Attorney General William Barr’s personal opposition to marijuana led him to direct improper antitrust investigations into multiple cannabis company mergers—accounting for nearly one-third of the division’s cases in 2019—according to written testimony from a current Justice Department official who is slated before the House Judiciary Committee on Wednesday.
Those investigations, which appear to have influenced the end of at least one major merger between MedMen and PharmaCann, were protested by career DOJ staff who objected to the rationale for such inquiries. The Justice Department’s Antitrust Division typically must demonstrate that there’s substantial risk of anticompetitive harm for mergers it investigates, including the potential for monopolization.
The official stressed that the directive from Barr resulted in the waste of departmental resources, with cannabis transactions at one point representing “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,” John Elias, who has been with the department for 14 years, said.
In March 2019, Barr reportedly called Antitrust Division leadership into a meeting titled “Marijuana Industry Merger Review,” the testimony states. Staff were instructed to prepare a briefing memo on the MedMen-PharmaCann transaction and concluded that it “was unlikely to raise any significant competitive concerns that would justify issuance of” a secondary request investigating the merger.
Elias emphasized that this was just one example of an investigation directed by Barr that was “undertaken over the objections of the career staff.”
And the excess scrutiny of marijuana companies didn’t stop there.
Under Barr’s influence, “the Antitrust Division launched ten full-scale reviews of merger activity taking place in the marijuana, or cannabis, industry,” Elias said. “These mergers involve companies with low market shares in a fragmented industry; they do not meet established criteria for antitrust investigations.”
“When career staff examined the transaction, they determined that the cannabis industry appeared to be fragmented with many market participants in the states that had legalized the product,” he continued. “As a result, they viewed the transaction as unlikely to raise any significant competitive concerns.”
Nonetheless, the nation’s top prosecutor pursued the unconventional legal proceedings, ordering “the Antitrust Division to issue Second Request subpoenas.”
Why? According to Elias, the decision “centered not on an antitrust analysis, but because he did not like the nature of their underlying business.”
“The head of the Antitrust Division, Assistant Attorney General Delrahim, responded to internal concerns about these investigations at an all-staff meeting on September 17, 2019,” the official said. “There, he 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.”
“Personal dislike of the industry is not a proper basis upon which to ground an antitrust investigation.”
This personal animosity to the cannabis industry seems at odds with statements the attorney general has made in various congressional hearings, where he expressed interest in resolving the state-federal conflict over marijuana policy and stated that the status quo is not tenable. Last year, he said that while he personally opposes legalization, he would prefer for Congress to pass a bill respecting the rights of states to implement their own cannabis policies rather than maintain blanket federal prohibition.
Following the meeting that Barr orchestrated to review the cannabis mergers, which was first reported by The New York Times, DOJ staff did not issue recommendations into launching an investigation or issuing subpoenas
“Instead, the staff reiterated its view that the transaction was ‘unlikely to raise any significant competitive concerns’ and that the industry appeared to be fragmented, with many participants,” the testimony states. “The staff went on to say that, nonetheless, ‘[t]he Division has decided to open an investigation and issue Second Requests,’ for the purported reason that it had ‘not closely evaluated this industry before.’ This rationale—standing alone, without reference to a competition problem—is not described in the Merger Guidelines as a basis for investigating a transaction.”
“The Division’s Front Office negotiated subpoena compliance with the companies, obtaining 1.3 million documents from the files of 40 employees,” it continues.
Ultimately, across 6 of the 10 investigations for which data are available, 5,965,000 documents were produced by the companies under inquiry.
“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 said.
Further, DOJ staff was asked to minimize attention to the investigation. Part of that meant “career staff was not permitted to take customary fact-finding steps.”
“For example, staff was instructed not to conduct interviews of customers or competitors – a necessary step in any bona fide antitrust investigation both to assess marketplace conditions and to identify potential witnesses in any enforcement action,” the testimony states. “In several instances, staff sought to make the investigation less burdensome on the parties by narrowing the subpoenas. Political leadership refused such requests.”
A Judiciary Committee hearing on DOJ interference into prosecutorial independence, where Elias is scheduled to testify on this and other matters, is scheduled for Wednesday.
Read the testimony on DOJ activity on marijuana antitrust investigations below:
Virginia Has Sealed 64,000 Marijuana Distribution Charges Since Legalization Took Effect This Summer
“These aren’t just numbers and there are families attached.”
