1. Is Citizen Democracy a Good Thing? Is Citizen Democracy a Good Thing? The recent adoption of an initiative deregulating the control state environment in the State of Washington has many in the alcohol beverage industry asking where such a “citizen” movement could occur next. This session will take a broad look at citizen-sponsored initiatives and will discuss the dynamics of conducting an initiative campaign.

2. Introduction of Panel Donald Weatherspoon, Ph.D. (Moderator), Michigan Liquor Control Commission. James R. Parrinello, Esq., Nielsen Merksamer Parrinello Gross & Leoni LLP Tim Ceis, Partner Ceis Bayne East Strategic Donald S. McGehee, Esq., Michigan Attorney General’s Office

3. Opening Remarks of Moderator In most states if citizens are dissatisfied with certain laws or feel that new laws are needed, they can petition to place proposed legislation on the ballot. It is because the electorate can initiate legislation that the process is termed the INITIATIVE. The REFERENDUM allows citizens, through the petition process, to reject or approve laws by referring acts of the Legislature to the ballot before they become law. The referendum also permits the Legislature itself to refer proposed legislation to the electorate for approval or rejection.

4. Twenty-Seven States have the Initiative and Referendum Process Source: Initiative & Referendum Institute at the University of Southern California http://www.iandrinstitute.org/statewide_i&r.htmhttp://www.iandrinstitute.org/statewide_i&r.htm (as of 2/12/12).

5. State-by-State List of Initiative and Referendum Provisions Every state allows the legislature to place a measure on the ballot. Every state except Delaware requires a popular vote to approve constitutional amendments.

6. Sources on the Web to Learn More about Ballot Initiatives Initiative & Referendum Institute at the University of Southern California http://www.iandrinstitute.org/statewide_i&r.htm Ballot Initiative Strategy Center http://www.ballot.org/pages/initiative_process Ballotpedia http://ballotpedia.org

7. GENERAL OVERVIEW -- INITIATIVE & REFERENDUM 4 Ways to Place a Proposed Law on the Ballot: 1.Direct Citizen Initiative: process by which a specified # of voters sign a petition to put a proposed law or constitutional amendment before the state’s electorate for approval or rejection Typically requires signatures of 5 - 10 % of registered voters or votes cast 2.Indirect Citizen Initiative: process by which proposed initiatives are submitted to state legislature after signatures collected; typically the initiative is placed on the ballot if the Legislature does not enact verbatim

8. 3.Legislature-proposed Ballot Measure All 50 states allow the Legislature to place proposed law and/or constitutional amendment on the ballot Majority or super-majority legislative vote required Alabama most prolific 1088 constitutional amendments since 1901 4.Referendum: 24 states have referendum process by which a citizen petition can keep a law passed by the Legislature from going into effect, and put on ballot for a public vote IN SUM: 27 states have some form of citizen initiative and/or referendum & 50 states allow Legislative ballot measures

9. THE INITIATIVE PROCESS IN THE 18 CONTROL STATES 10 HAVE SOME FORM OF INITIATIVE PROCESS FOR LAWS AND/OR CONSTITUTIONAL AMENDMENTS: 8 have a direct initiative process: Idaho (laws), MI (const amdts), Montana (both), Ohio (laws), Oregon (both), Utah (laws), WA (laws), Wyoming (laws)* 6 have an indirect initiative process: Maine (laws), MI (laws), Mississippi (const amdts), Ohio (const amdts), Utah (laws), WA (laws) 5 states provide for substantive legal review prior to signature gathering (Idaho, Miss., Utah, WA. & Wyoming – advisory only except Utah) ALL 18 ALLOW THE LEGISLATURE TO PUT PROPOSED LAWS AND/OR CONSTITUTIONAL AMENDMENTS ON THE BALLOT

10. CALIFORNIA’s EXPERIENCE -- THE INITIATIVE EXPLOSION ADDED TO CONSTITUTION IN 1911 – TO COUNTER SOUTHERN PACIFIC RAILROAD CO’S STRANGLEHOLD ON STATE LEGISLATURE “NO” SIDE USUALLY WINS – 343 Initiative elections 116 “Yes” won 227 “No” won BECAME POPULAR WITH PROPOSITION 13 IN 1978 – ENACTED SWEEPING PROPERTY TAX REFORM AFTER LEGISLATURE REFUSED TO ACT

11. OVER PAST 34 YEARS, INITIATIVES HAVE BEEN PRIME VEHICLE OF PUBLIC POLICY CHANGE IN CALIFORNIA, INCLUDING: – POLITICAL REFORM ACT – TAXATION – CRIMINAL JUSTICE/ DEATH PENALTY/3 STRIKES LAW – PUBLIC EDUCATION FUNDING – STATE WATER PROJECTS – REAPPORTIONMENT – LOCAL GOVERNMENT FUNDING PROTECTIONS – ENVIRONMENTAL/COASTAL PROTECTION – STATE TRANSPORTATION PROJECTS – INDIAN GAMING – AFFIRMATIVE ACTION RESTRICTIONS – MEDICAL MARIJUANA – GAY MARRIAGE INCREASINGLY SOPHISTICATED AND TARGETED CAMPAIGN ADS:

13. PRINCIPAL PLAYERS – CHAMBER OF COMMERCE/BUSINESS ROUNDTABLE – PUBLIC EMPLOYEE UNIONS – HI TECH – INSURANCE – INDIAN TRIBES – TRIAL LAWYERS – BIG OIL – ENVIRONMENTAL GROUPS – INCREASINGLY, WEALTHY INDIVIDUALS

