For sale in the pot industry: political influence
Last in a series
Lobbyist Frank Perullo had good reason to believe his client’s proposal to open a medical marijuana store would receive a warm reception from the Cambridge City Council. After all, Perullo counted six of the nine councilors as his political clients, including Leland Cheung, whom Perullo served as campaign treasurer.
Cheung was ready to do his part. He planned to offer a resolution supporting the marijuana shop.
But Perullo wasn’t going to leave anything to chance at the August 2016 council meeting. So his staff sent Cheung an e-mail labeled “talking points,” describing Commonwealth Alternative Care’s exotic marijuana products.
“LC, please see attached for this evening,” a staffer wrote, addressing Cheung by his initials. “Let me know if you have questions.”
Nothing happens quickly in Massachusetts politics, or in the business of pot, for that matter. But Perullo’s diligence — and carefully cultivated relationships — paid off. Today Commonwealth Alternative Care’s pot shop is under construction in Inman Square.
Marijuana may be the hot, new retail business in town, but it largely plays by the old political rules. The competition for new licenses all over the state has been a bonanza for some in the influence game, none more so than Frank Perullo.
A college dropout who found work at the secretary of state’s office, he now co-owns Boston-based Novus Group, which claims to be “one of the nation’s leading cannabis consulting firms.” He estimates that he has deployed his extensive political connections and expertise to help push 40 to 50 proposed pot shops in Massachusetts. He helped recruit two prominent political clients — former state public safety secretary Andrea Cabral and former Boston city councilor Tito Jackson — to run pot companies, further expanding his reach.
And now Perullo is a pot executive himself, part owner of an enterprise that says it has raised nearly $100 million to build a business in Massachusetts and other states.
But Perullo’s hustle and influence are pushing the boundaries in a new industry where often-overmatched regulators are supposed to prevent a few players from dominating. He stands at the forefront of a cadre of politically connected lawyers, consultants, and lobbyists whose work to promote their well-capitalized clients is having an unintended side effect: undermining the state’s promise to create an egalitarian marijuana industry in which small operators could thrive, a Spotlight Team review found.
The 2017 law that legalized recreational marijuana tried to make room for the little guy by limiting the number of pot shops a company could own or control. The new law also directly encourages pot shop proposals from black and Latino entrepreneurs whose community members were often unfairly targeted for arrest when pot was illegal.
But, so far, winning a license to sell pot in Massachusetts often seems to be determined by whom you know — or if you can afford to pay a lobbyist or consultant who knows people.
At least 12 of the 17 recreational pot stores open as of May 1 hired lobbyists or former politicians. The Boston Globe Spotlight Team obtained, through public records requests, thousands of e-mails relating to pot shop proposals in a host of communities. The fingerprints of influence peddlers — consultants, lawyers, lobbyists — are all over them.
This should be no surprise; it would be a surprise, in fact, if the influence business had taken a pass on the lucrative potential of pot. But the flood of former government officials coming into the pot business — including former governor and current presidential candidate William F. Weld, former state House speaker Thomas M. Finneran, former state senator Andrea F. Nuciforo Jr., former Boston city councilor Michael P. Ross and even former Boston police superintendent-in-chief Daniel Linskey — is striking.
And the lobbying payments can be eye-popping. For example, New England Treatment Access, which has opened pot stores in Brookline and Northampton, has paid $530,000 since 2014 for a lobbying effort that included work by former state senator Robert A. Bernstein and former representative James E. Vallee. Pot companies have paid Perullo and Novus Group at least $760,500.
State lobbying records do not track marijuana as an industry, so it’s difficult to calculate the total growth of the pot influence-peddling business. But even among lobbyists, Perullo stands out. The man is everywhere, the engine behind a web of entities and investors deployed in a host of deals.
