No laws have been broken but the event sounds like a reminder to US cannabis companies that the federal government can always interfere with their business dealings.
General Counsel William Barr has forced companies to produce thousands of documents costing millions of dollars, the review of which has slowed down certain operations and even completely scuttled the announced merger between MedMen and PharmaCann.
A whistleblower working at the Department of Justice, John Elis, said that some of these requests had more to do with Attorney General William Barr’s personal views on the cannabis trade than with a need to monitor possible monopoly positions that cannot now exist in the US cannabis market.
John Elias testified before the House Judiciary Committee on Wednesday as part of an investigation into whether the department had been used for political purposes. He told the committee that career Justice Department lawyers believe that a proposed merger between MedMen and PharmaCann does not require further antitrust review. Instead, William Barr mobilized the management of the antitrust division and ordered a full investigation, asking companies for thousands of documents, mobile phone records, computer hard drive images, and entire copies of mobile devices and answering dozens of detailed questions on a wide range of business interests.
In addition to the MedMen – PharmaCann merger, a dozen other M&A deals have been vetted.
At one point, cannabis investigations accounted for five of the eight active merger investigations in the office responsible for the transportation, energy, and agriculture sectors of the U.S. economy,” said Elias. “The investigations were so numerous that staff from other offices were mobilized to assist, including telecommunications, technology, and media.
In his written testimony, Elias said that while responding to internal concerns about the investigations, Deputy Attorney General of the Antitrust Division Makan Delrahim “acknowledged that the investigations were motivated by the fact that the cannabis industry was unpopular ‘on the fifth floor'”, a reference to William Barr’s offices.