As an emerging industry with sky-high revenue projections, lofty social-justice promises, and ground rules currently being written from scratch, no business in America prompts ready comparisons to Silicon Valley like legal cannabis.

But though analysts project legal weed sales to balloon from $17.5 billion last year to $70 billion by 2028—exponential growth fueled by the beginning of adult-use sales in East Coast states like New York and the potential of a legal national market, as the U.S. Senate for the first time seriously debates federal legalization—cannabis businesses in legacy West Coast states like California and Oregon are struggling. Among other problems, they’re being squeezed by high taxes, low margins, and oversupply as companies large and small rush to enter the fray.

To avoid this uncertainty and to guarantee high profits, the country’s biggest cannabis companies—some of them publicly traded with valuations in the billions of dollars—are angling for regulations that would see government hand them what critics say is a near-oligopoly, according to source who leaked an internal document to The Daily Beast.

“They don’t want to compete,” claimed an industry insider who provided the “privileged and confidential” document—a presentation dated June 17 titled “Intentional Federal Regulation,” given to the policy committee of the United States Cannabis Council, a Washington lobbying group representing some of the country’s biggest cannabis companies—to The Daily Beast.

The source spoke under the condition of anonymity, for fear of being removed from the organization and suffering other professional repercussions.

Leadership from the USCC—a Washington, D.C.-based lobbying organization that’s spent $337,500 so far this year lobbying the Senate, according to recent filings, and whose members include major cannabis companies such as Curaleaf, PharmaCann, and Cresco Labs—rejected the characterization of its policies as false.

Most significantly, they said, the presentation—which actually suggests nationwide marijuana legalization without careful rules could produce a Big Tobacco-style oligopoly in cannabis, and that current companies are a bulwark against that—was merely a third-party pitch the organization didn’t accept.

In a statement, Steven Hawkins, the organization’s CEO—who is also executive director of the Marijuana Policy Project—claimed that the presentation, which according to its author page was prepared by MPG Consulting and an attorney from Perkins Coie, a law firm listed on the USCC website as a member, does not represent the group’s priorities.

“The presentation does not speak for USCC, and your source either misunderstands, or is misrepresenting, our views,” Hawkins said.

Unlike on the West Coast, marijuana legalization in the Midwest and East, passed by state legislatures rather than by voter initiative, has often come packaged with strict government limits on how many businesses will be issued licenses to grow and sell the products. Limited licensing has allowed the few companies lucky enough to win licenses to become national players valued at multiple billions of dollars in just a few years.

That’s the system that created Big Weed, and it’s this system that the USCC wants to enshrine, according to the source. “They want ten licenses in each state for just them,” they told The Daily Beast.

Hawkins denied this, insisting his group has no position on license caps.

“We do not have a position on limited licensing,” he told The Daily Beast. “We would not oppose or support efforts to lift or expand licensing caps.”

“Our top concern is a successful national transition to legal, regulated cannabis,” he added later. “Maintaining existing programs during the transition will help prevent significant disruptions in the marketplace, safeguarding consumer safety, tax revenues, and social equity programs while helping prevent a windfall for the illicit market.”

In a separate statement, a spokesman for Perkins Coie, which represented PharmaCann, another USCC member, in a recent merger, denied that the law firm was involved at all, despite its logo appearing on the presentation’s first slide. The spokesman did not explain the discrepancy.

Sal Barnes, the managing director of MPG Consulting, the presentation’s lead author, also denied that his group advocated for anything resembling a Big Weed oligopoly.

“This presentation does not advocate for a limited-license system in any way, neither in its delivery or context,” he said. “My assumption is that your source is based in a large production state, such as California or Oregon, and has personal vested interest in exporting cannabis nationally as soon as possible.”

But according to outside critics who viewed the policy presentation—and who put it into the context of other publicly-available USCC and member companies’ policy positions and lobbying efforts—the document is really a blueprint for how entrenched interests could dominate the industry.

And even if the people behind the proposal say it was just that—a rejected plan—those same critics argue it’s more like a strategy that’s already in action, and that a Big Weed oligopoly is the industry’s real goal.