Perullo and investor Abner Kurtin are proposing three pot stores in Greater Boston and a growing facility in Athol through their company Ascend Massachusetts, where Perullo’s former client Cabral is chief executive. Kurtin also runs a private equity fund with Greg Thomaier, who is backing yet another pot company, Union Twist — where former state representative Marie St. Fleur, another Perullo client, is an executive.
Operators of a third company connected to Perullo and Kurtin want to open yet another shop next to the Athol cultivation site. An employee of Kurtin’s investment fund was listed on the shop’s corporate records and Perullo and Kurtin would be the store’s landlord.
If all are approved, that could give them influence over at least seven pot shops. The state’s three-shop legal limit has clearly not been an impediment so far.
Perullo, in an interview with the Globe, said it was premature to raise questions about Ascend and license limits. Pot is a new industry with a relatively small pool of capital, he said, so overlap is to be expected among the early investors. State regulators will scrutinize everything, including relationships between companies, he said.
“It will be reviewed,” Perullo said. “And if it needs to be modified, we’re happy to modify it.”
But, for some local officials, the labyrinthine networks of ownership and investment raise concerns about whether they are getting the full story about who’s in charge.
“There are corporations within corporations within corporations. If you track them back, they all go back to the same small number of people,” explained Rebecca J. Bialecki, chair of Athol’s Board of Selectmen.
Frank Perullo, she said, “is one of those people.”
Perullo said his firm simply provides expertise that helps guide clients through an often murky licensing process.
“I’ve been very, very fortunate to have clients that appreciate what I do and [they] pay me for what I do,” Perullo said. “And I think this industry is a dream come true for someone like me who likes to get in with their hands and do the hard work.”
Other players in the pot industry feel likewise. Despite the proliferation of upstart marijuana companies, many of the same faces — the same lawyers, consultants, and lobbyists — show up again and again at hearings for proposed stores. At the Greenfield Zoning Board in February, attorney Phil Silverman from the national pot law firm Vicente Sederberg quipped that he had been “to 50 communities recently doing the same thing.”
Or take Jay A. Youmans, a former Department of Public Health official who describes himself as lead author of the state’s medical marijuana regulations. Youmans jumped into influence peddling so quickly that his last paycheck from the state arrived after he’d already registered as a lobbyist for his new firm, Smith, Costello & Crawford.
Youmans said he abided by the state’s cooling-off period, which required him to wait a year before lobbying his former DPH colleagues, but that still left him plenty of other work he could do. In his first 20 months since leaving state government, Youmans has received $322,000 from pot clients for his lobbying services on Beacon Hill alone, a figure that doesn’t include payments for his work at the local level in Boston, Cambridge, Nantucket, and beyond.
Lobbyists with a background in government like Youmans’s bring expertise that hard-pressed local officials sometimes lean on. When Cambridge City Councilor Craig Kelley had a question about zoning in 2018, the chief executive of Revolutionary Clinics quickly turned to his lobbyist.
“Jay Youmans, copied here and who worked at DPH, is a person that is an expert in these matters,” wrote Keith W. Cooper on Aug. 8, 2018. “Please feel [free] to speak with him.”
In an interview, Youmans said he is not trying to tilt the playing field in favor of the powerful, noting that his firm represents an economic empowerment marijuana applicant pro bono and helped organize a job fair to get more people of color involved in the industry. His firm will not represent clients, he said, who try to circumvent the license cap and other state rules.
“We’re a part of the solution,” Youmans said. “I don’t view us as part of the problem.”
Still, some worry that lobbyists will enable large corporations to define the new industry. In Massachusetts, few municipalities require lobbyists to disclose their work at the local level. That gap, Boston City Councilor Michelle Wu warns, “is a recipe for political connections and big money to take over.
“There are daily calls from lobbyists,” said Wu, who championed new municipal lobbying regulations for Boston. “Some of the smaller operators are also trying to make sure they’re reaching out, but when you can pay someone to get you meetings and face-to-face conversations, it’s a very uneven playing field.”