By Ned Oliver, Virginia Mercury
Virginia has sealed records documenting more than 64,000 misdemeanor marijuana distribution charges since the state legalized the drug in July.
The figure came out Thursday during a meeting of the legislature’s Cannabis Oversight Commission.
Officials said the records were scrubbed from the state’s criminal record database, which is used by employers like school boards, state agencies and local governments to screen employees.
The state had already sealed 333,000 records detailing charges of simple possession last year after the state reduced the offense to a civil infraction on par with a traffic offense, said Shawn G. Talmadge, the Deputy Secretary of Public Safety and Homeland Security.
Lawmakers directed the state to expand that effort when they voted to broadly legalize recreational use of marijuana earlier this year.
The legislature also agreed to a broader expungement reform that will automatically seal other misdemeanor charges, including underage possession of alcohol, use of a fake ID, petit larceny, trespassing and disorderly conduct. Talmadge said those charges will remain in the system until the state finishes updating the software it uses to track criminal records.
“As of right now, the process is proceeding,” he said.
The Virginia Joint Commission on Cannabis Oversight is meeting now. You can find the agenda and links to livestream and to provide public comment at https://t.co/f1wsPn7SV7
— Jennifer McClellan (@JennMcClellanVA) October 14, 2021
Members of the oversight commission also heard from two advocates who urged them to move fast to address people currently imprisoned for marijuana offenses—a category of people the legalization legislation passed this year did not address.
Chelsea Higgs Wise, the leader of the advocacy group Marijuana Justice, and Gracie Burger, with the Last Prisoner Project, said Department of Corrections data suggests there are currently 10 people being held solely on serious marijuana charges.
They said it remains unknown how many more are being held because of marijuana related probation violations.
“These aren’t just numbers and there are families attached,” Burger said.
DEA Proposes Dramatic Increase In Marijuana And Psychedelic Production In 2022, Calling For 6,300 Percent More MDMA Alone
The Drug Enforcement Administration (DEA) is proposing a dramatic increase in the legal production of marijuana and psychedelics like psilocybin, LSD, MDMA and DMT to be used in research next year.
In a notice scheduled to be published in the Federal Register on Monday, the agency said there’s been a “significant increase in the use of schedule I hallucinogenic controlled substances for research and clinical trial purposes,” and it wants authorized manufacturers to meet that growing demand.
DEA had already massively upped its proposed 2021 quota for cannabis and psilocybin last month, but now it’s calling for significantly larger quantities of research-grade marijuana and a broader array of psychedelics to be manufactured in 2022.
It wants to double the amount of marijuana extracts, psilocybin and psilocyn, quadruple mescaline and quintuple DMT. What especially stands out in the notice is MDMA. The agency is proposing an enormous 6,300 percent boost in the production of that drug—from just 50 grams in 2021 to 3,200 grams in the coming year—as research into its therapeutic potential continues to expand.
LSD would see a 1,150 percent increase, up to 500 grams of the potent psychedelic.
Marijuana itself would get a 60 percent boost under DEA’s proposal, up to 3.2 million grams in 2022 from the 2 million grams last year.
Here’s a visualization of the proposed quota increase from 2021 to 2022 for marijuana and cannabis extracts:
For all other THC, psilocybin, psilocyn and MDMA:
And for other psychedelic substances like LSD, mescaline and DMT:
DEA said in the Federal Register notice that it has been receiving and approving additional applications to “grow, synthesize, extract, and manufacture dosage forms containing specific schedule I hallucinogenic substances for clinical trial purposes” to achieve these ambitious quotas.
“DEA supports regulated research with schedule I controlled substances, as evidenced by increases proposed for 2022 as compared with aggregate production quotas for these substances in 2021,” the agency said, adding that it working “diligently” to process and approve marijuana manufacturers applications in particular, as there’s currently only one farm at the University of Mississippi that’s permitted to cultivate the plant for research.
“Based on the increase in research and clinical trial applications, DEA has proposed increases in 3,4- Methylenedioxyamphetamine (MDA), 3,4-Methylenedioxymethamphetamine (MDMA), 5-Methoxy-N,N-dimethyltryptamine, Dimethyltryptamine, Lysergic acid diethylamide (LSD), Marihuana, Marihuana Extract, Mescaline, Psilocybin, Psilocyn, and All Other Tetrahydrocannabinols to support manufacturing activities related to the increased level of research and clinical trials with these schedule I controlled substances.”