“They’re trying to borrow influence from government to put people under the influence of corporate cannabis. It’s a political game,” said David C. Holland, a New York City cannabis business attorney active in the industry who lobbied for legalization in that state and who reviewed a copy of the document.

“It’s a strategy of preclusion through legislation rather than inclusion through competition,” he added. “This is not what American business is supposed to be about.”

In order to command a market and maximize profits, including a company’s potential resale value when bidders might include Amazon and Big Tobacco, the best way to make lots of money in weed is to ensure virtually nobody else can enter the game. And that’s exactly what Big Weed wants, including lobbying firms like USCC and companies that organization represents, these critics say.

What’s more, they argue, multiple elements from the leaked presentation—including potentially delaying interstate commerce; a critique of the hemp industry as a model to avoid; and enshrining existing state markets—made it into the USCC’s public comments on the Cannabis Administration and Opportunity Act (CAO). That’s the federal legalization bill introduced by Senate Majority Leader Chuck Schumer and Sens. Cory Booker (D-NJ) and Ron Wyden (D-OR) over the summer.

“I’m not sure if I believe in coincidence five times,” said Bradford Sodowick, an assistant clinical professor of finance at Drexel University, who teaches a class on cannabis business, who also reviewed the presentation.

In Sodowick’s analysis, the source’s description of the document is consistent with what Big Weed appears to be working towards, he said.

“This is history repeating itself. Everyone wants to be a monopoly, or an oligopoly in this case,” he added. “They want to basically have control, and by the time controls are loosened, there’s no way any little farms can keep up.”

“You don’t have to teach finance at Drexel like I do to know what’s going on here,” he added.

Specifically, the leaked document highlights “Stable State Markets” as the “core” of legal cannabis’ “success” to date. It alludes to an unspecified delay before interstate cannabis markets can be opened, and for existing state markets to be preserved and stabilized in the meantime. (Hawkins denied the group was “seeking delay or a specific timeline” for interstate commerce.)

That means enshrining state laws that restrict the number of businesses allowed to grow and sell cannabis, according to the source, an insider with both the USCC and the Marijuana Policy Project, the advocacy group that ran early legalization campaigns.

Such laws are credited with allowing a limited number of billion-dollar cannabis companies to emerge—some of which have flipped their licenses for tens of millions of dollars in cash and stock to larger players. For example, limited state licensing is why an investment trust paid a total of $49 million for a former tool factory in Massachusetts that’s licensed to grow weed.

For its part, the presentation also touts state “equity programs”—in which a certain percentage of licenses may be guaranteed to people of color or individuals identified as harmed by the drug war—as a key social-justice corrective.

The problem, as critics have long noted, is that though well-intentioned, so-called equity programs have so far failed to deliver, and have allowed some cannabis companies to present a woke pose while still reaping most of the profits.

In New York State, for example, 50 percent of the adult-use licenses to be issued will be “equity” licenses reserved for people of color and drug-war victims. That sounds nice, but as critics point out, those small businesses will have to compete with the ten companies with massive headstarts, already licensed to grow and sell medical marijuana, who are currently building operations in anticipation of adult-use licensing sometime in 2022 or 2023.

Another slide from the leaked presentation—a graph that notes the consolidation in various other industries—signals where Big Weed wants to go, according to the source. At the top are industries like mobile phones and alcohol, where just a few firms control nearly all of the market.

“The transition from the growth to consolidation phases of the industry life cycle is where wealth creation occurs,” a caption to the graph reads. “The Cannabis industry has not reached that point yet. The Cannabis Industry mut [sic] be given the chance to experience proper growth.”

That consolidation is absolutely Big Weed’s goal, the source argued to The Daily Beast. Third-party observers agreed.

“I see an oligopoly play afoot,” said Shad Ewart, a professor of business at Anne Arundel Community College in Maryland, where he teaches classes on cannabis entrepreneurship, who also reviewed a copy of the presentation as well as the USCC’s CAO comments, and noted “overlap and commonality.”

-Daily Beast