A pioneering consultant
Perullo, 42, learned the value of hard work in high school, he said, washing dishes at his family’s restaurant, Max’s Restaurant and Pub in Lynn. He took classes at Suffolk University but found his calling after a family friend with political connections made a phone call and got him a job at the secretary of state’s office.
That job at age 20 put Perullo on track to rise to where he is now, more than two decades later. He eventually oversaw Massachusetts’ first centralized voter database — a significant technological milestone because disparate voter records had previously been kept locally at the state’s 351 cities and towns.
Perullo parlayed that technology into a business. He became a pioneering political consultant who used the mining of voter data to redefine campaigns. He sold voter lists, data, and more to some 6,000 political campaigns across 21 states. (Perullo also did polling, including work for The Boston Globe.)
He was an entrepreneur, Perullo told the Globe in 2006, “driven by a desire to get rich.” Marijuana may make his dream come true, with the foundation of his pot business built on his network of political clients, stretching from the Berkshires to Cape Cod.
In Boston, Perullo looked to his former clients, or those of his consulting group — Senator Joseph A. Boncore of Winthrop, Representative Aaron Michlewitz of Boston, and Boston City Councilor Josh Zakim — to write letters supporting Ascend’s flagship store near North Station. (The lawmakers told the Globe they supported Ascend because of its store location, not Perullo.)
“It’s just persistence,” Perullo said. “It’s knowing when to call and who to call and having that subject matter expertise to know the process and how to get it done.”
He also made himself valuable to local officials.
“I like Frank,” said Athol Town Manager Shaun A. Suhoski. “When he tells me something’s going to be done, it gets done.”
Perullo’s income from marijuana is difficult to tally. The Novus Group does not disclose how much it charges and the $760,500 the firm has been paid for lobbying by pot clients since 2015 does not reflect all of the firm’s work. But records from Perullo’s recent divorce offer one indication of his financial resources: He agreed to child support payments starting in January that total $180,000 a year.
Perullo’s income may be hard to quantify, but his impact is clear. His team at Novus has helped the Florida-based investors behind Sea Hunter Therapeutics pursue licenses for nine pot stores through a network of interconnected corporate entities. Though that’s considerably more than the state cap of three per company, Sea Hunter executives say they will not have control over more than the limit.
Perullo helped conceal the sprawling ambitions of his client. When Greenfield Mayor William F. Martin asked about the state cap on licenses, Perullo told him only about the pot stores being pursued by one of Sea Hunter’s affiliates.
“There is a limit of three. We have three,” Perullo wrote back in a July 2018 e-mail obtained by the Globe through a public record request. “Greenfield. Easthampton. Amherst.”
But Perullo didn’t say that his consulting firm was also working closely with another Sea Hunter affiliate, Verdant Medical, to open pot stores in Provincetown, Rowley, and the Mattapan neighborhood of Boston.
Asked recently if he believes Perullo was fully forthcoming, Greenfield’s mayor replied: “Obviously not since they were part of a larger group seeking franchises, if you will, in different parts of the state.”
Perullo said his response to the Greenfield mayor was “very accurate” because Sea Hunter and its individual affiliates were separate clients. But the actions of one of Perullo’s staffers showed the extent of Novus’s involvement in Sea Hunter operations.
For several months, records show, Anne Nagle worked for both Novus and Sea Hunter’s other companies, using different e-mail addresses to keep her roles separate. One day last year, Nagle wrote nearly identical messages to officials in Greenfield and Provincetown, within minutes of each other, one using her Novus address, the other her Verdant Medical e-mail.
“We work very hard to help these companies, which most of the times [are] having a hard time finding the resources that they need to hire full-time folks,” Perullo said in defending Novus’s approach to helping clients. “Our role was to assemble a team of experts to get them through the permitting process and help them get their doors open.”
Now as an executive and part-owner in the startup, Ascend Wellness Holdings, Perullo said he has a chance to help shape a new industry. That includes recruiting marijuana executives such as Andrea Cabral. In an interview, Cabral recalled that Perullo bucked the establishment and worked for her successful 2004 campaign, helping her to become the first woman and first African American elected Suffolk sheriff.