Here are the exact numbers for the proposed 2021 and 2022 quotas:
|All other tetrahydrocannabinol||1,000||2,000|
A 30-day public comment period will be open after the notice is formally published on Monday.
It’s difficult to overstate just how significant the proposed 2022 increases are, but it’s certainly true that scientific and public interest in marijuana and psychedelics has rapidly increased, with early clinical trials signaling that such substances show significant therapeutic potential.
National Institute on Drug Abuse (NIDA) Director Nora Volkow told Marijuana Moment in a recent interview that she was encouraged by DEA’s previous proposed increase in drug production quota. She also said that studies demonstrating the therapeutic benefits of psychedelics could be leading more people to experiment with substances like psilocybin.
Advocates and experts remain frustrated that these plants and fungi remain in the strictest federal drug category in the first place, especially considering the existing research that shows their medical value for certain conditions.
A federal appeals court in August dismissed a petition to require the DEA to reevaluate cannabis’s scheduling under the Controlled Substances Act. However, one judge did say in a concurring opinion that the agency may soon be forced to consider a policy change anyway based on a misinterpretation of the therapeutic value of marijuana.
Separately, the Washington State attorney general’s office and lawyers representing cancer patients recently urged a federal appeals panel to push for a DEA policy change to allow people in end-of-life care to access psilocybin under state and federal right-to-try laws.
Image element courtesy of Kristie Gianopulos.
Supreme Court Won’t Hear Case On Legalizing Safe Drug Consumption Sites, But Activists Are Undeterred
The U.S. Supreme Court (SCOTUS) has rejected a request to hear a case on the legality of establishing safe injection sites where people can use illicit drugs in a medically supervised environment.
The justices announced on Tuesday that they decided against taking up the case raised by the nonprofit Safehouse, despite the pleas of attorneys general from 10 states and D.C. who recently filed amici briefs urging the court’s involvement.
Representatives from 14 cities and counties, as well as the mayor of Philadelphia, which is at the center of the current case, also filed briefs in support of the case in recent days.
Safehouse was set to launch a safe consumption site in Philadelphia before being blocked by a legal challenge from the Trump administration. It filed a petition with the nation’s highest court in August to hear the case.
But while the Supreme Court declined to take action—and the Biden administration passed up its voluntary opportunity to weigh in at this stage, which may well have influenced the justices’ decision—activists say the battle will continue at a lower federal court level, where the administration will have to file briefs revealing its position on the issue.
Disappointed but not surprised U.S. Supreme Court declined to hear our case. We’re pursuing our claims in federal court. As that litigation proceeds, Biden administration will have to take a position, which it avoided by waiving its right to respond to our Supreme Court petition.
— Safehouse (@SafehousePhilly) October 13, 2021
“We were disappointed that the government chose not to respond to our petition,” Safehouse Vice President Ronda Goldfein told Filter. “They said, ‘We’re going to waive our right to respond,’ [and] the Supreme Court declined to review our case. Ordinarily that sounds like the end of the road—but in our case we are still pursuing our claims in a different venue.”
That venue will be the the federal district court in Philadelphia, where activists plan to submit multiple arguments related to religious freedom and interstate commerce protections. The Biden administration will be compelled to file a response in that court by November 5.
“If they don’t respond, they lose,” Goldfein said.
A coalition of 80 current and former prosecutors and law enforcement officials—including one who is President Joe Biden’s pick for U.S. attorney of Massachusetts—previously filed a brief urging the Supreme Court to take up Safehouse’s safe injection case.
Fair and Justice Prosecution, the group that coordinated the amicus brief, also organized a tour of Portugal for 20 top prosecutors in 2019 so they could learn about the successful implementation of the country’s drug decriminalization law.
If the Supreme Court were to have taken the case and rule in favor of Safehouse, it could have emboldened advocates and lawmakers across the country to pursue the harm reduction policy.
The governor of Rhode Island signed a bill in July to establish a safe consumption site pilot program where people could test and use currently illicit drugs in a medically supervised environment. It became the first state in the country to legalize the harm reduction centers. It’s not clear whether the Department of Justice will seek to intervene to prevent the opening of such facilities in that state.
Massachusetts lawmakers advanced similar legislation last year, but it was not ultimately enacted.
A similar harm reduction bill in California, sponsored by Sen. Scott Wiener (D), was approved in the state Senate in April, but further action has been delayed until 2022.