Attorney General William Barr’s personal opposition to marijuana led him to lead inadequate antitrust investigations into multiple cannabis company mergers, accounting for nearly a third of the division’s cases in 2019, according to written testimony from a current Department official. of Justice that is scheduled before the Chamber Judicial Committee on Wednesday.
Those investigations, which appear to have influenced the end of at least one major merger between MedMen and PharmaCann, were protested by career Justice Department staff who opposed the rationale for such investigations. The Justice Department’s Antitrust Division generally must demonstrate that there is a substantial risk of anti-competitive harm to the mergers it investigates, including the potential for monopolization.
The official emphasized that Barr’s directive resulted in waste of departmental resources, with cannabis transactions at one point representing “five of the eight active merger investigations in the office that is responsible for the transportation, energy and agriculture sectors of the American economy. “
Via Judicial Committee of the House.
“The investigations were so numerous that staff from other offices were hired to help, including the telecommunications, technology and media offices,” said John Elias, who has been in the department for 14 years.
In March 2019, Barr reportedly called the leadership of the Antitrust Division to a meeting titled “Review of the Marijuana Industry Merger,” according to testimony. Staff were instructed to prepare an information memorandum on the MedMen-PharmaCann transaction and concluded that “it was unlikely to raise significant competitive concerns that would warrant the issuance of” a secondary request to investigate the merger.
Elias emphasized that this was just one example of an investigation led by Barr that was “undertaken on career personnel objections.”
And the excessive scrutiny of the marijuana companies did not stop there.
Under Barr’s influence, “the Antitrust Division launched ten large-scale reviews of the fusion activity taking place in the marijuana or cannabis industry,” Elias said. “These mergers involve companies with low market shares in a fragmented industry; they do not meet the criteria established for antitrust investigations. “
“When career staff examined the transaction, they found that the cannabis industry appeared to be fragmented with many market participants in states that had legalized the product,” he continued. “As a result, they viewed the transaction as unlikely to raise significant competitive concerns.”
However, the nation’s chief prosecutor carried out unconventional legal proceedings, ordering “the Antimonopoly Division to issue Second Request subpoenas.”
Why? According to Elias, the decision “did not focus on an antitrust analysis, but because he did not like the nature of his underlying business.”
“The head of the Antitrust Division, Deputy Attorney General Delrahim, responded to internal concerns about these investigations at a meeting of all staff on September 17, 2019,” the official said. “There, he acknowledged that the investigations were motivated by the fact that the cannabis industry is unpopular ‘on the fifth floor,’ a reference to Attorney General Barr’s offices in the Justice Department headquarters building.”
“Personal aversion to the industry is not an adequate basis on which to base an antitrust investigation.”
This personal animosity towards the cannabis industry appears to be at odds with statements that the attorney general has made at various hearings in Congress, where he expressed interest in resolving the state-federal conflict over marijuana policy and stated that the status quo no it is sustainable. Last year, he said that while he personally opposes legalization, he would prefer that Congress pass a bill that respects states’ rights to implement their own cannabis policies rather than uphold a general federal ban.
After the meeting Barr organized to review cannabis fusions, which was first reported by The New York Times, DOJ staff did not issue recommendations to initiate an investigation or issue citations.
“Instead, staff reiterated their view that the transaction was unlikely to raise significant competitive concerns” and that the industry appeared to be fragmented, with many participants, “the testimony states.” Staff went on to say, however, ‘[t]The Division has decided to open an investigation and issue Second Requests, “for the alleged reason that” it had not closely evaluated this industry before. “This independent justification, without reference to a competition issue, is not described in the merger as the basis for investigating a transaction. “
“The Division Office negotiated compliance with the subpoena with the companies, obtaining 1.3 million documents from the files of 40 employees,” he continues.
Ultimately, in 6 of the 10 investigations for which data is available, the companies investigated produced 5,965,000 documents.
Via Judicial Committee of the House.
“Staff continued to document at the beginning of investigations that the transaction seemed unlikely to raise significant competitive concerns, but that the Division (ie the political leadership) had decided to proceed, allegedly because it had not closely evaluated this industry before.” Elias said. said.
Additionally, Justice Department staff were asked to minimize attention to the investigation. Part of that meant that “career personnel were not allowed to take the usual investigative steps.”
“For example, staff were instructed not to interview clients or competitors, a necessary step in any bona fide antitrust investigation both to assess market conditions and to identify potential witnesses in any enforcement action,” the testimony states. “In several cases, staff sought to make the investigation less burdensome to the parties by reducing subpoenas. The political leadership rejected such requests. “
A hearing of the Judicial Committee on the interference of the Department of Justice in the independence of the prosecution is scheduled for Wednesday, where Elias will testify on this and other matters.
Read the testimonial on DOJ activity on marijuana antitrust investigations below:
Testimony about AG Barr Scruti … by Marijuana Moment on Scribd
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