“People forget what the atmosphere was back then,” Cabral said. “There was considerable political risk to supporting me.”
Cabral was secretary of public safety when medical marijuana was legalized and served on a state marijuana advisory board. After she left office, Perullo asked Cabral to run Ascend’s business in Massachusetts.
The marijuana business intrigued Cabral, she said, because there are “very few brand new industries in this country and fewer that present a wide open opportunity for women to be in leadership or people of color to be in leadership.”
Cabral then persuaded her longtime friend, former state representative Marie St. Fleur, to join the pot industry, both women said. St. Fleur, a native of Haiti, described Perullo as a “connector” but said he had no role in her Boston-based pot company, Union Twist, beyond Novus’s work as a consultant. St. Fleur said she and her business partners are making decisions and are in control of the company. Corporate records, however, list Union Twist’s president as Greg Thomaier from Kurtin’s investment fund.
Perullo also helped recruit one of the best known African-American politicians in Boston, former city councilor Tito Jackson, to be chief executive at Verdant Medical.
Perullo expressed pride about his role in recruiting people of color into leadership in an industry that, when it was illegal, led to the disproportionate incarceration of blacks and Latinos.
“People of color in this city have been stepped on and stepped over for far too long,” Perullo said. “And if it’s my opportunity to help bridge the gap for their opportunity, I will never apologize for that.”
Now, Perullo is taking a leave from Novus Group and making a big bet on his own Ascend Wellness, which is pushing to open stores in four states. He has cast his lot with Kurtin, an investment veteran who once worked for the well known Boston hedge fund the Baupost Group.
Kurtin and Thomaier founded a high-end investment club focused on pot that became JM10 Partners, which has taken stakes in four marijuana firms that already have opened stores in Massachusetts. Kurtin said that all of JM10’s investments, including Union Twist, will follow the law — with holdings no greater than 9.9 percent in any company.
But Kurtin wanted to start his own operation, too. Over several breakfasts with Perullo at Newton’s Rox Diner, they decided to launch Ascend Wellness.
“You have guys flying in from Palm Beach and Illinois and California who potentially are getting a lot of the licenses in Mass. And we were like, why?” Kurtin said. “We really wanted to found a company that could do a better job.”
Lobbying in the far corners
The pot lobbying frenzy has reached even the most distant corners of the commonwealth, including 30 miles offshore in Nantucket. There, one of two planned pot licenses has already been awarded to a company that hired Perullo’s Novus to help build community support.
That left one remaining license on the island, and the fight got so intense this winter that one company offered to walk away for a $15 million payoff.
But the fight went forward. One company vying for the Nantucket license was Acreage Holdings, whose board includes Weld and former US House speaker John Boehner. To make local connections, Acreage hired former Nantucket select board member Patricia Roggeveen.
“I was hoping we could sit down and talk about your concerns regarding Acreage Holdings,” Roggeveen e-mailed Selectman Matt Fee in July 2018. “I’ve just started to work with them, and want to understand more about where you’re coming from.”
But Roggeveen wasn’t the only former government official fighting for the license. Another pot company, ACK Natural, hired its own lobbyist — Youmans, the former Department of Public Health official.
“Great to connect today — so appreciated,” Youmans e-mailed Nantucket’s deputy director of planning. “How might 11/28 work for me to meet with you and the team in Nantucket?”
As a vote on the license neared, a select board member sounded exasperated.
“I know all the people involved in both of these groups,” Selectwoman Dawn E. Hill Holdgate said. “I’m being lobbied left and right. I feel like I’m in an incredibly unfair position.”
In the end, the side that hired Youmans won, but that was just one flashpoint in a much larger battle. Acreage may have lost on Nantucket, but the company still had plenty of ambitions, backing pot stores in Leominster, Shrewsbury, West Tisbury, Framingham, and beyond.