Attorney General William Barr has recently come under fire from the Department of Justice (DOJ) and we expect him to be questioned by a House of Representatives committee on a number of topics.
Early last week, we learned more about Barr and his decision to conduct antitrust investigations into 10 cannabis companies. According to a high ranking official within the US Department of Justice, the investigations were solely based on Barr’s political opposition to cannabis legalization.
After learning more about the types of antitrust investigations that are conducted by the Justice Department, we are convinced that Barr had a personal vendetta against the cannabis industry. In the 2019 fiscal year, the cannabis cases that Barr had ordered investigations into accounted for nearly one-third of DOJ’s antitrust workload.
One of the facts that we found to be interesting is related to the recommendations from the DOJ as it relates to cannabis antitrust cases. For example, a DOJ staff reviewed the proposed merger of MedMen Enterprises (MMEN.CN) (MMNNF) and PharmaCann in 2019 and advised that the deal did not merit a full investigation. According to John W. Elias, Barr rejected his staff’s advice and ordered a full-scale investigation into the merger.
We find the actions by Barr to be concerning, especially when you look at the impact that the failed merger had on MedMen. A federal antitrust investigation is a major undertaking for the companies involved. A large number of companies that undergo this process ended up going bankrupt as the investigation end up draining the resources of the companies in question.
When President Donald Trump appointed Jeff Sessions as Attorney General, the cannabis sector became very concerned as to what actions would be taken against plant touching businesses. After Sessions was fired, we thought the industry would be well positioned to grow based on the testimony provided by Barr prior to his approval.
Prior to be approved to be Attorney General, Barr told members of Congress that he preferred the STATES Act over federal prohibition and found this to be of significance. Clearly, Barr does not feel as positively about the cannabis industry as he initially led on and we will monitor how this story plays out over the coming weeks.