Nobody Should be Surprised Animus Drives Policy
Career Department of Justice attorney John Elias’ public revelations about Attorney General William Barr unjustly targeting the cannabis industry is enough to make your blood boil. Whether you are supportive of the cannabis movement, against government financial waste, or a defender of civil rights this story is terrible. But in spite of today’s outrage culture, if the cannabis industry wants to continue to grow it must accept that policy makers bring their own perspective and personal ideology to policy making. This is reality in Washington, and now that cannabis is rising as a legitimate business it must account for this.
Under Attorney General Barr’s direction in 2019, and without bone fide cause, the Department of Justice Antitrust Division committed significant resources to investigating mergers and acquisitions in the cannabis industry. The Antitrust Division assessed 2000 transactions last year. Of those 2000, it issued Second Request subpoenas to parties in 31—nine were cannabis related. Second Request subpoenas are the “work of the work" for the Antitrust Division, whose 2019 budget was $165 million. These are cumbersome, expensive, deep dives into company financials that parties cannot challenge and must comply with. For companies that receive these, their cost to comply is hundreds of thousands—if not millions—of dollars. In 2019 there 10 full-scale antitrust investigations in the cannabis industry. And at one time 5 of 8 active DOJ Antitrust investigations were in cannabis.
Elias testified that Attorney General Barr directed these investigations simply because he personally hates cannabis. Antitrust staff made clear to DOJ leadership the cannabis market was so fragmented that these transactions didn’t represent large enough market share to trigger an investigation. After the staff raised concerns about the amount of energy and resources Barr diverted to cannabis mergers, Barr’s lieutenant in charge of the Antitrust Division held an all-staff meeting where he acknowledged Barr's dislike of the cannabis industry drove the investigations.
Now, an attorney general (or any cabinet level official) using federal resources to push their personal political agenda and ideology is not new—some may argue it’s as American as apple pie. In the most extreme examples, Attorney General Mitchell Palmer (1919–21) initiated the Red Scare, which persecuted thousands of suspected communists and Attorney General John Mitchell (1969–72) spearheaded warrantless wiretaps and refused to enforce court-ordered mandates for desegregation. The list goes on and on.
The young cannabis industry learned an important lesson about American politics: the veracity and strength of your argument is not sufficient, you must also account for policy makers’ personalities and perspectives. This is true not just for legislators, but also for members of the Executive Branch. Among the reasons why people agree to serve in executive roles is because they have some type of personal ideology. To believe they will leave those beliefs at the door when making policy, or to be outraged when their personal beliefs command their decisions is to be disconnected from the realities of Washington.
The onus today is on the cannabis industry to engage with consequential decision makers, and build relationships. The relationship must be more than simply between a lobbyist and an executive official. It must be broader and focus on the official’s relationship with the cause at-large. At the same time, it cannot leverage its success on a few relationships. It needs broad, bi-partisan support. It should look at all of Washington as either friends and those that have the potential to become friends.
So far, the political mobilization and engagement from the organized cannabis community has been a slow build at the federal-level versus state and local. Organizations are forming and dollars are coming in to create promising groups like the Cannabis Trade Federation. But the organized political movement still hasn’t achieved a real legislative or executive-level victory—and no, we can’t declare committee votes a victory at this point when none have materialized into law.
If there is a silver lining with this incident, it is that cannabis has a legitimate and undeniable role in America’s economy. That the Justice Department was investigating cannabis through its Antitrust Division and not through the Drug Enforcement Agency is something that would stupefy the industry 10 years ago. Cannabis is still a level-one controlled substance, and so is still federally illegal. The fact that cannabis mergers and acquisitions are being submitted to the Antitrust Division for review is a sign of the growing economic impact that cannabis has on America’s economy.
And it is growing.
