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WASHINGTON — The Department of Justice is deliberately harassing legal cannabis companies with pointless investigations, according to a department insider.
And that’s happening solely because President Trump’s attorney general, Bill Barr, hates weed, the whistleblower says.
John Elias, an antitrust prosecutor who still works for Barr at the DOJ, says the department is using burdensome antitrust probes to demand companies turn over millions of documents that investigators don’t need or even bother to look at. And it’s using a huge portion of its antitrust resources to make life miserable for cannabis companies, he says.
Traditionally, antitrust investigations are supposed to be about making sure a company can’t jack up prices in the market by buying a competitor. But Barr is hardly concerned about ensuring medical cannabis smokers don’t pay too much for their buds. Instead, he’s poured enormous resources into antitrust probes of cannabis companies out of personal bias against their underlying business, Elias claims.
“They were not bona fide antitrust investigations,” Elias plans to tell Congress Wednesday according to a copy of his opening remarks obtained by VICE News. “Personal dislike of the industry is not a proper basis upon which to ground an antitrust investigation.”
The claims open up yet another controversy at Barr’s Department of Justice, which has been accused by department alumni of politicizing investigations and the criminal justice system to protect Trump’s friends and reward his enemies.
The department has conducted ten investigations of mergers in the cannabis industry since March 2019, and almost a third of all the antitrust division’s full-review merger investigations last year were focused on legal cannabis companies, according to Elias.
At one point, cannabis investigations accounted for five out of eight active merger probes in an office that also covers transportation, energy, and agriculture. Officials became so obsessed with probing legal weed mergers that staff from other offices were pulled in to assist from the telecommunications, technology, and media divisions, Elias says.
The top brass around Barr knows that these probes are absolutely bogus, according to Elias.
“These mergers involve companies with low market shares in a fragmented industry; they do not meet established criteria for antitrust investigations,” Elias claims, adding that he’s asked the department’s Inspector General to investigate the matter.
Elias says the top antitrust lawyer in the Department of Justice, Makan Delrahim, told staff that the probes stem from Barr’s deep dislike of cannabis itself, and not from antitrust concerns in the sector, during an all-staff meeting in September 2019.
“There, [Delrahim] 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 DOJ headquarters building,” Elias says.
Trump has expressed a dim view of cannabis, saying he thinks smoking weed makes people “lose IQ points” and get into accidents, although it’s not clear he had anything to do with the DOJ’s aggressive handling of legal weed companies.
During a closed-door dinner last year, Trump told well-heeled donors he’s unsure whether the wave of cannabis legalization sweeping the country is “a good thing or a bad thing.” At the same dinner, Trump’s son Don Jr. assured the president that weed is less dangerous than booze.
“Alcohol does much more damage,” Don Jr. said. “You don’t see people beating their wives on cannabis. It’s just different.”
Barr hasn’t had a lot to say in public about the legal cannabis industry. During his confirmation hearing last year, Barr expressed uneasiness about the mismatch between federal law, which still prohibits cannabis, and the law in many states where it is allowed. But he said he wouldn’t “go after” companies that were relying on state laws to sell cannabis.
“I’m not going to go after companies that have relied on Cole memorandum,” Barr replied, referring to a policy set in place by former Democratic President Barack Obama that said the Department of Justice wouldn’t go out of its way to enforce the federal ban on cannabis in states that had legalized it.
“However,” Barr continued, “we either should have a federal law that prohibits cannabis everywhere, which I would support myself because I think it’s a mistake to back off cannabis. However, if we want a federal approach — if we want states to have their own laws — then let’s get there and get there in the right way.”
The Cole memo was rescinded by Trump’s first Attorney General, Jeff sessions, who once quipped: “good people don’t smoke marijuana.”
Elias says that Barr’s DOJ continues to overrule internal objections to the extensive reviews, by arguing that it hasn’t looked closely enough at the legal cannabis industry before — even as the reviews drag on.
“Staff continued to document at the outset of the investigations that the transaction appeared unlikely to raise significant competitive concerns but that the Division (meaning the political leadership) nonetheless had decided to proceed, purportedly because it had not closely evaluated this industry before,” Elias says. “This remained the rationale through the tenth investigation.”
Cover: Attorney General William Barr speaks during a roundtable with President Donald Trump about America’s seniors, in the Cabinet Room of the White House, Monday, June 15, 2020, in Washington. (AP Photo/Evan Vucci)