CAUGHT: Did Magee and Davis vote for personal gain?

   

The question has been asked, should a person or their family be able to directly benefit from their status as a legislator? In our experience it’s been quite common to hear about spouses of lawmakers who are lobbyists, or at least employed by a business dependent upon public money. However, there should be a point at which the action becomes illegal, or at least unethical. When it comes to marijuana legislation, numerous Louisiana lawmakers may have already crossed that line.

In 2015, Louisiana enacted the Alison Neustrom Act (Act 261) authorizing the Louisiana Board of Pharmacy and the Louisiana State Board of Medical Examiners to develop rules and regulations by which marijuana could be prescribed for therapeutic use. The bill which became law was introduced by Senator Fred H. Mills, Jr. of Breaux Bridge. Senator Mills is a pharmacist by trade.

This legislative session Representative Tanner Magee of Houma sought to reform the regulations concerning the production and dispensing of marijuana. Through House Bill 697 Magee will remove the Louisiana State Board of Medical Examiners from among the policy makers and transfer “licensing” from the independently elected Louisiana Commissioner of Agriculture and Forestry to the Louisiana Department of Health, or an appointee of the Governor. Tanner’s bill also seeks to divide the state into nine regions allowing for a pharmacy permit to be issued to a single pharmacy after a region has five thousand qualified patients. The bill also provides for pages of onerous regulations which would be codified into state law requiring further legislative acts to modify them. The laundry list of regulations contained in the law would clearly limit the ability of businesses to break into the market without significant capital, creating a government controlled monopoly.

Magee also introduced marijuana legislation last year (HB391) which was signed into law (Act 424). That act allowed for any physician licensed with the Louisiana State Board of Medical Examiners to recommend ‘inhalable’ forms of marijuana.

Legislative Ties to Medical Marijuana Industry

Tanner Magee is married to Kristen Magee, a CPA who previously served as the Controller for GB Sciences, LLC. GB Sciences, LLC, which is based in Las Vegas, Nevada, is the company that has the exclusive license issued by the LSU AgCenter to cultivate and produce marijuana products in the state of Louisiana. It is one of only two companies licensed in the state, with the second company being licensed by Southern University.

Magee, who filed personal finance disclosure statements for the years of 2018, 2019 and 2020 (the period is spouse was employed by GB Sciences, LLC), did not disclose his spouse’s employment and/or income derived from GB Sciences, LLC. Magee was fully aware of the potential conflict of interest and/or appearance of impropriety which existed. GB Sciences, LLC sold its 50% stake in the Louisiana medical marijuana business to Wellcana Plus, LLC in December of 2019.

Enter Paula Davis

But Magee is not the only Louisiana legislator with close ties the medical marijuana industry. Representative Paula Davis of Baton Rouge is also connected. Davis’ spouse, John Davis, an attorney and former lobbyists is/was the President of GB Sciences.

The September 14, 2017 agreement for services between LSU and GB Sciences Louisiana, LLC doesn’t list Davis as a representative of either of the parties to the contract. However, it does list John B. Davis of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC as being provided a copy of the agreement. Although Davis’ exact role during these early stages of the medical marijuana industry is unknown it is clear that he played a part. A review of the 2018 Research Partnership Agreement between LSU and GB Sciences Louisiana, LLC reveals John Davis, listed as president, signed the agreement on behalf of GB Sciences Louisiana, LLC. A Master Research and Development Agreement also entered into in 2018 between LSU and GB Sciences Louisiana, LLC bears the signature of John Davis as president of GB Sciences Louisiana, LLC.

According to the personal finance disclosure statements filed in 2018 and 2019 by Davis, her spouse is listed as the “EVP and General Counsel” for GB Sciences, Inc. where his income exceeded $100,000. His duties included “advising, creating and implementing rules and policies for the operation of the company.” John Davis also operated a private consulting firm, John B. Davis Consulting, LLC during this period of time. Davis’ personal finance disclosure statement for 2020 indicates that John Davis is the “president” of GB Sciences, Inc. doing business as Wellcana with his duties being “creating, implementing and directing strategic operations of the company.” As of this writing, Paula Pellerin Davis has yet to file a 2021 personal finance disclosure statements with the Louisiana Board of Ethics.

Behind the smoke

Magee at one point issued a statement reading: “During her (Kristen Magee’s) entire relationship (with GB Sciences, Inc.), I abstained on any marijuana related bill out of an abundance of caution. I publicly disclosed this issue when I abstained. I only got back involved after her relationship ended.” Kristen Magee self-reports her employment with GB Sciences, Inc. ranging from April of 2018 through September of 2020. During this time, Magee, in fact, voted “yes” to House Bills  HB326 and HB627 in 2018 and House Bill HB169 in 2019, which involved legislative changes concerning medical marijuana laws.

Paula Davis who reported her spouse’s employment with Wellcana beginning in 2018 likewise has voted “yes” to several bills concerning medical marijuana. Those favorable votes were also for House Bills HB326 and HB627 in 2018.

Is this illegal?

Buried in Louisiana Revised Statute 40:1046 (H)(4)(e), is a provision which states: “No person licensed pursuant to this Subsection [LSU and Southern University] shall subcontract for services for the cultivation or processing in any way of marijuana if the subcontractor, or any of the service providers in the chain of subcontractors, is owned wholly or in part by any state employee or member of a state employee’s immediate family, including but not limited to any legislator, statewide public official, university or community or technical college employee, Louisiana State University Agricultural Center employee, or Southern University Agricultural Center employee. For the purposes of this Paragraph, “immediate family” has the same meaning as provided in R.S. 42:1102.”

Louisiana Revised Statute 42:1102 reads: “Immediate family” as the term relates to a public servant means his children, the spouses of his children, his brothers and their spouses, his sisters and their spouses, his parents, his spouse, and the parents of his spouse.”

Neither Magee or Davis report in their disclosures statements an ownership interest in companies known to be involved in medical marijuana in Louisiana. However, those reports would not necessarily include information concerning other immediate family members. Additionally, the statute lacks any penalties or enforcement mechanisms giving it “teeth” to discourage bad actors.

What about substantial economic interest?

Louisiana Revised Statute 42:1112 would potentially bar Magee and Davis from participating in any transaction involving the governmental entity in which, to his or her actual knowledge, any immediate family would have a “substantial economic interest”. “Substantial economic interest” is defined as “an economic interest which is of greater benefit to the public servant or other person than to a general class or group of persons.” And a “transaction involving the governmental entity” means any proceeding, application, submission, request for a ruling or other determination, contract, claim, case, or other such particular matter which the public servant or former public servant of the governmental entity in question knows or should know:

(a) Is, or will be, the subject of action by the governmental entity.

(b) Is one to which the governmental entity is or will be a party.

(c) Is one in which the governmental entity has a direct interest. A transaction involving the agency of a governmental entity shall have the same meaning with respect to the agency.

The final word

Is a law maker’s participation in the legislation process that impacts the exclusively licensed corporation from which their spouse earns a considerable salary constitute a “transaction”? And if it does constitute a transaction, how much money would have to be gained to rise to the level of a “substantial economic interest”?

It might also be instructive to know why Magee seeks to transfer oversight for the production and dispensing of marijuana away from the Louisiana Department of Agriculture to the authoritarian Governor John Bel Edwards.

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