John Elias, a veteran employee at the U.S. Department of Justice Antitrust Division, testified on Wednesday that Attorney General William Barr opened antitrust investigations into 10 cannabis companies due to his personal dislike for the industry, which Elias agreed was tantamount to “harassment” and didn’t “even come close to meeting established criteria” for an investigation, according to an MJBizDaily report.
In the testimony, Elias only names one of the cases opened by Barr – the proposed 2018 merger of MedMen and PharmaCann, which was ultimately called off. Elias, who is testifying as a whistleblower in a House Committee on the Judiciary investigation seeking information on the alleged politicization of the Justice Department under Barr, said the attorney general ordered a full review of the deal despite it not coming close to meeting review thresholds by the anti-trust division. Barr’s request led to the production of 1.3 million documents and required 40 personnel to review, Elias testified.
In all, the nine cannabis cases reviewed last year accounted for nearly 30 percent of the antitrust division’s full-review or second-request review and at one point five of the agency’s eight active investigations were for cannabis firms.
In many of the cannabis industry investigations, staff calculated market shares far smaller than the double-digit shares that ordinarily trigger a full antitrust review, according to Elias, and in two instances, staff determined at the start of the investigation that the merging companies operated in different geographic locations and did not compete at all.
Elias indicated that the post-merger market share for one of the unnamed investigated deals would be just 0.35 percent.
“This rationale – standing alone, without reference to a competition problem – is not described in the Merger Guidelines as a basis for investigating a transaction.” — Elias, during testimony, via MarketWatch
In several instances, staff sought to make the investigation less burdensome on the parties by narrowing the subpoenas but “political leadership” at DOJ refused such requests, Elias said during his testimony.
In 2019, shortly after being confirmed by the Senate, Barr called the cannabis policies in the U.S. “intolerable” and said he would support policies outlined in the STATES Act, which would protect state-approved cannabis programs.
Last January, Barr said he would “not go after” legal cannabusinesses.