or to reward him for actions that he might take – mainly, to help the payers of the bribe obtain licenses,” Totten said at the press conference.
Three of the four have already pleaded guilty in federal court, and the fourth is scheduled to do so in the coming week.
What was the board Johnson chaired?
In the years after voters legalized medical marijuana in Michigan in 2008, numerous dispensaries sprung up throughout Michigan, operating in legal limbo — the medical law had never mentioned businesses and Michigan courts had ruled them illegal but some cities allowed them to flourish.
In 2016, the legislature sought to bring some regulations to the budding, highly lucrative industry, and established the Medical Marijuana Facilities Licensing Act.
It allowed dispensaries and other businesses, like processors, to operate with the legal blessing of the state for the first time once they became licensed. They’d have to apply to become legitimate, and a five-person board would review the applications.
Enter former House Speaker Rick Johnson. A Republican who lead the legislature’s lower chamber from 2001 until 2005, he became a lobbyist after leaving elected office and had worked on the law.
Then-Gov. Rick Snyder appointed Johnson to chair the board. The body had financial disclosure requirements, but Johnson didn’t file one until he had been on the board for 116 days.
From 2017: Concerns over marijuana licensing board chair’s past cloud future
Court filings said Johnson “provided valuable non-public information about the anticipated rules and operation of the board and assistance with license applications to” those who paid Johnson bribes while he served as chair.
Johnson has pleaded guilty to accepting a bribe. He could face up to 10 years in prison and a fine of $250,000. As part of his plea agreement, Johnson has agreed to pay $110,200 to the federal government, the total value of the bribes he accepted.
The board eventually disbanded in 2019, under an executive order from Gov. Gretchen Whitmer when she created what is now called the Cannabis Regulatory Agency.
Who else has been implicated?
John Dalaly, 70, a businessman from Oakland County who admitted to paying Johnson at least $68,200 worth of cash and other gifts as he sought a marijuana license on behalf of two businesses, one of which, PharmaCo, ultimately became one of the first businesses in the state to have a marijuana license approved.
In court, Dalaly said Johnson “recommended that we use his wife, Jan Johnson, as a consultant,” and proceeded to pay her $4,000 a month. Johnson’s wife, according to the plea agreement Johnson signed, will not be prosecuted.
Raymond Cassar, Dalaly’s attorney, claimed Dalaly had no ownership stake in the business and was simply acting as a “facilitator” for the businesses investors. A Canadian investment company held a two-thirds stake in PharmaCo, according to business filings, and Cassar said the private flights had been to Canada to meet those investors.
Related: Read filings describing bribery scheme involving ex-Michigan House speaker
Tyler Brown, 32, and Brian Pierce, 45, are both lobbyists for the marijuana industry.
Court filings describe how the two paid Johnson thousands by “transferring client payments” from companies they controlled and sending the cash to the businesses set up by Johnson, JBJ Ranch, LLC; VM Enterprises, LLC and Common Cents Harvest Farms, LLC. They both were charged with conspiracy to pay a bribe.
Brown’s bond, according to court filings, prevents him from participating in any “marijuana business” before his sentencing. Pierce was scheduled to plead guilty this week but his hearing was rescheduled to this upcoming Friday.
What’s next?
The three who have been arraigned so far all still need to be sentenced. They have been released pending sentencing hearing scheduled for September and did not have to pay any bond to walk free.
As to the future of the probe, federal officials have been tight-lipped.
Totten told reporters Tuesday their work in the case “may or may not” be ongoing. All four charged have been cooperating with the FBI for some time, and court filings indicate the scope of the investigation stretches beyond the current charges, but it remains unclear if more charges will be brought.
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