DOJ whistleblower: Attorney General Barr’s treatment of cannabis industry tantamount to ‘harassment’

Department of Justice; cannabis mergers, DOJ whistleblower: Attorney General Barr’s treatment of cannabis industry tantamount to ‘harassment’

John Elias tells the U.S. House Judiciary Committee about what he viewed as unfair treatment of the cannabis industry by the Justice Department.

A career U.S. Justice Department attorney testified Wednesday that antitrust investigations of 10 cannabis mergers since March 2019 were “not even close to meeting established criteria” for such reviews and agreed they amounted to industry “harassment” by Attorney General William Barr.

John Elias told a U.S. House Judiciary Committee hearing that antitrust employees were told at an all-staff meeting in September 2019 that cannabis was unpopular “on the fifth floor,” a reference to Barr.

The resulting investigations represented a significant chunk of the antitrust division’s cases and drew in staff from other DOJ sections to assist in the probes, according to Elias.

Elias said he asked the DOJ inspector general to examine whether abuses of authority and misconduct occurred during what was a wave of cannabis antitrust merger reviews.

Cannabis companies were forced to produce millions of documents but probably only a small portion were reviewed, Elias testified.

In one case, antitrust division records, according to Elias, show that the closing of the investigative process began before the documents had been uploaded and made available for viewing by division staff.

In other words, antitrust attorneys had not even looked at the documents while the investigation remained open.

U.S. Rep. Steve Cohen, a Tennessee Democrat, asked Elias if it was fair to characterize the situation as Barr leveling a form of “harassment” against an industry he personally disliked.

“I think that’s a fair way to characterize it, yes,” Elias said.

Earlier, Elias testified that “the personal dislike of an industry is not a valid basis upon which to ground an antitrust investigation.”

Elias was one of several witnesses at a hearing that focused on Barr’s conduct in a number of cases. The hearing was titled: “Oversight of the Department of Justice: Political Interference and Threats to Prosecutorial Independence.”

MedMen-PharmaCann deal

Elias didn’t name any of the cannabis mergers, except the first one reviewed by the antitrust division: the $682 million MedMen-PharmaCann merger deal.

He told the committee that Barr had phoned the “antitrust leadership” and ordered a full review despite the deal not being close to meeting merger review thresholds.

The request resulted in the production of 1.3 million documents involving 40 personnel to review, Elias said.

MedMen and PharmaCann, he noted, abandoned the merger, citing delays in obtaining regulatory approvals.

MedMen and PharmaCann didn’t immediately respond to Marijuana Business Daily inquiries for comment.

Rep. Doug Collins, a Georgia Republican, attacked Elias, noting, among other things, that the office investigating his whistleblower complaint concluded that it was reasonable for the DOJ to seek additional information on the merger deals because of the unique challenges presented by the cannabis industry.

Elias, in his testimony, shed light on the extent of the reviews, and how it preoccupied the antitrust division:

  • Nine cannabis cases accounted for 29% of the antitrust division’s full-review or second-request merger investigations in fiscal year 2019.
  • At one point, cannabis investigations accounted for five of the eight active merger investigations in the office that is responsible for the transportation, energy and agriculture sectors of the U.S. economy. The investigations were so numerous that staff from other offices were pulled in to assist, including employees from the telecommunications, media and technology offices.
  • In many of these investigations, staff calculated market shares far smaller than the double-digit shares that ordinarily trigger a full antitrust review. In two instances, staff determined at the outset that the merging companies operated in different geographies and did not compete at all.
  • In several instances, staff sought to make the investigation less burdensome on the parties by narrowing the subpoenas. “Political leadership” at DOJ refused such requests, Elias said.

Jeff Smith can be reached at [email protected]

5 comments on “DOJ whistleblower: Attorney General Barr’s treatment of cannabis industry tantamount to ‘harassment’
  1. Canuck in Cannabis on

    Simply because he does not like cannabis. Considering the economic mess in the US right now, Barr might want to consider a well-proven revenue source of taxes. Like in Canada, cannabis thrives in good times and bad times. That’s a solid revenue source for cash-strapped governments. Word on the street is that even in California, many regions who declined dispensaries are rethinking that. The genie is out of the bottle, hard to put it back in now.

  2. Jeff on

    It is past time to shut down the whole anti-trust dept. and the law that gives these tyrants this power. When you check on the history of anti-trust prosecutions, you will find arbitrary and unjustified cases all the way back since that law was passed.

  3. Shelley Boyes on

    “The investigations were so numerous that staff from other offices were pulled in to assist including employees from the telecommunications, media and technology offices.”

    Employees taken off of files involving three of the most ownership-concentrated industries in the U.S. to “investigate” antitrust in cannabis? The mind boggles.

  4. Micheals on

    Hmm, a whistleblower giving second-hand snowflake commentary like “he does not like us” to the same bias House committee that pushed the Russia Hoax and the Impeachment Hoax that ended up exonerating Trump. And despite AG Barr comments about preferring nationwide marijuana laws and that he would not go after the industry.

    Believing a disgruntled whistleblower over the words out of his mouth? I have seen this movie. I would suggest holding judgement or not and just be oblivious idiots to believe that same people that have fooled you time and time again. That should be too hard in this case 🙂

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