14. $$$ AND INITIATIVE CAMPAIGNS US SUPREME COURT 1981 – LIMITS ON CONTRIBUTIONS TO BALLOT MEASURE COMMITTEES VIOLATE 1 ST AMENDMENT RECORD INITIATIVE CAMPAIGN SPENDING IN CALIFORNIA – 2006 -- $154M ON PROP 87, OIL SEVERANCE TAX STEVEN BING $49.5M OF OWN $$ OIL COMPANIES $94M – 2008 $471M IN CALIF vs $324M IN ALL OTHER STATES – 2008 PROP 8 GAY MARRIAGE $106M SUBJECT TO STRICT FINANCIAL REPORTING LAWS AND ADVERTISING DISCLOSURES

15. I-1183 FUNDING PERSPECTIVE: WASHINGTON - Yes on I-1183 : $22.7M 1,128,904 Yes votes $20.10 per vote CALIFORNIA - No on Prop 87 2006 : $94.5M; 4,635,265 No votes $20.39 per vote

16. INITIATIVE CAMPAIGN PHASES Pre-Circulation Define objective Draft legally sound text of proposed law Hire consultants, survey public opinion, build coalitions Circulation Signature gathering $2-5 per signature New technology for smart-phone signatures could reduce costs, make signature gathering inexpensive Campaign Print and electronic media Full disclosure of $-in and $-out Litigation Usually post-election Many states allow limited pre-election challenges

17. What Caused the Initiatives in Washington State? Corporate Interest in the liquor system Frustration with state control Legislative inaction

18. How to Qualify an Initiative for the Ballot in Washington File the initiative with the Secretary of State Within 10 months and not less than 4 months before the next general election Ballot title written and assigned by the AG Obtain enough signatures 8% of votes cast in the prior Governor’s race = 241,153 Turn signatures into the Secretary of State Litigate the ballot title

19. What Happened When the Initiatives Were on the Ballot? 2010 Initiatives 1100 and 1105 Coalition against - “Protect Our Communities” Coalition in support - Costco and Safeway Total spent $17.8 million (a record) 2011 Initiative 1183 Protect our Communities v Costco Total spent $32.5 million (a new record) (over $20 million by Costco )

20. And After the Election? Litigation Regret Implementation Legislation

21. The Michigan Experience with Initiatives Four methods whereby a proposal can be placed on the statewide ballot in Michigan: (1)Statutory initiative (2)Voter referendum (3)Legislative referendum (4)Constitutional amendment

22. Michigan’s Statutory Initiative Process The power of initiative extends to any law the Legislature may enact and is invoked by filing petitions containing signatures of registered voters equal in number to at least eight percent of the total votes cast in the last election for governor. The Legislature is required to enact, without modification, or reject any proposed initiative within 40 session days. An initiative not enacted by the Legislature is placed on the statewide ballot at the next general election. A law that is initiated or adopted by the people is not subject to gubernatorial veto and once adopted by voters cannot subsequently be amended or repealed except by the voters or by a three-fourths vote of the Legislature (unless Initiative language says otherwise). Mich. Const. 1963, Art. III, § 9

23. Michigan's Referendum Process The power to approve and reject laws enacted by the legislature. Referendum must be invoked, within 90 days of final adjournment of the legislative session during which the law in question was enacted, by filing petitions containing signatures of registered voters equal in number to at least five percent of the total votes cast for governor in the last general election. The effect of invoking a referendum is to suspend the law in question until voters approve or reject it at the next general election. Mich Const. 1963, Art. II, § 9

24. Constitutional Amendment May be proposed either by a two-thirds vote of the Legislature or by filing petitions containing signatures of registered voters equal in number to at least ten percent of the total votes cast for governor in the last general election. The question of CONSTITUTIONAL REVISION is required to appear on the ballot automatically every 16 years after 1978. Its been rejected each time since then. Mich Const. 1963, Art. XII, § 1-3.

25. Notable Michigan Initiatives 1932-Constitutional Initiative to allow for the establishment of a liquor control commission under the law. 1972-Legislative Initiative authorizing Daylight savings time. 1974-Constitutional Initiative eliminating sales taxes on food and drugs. 1976-Legislative Initiative requiring 10-cent bottle deposit on bottles & cans 1978-Constitutional Initiative to raise drinking age to 21. 1994-Constitutional Initiative-Prop A-School Refinance Reform. 1996-Legislative Initiative -Prop E- allowing casino gaming in qualified cities. 2004-Constitutional Initiative defining marriage between man and woman. 2004-Constitutional Initiative requiring voter approval for any gaming authorized after 1/1/04 but exempting Tribal gaming and Detroit casinos. 2008-Legislative Initiative legalizing the use of marijuana for medical purposes, and removed certain restrictions on embryonic stem cell research.

26. Reporting requirements and reports Michigan is different from other states as the reporting requirements and reports are different for ballot measure committees from other campaigns. The Secretary of State's Office uses a tri-annual reporting system and requires campaigns to file different forms for contributions, independent expenditures, in-kind contributions, and outstanding debt.

27. Prohibited contributions Under Michigan law, ballot question committees are prohibited from accepting the following types of contributions: – Anonymous contributions. – Contributions of $20 or more made in cash/coins. – Foreign nationals. – Persons that have a financial stake in a casino or other gambling establishment.