Commissioner Jim Cavanaugh, an attorney, as well as a fellow lawyer Michael O'Hara, a campaign treasurer and a company based in Washington, D.C., were all named in a lawsuit filed last week by donors to the effort to qualify the medical cannabis issue for the November ballot.

The lawsuit claims that Cavanaugh and the others failed to account for the spending of donations, reported political contributions late, and did not create a nonprofit to properly handle the donations.

The plaintiffs in the lawsuit also allege that Cavanaugh and O’Hara assured them that the language of the Nebraskans for Medical Marijuana ballot initiative was legally “solid."

However, when anti-cannabis forces challenged the approval of the ballot language by the Nebraska Secretary of State, the Nebraska Supreme Court ruled that it contained more than one subject in violation of the state constitution, thus disqualifying the issue for the ballot. 

Cavanaugh and O'Hara were hired to coordinate the initiative, and they formed a campaign committee called "ADOPT." They hired a D.C. firm, First Tuesday Campaigns, to collect the more than 122,000 signatures needed to qualify for the ballot, according to the lawsuit.

A Texas oil company, Mai Oil; a Maryland investment firm, Kingfish Investments; and an Omaha construction company, Harper Enterprises; donated about $606,000 in February and March of 2020 to get the petition drive underway.

However, by June 8, the effort — which paused for three weeks because of the COVID-19 pandemic — had collected only about 63,000 signatures, and the group of financial contributors moved to fire the Cavanaugh group. 

That, according to the lawsuit, led to a dispute over the return of some of the contributions and whether the contributors had to sign a "hold harmless" agreement with Cavanaugh and others before the completed petitions would be turned over to them.

The lawsuit alleges that First Tuesday agreed to return $328,000 in contributions, but that only $170,000 was provided.

The lawsuit maintains that the financial backers of the petition drive had signed the release agreement "under duress." It asks the Lancaster County District Court to nullify the agreement and award them financial damages.

Despite the disruption, a new coordinator of the petition drive, Heartland Strategy Group, was hired. Heartland brought in a new firm, which gathered 150,000 signatures in just more than a month to reach the signature requirement.

Cavanaugh, when reached by telephone Tuesday, said he had not yet read the lawsuit. A message left with O'Hara's office was not immediately returned. Similarly, a message left with Jonathan Stember, an official with First Tuesday Campaigns named in the lawsuit, was not returned.

Barry Rubin, president of Heartland Strategy Group, said that the Cavanaugh organization failed to "put their money on the ground" to gather signatures.

Because of the late filing of campaign donations reported by ADOPT, the Nebraska Accountability and Disclosure Commission imposed late filing fines in the amount of $750 for Harper Enterprises, $300 for Kingfish Investments and $34,550 for Mai Oil.

The fine for Mai Oil was larger because penalties are based, in part, on the size of the unreported contribution, according to the commission. Mai Oil also waited more than a month to pay the fine, which caused it to escalate.

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