Attorney Gen. Barr Targeted Cannabis Businesses Based on His Own Prejudices

According to written testimony from a current Justice Department official, Attorney General William Barr improperly diverted Justice Department resources to scrutinize cannabis company mergers because he doesn’t like the cannabis industry.

A Career Antitrust Division Staffer Testified to the House Judiciary Committee

John Elias, a veteran employee at ATR, testified to the House Judiciary Committee that the merger investigations by the agency into cannabis companies didn’t “even come close to meeting established criteria” for such an inquiry. Elias claims that the investigations were only opened due to Barr’s personal distaste for legalized cannabis.

The written testimony reads:

“Across all sectors of the American economy, the cannabis industry accounted for a full 29 percent of the Division’s Second Request 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 American economy. The investigations were so numerous that staff from other offices were pulled in to assist, including from the telecommunications, technology, and media offices.”

In a June 11 memo, the U.S. Department of Justice Office of Professional Responsibility Director and Chief Counsel Jeffrey Ragsdale defended the agency’s cannabis investigations by the Antitrust Division (ATR), saying the cannabis industry “provided a unique challenge to federal and state regulators alike.”

Mergers are usually only subjected to antitrust investigations if they are likely to have an impact on competition or create a monopoly. A federal prosecutor told House lawmakers that Attorney General William Barr ordered antitrust staffers to investigate 10 proposed mergers in the cannabis sector because of his personal dislike of the industry.

“While these were nominally antitrust investigations, and used antitrust investigative authorities, they were not bona fide antitrust investigations,” said Elias. “Nonetheless, they accounted for 29% of the Antitrust Division’s full-review merger investigations in Fiscal Year 2019.”

Barr Poured Resources Into Unnecessary Probes on Cannabis Companies

After staffers expressed concerns, division head Makam Delrahim acknowledged at an all-staff meeting 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 D.O.J. headquarters building.”

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.

The only legal restraint on Barr is found in the Rohrabacher Farr Amendment (also known as the Rohrabacher–Blumenauer amendment). This legislation prevents the DOJ from spending funds to interfere with the implementation of state medical cannabis laws (emphasis intended). In the weeks since, dozens of House members have introduced a resolution calling for a possible impeachment inquiry into Barr as he “abused the power of his office” to improperly investigate cannabis businesses and allegedly engaged in other unlawful conduct. The operative word here is “improperly.”