Is the US cannabis industry just a front for the Russian mob?

Roman Abramovich, a Russian billionaire and former owner of the English Premier League’s Chelsea Football Club, has been investing discreetly in cannabis companies for years. According to Forensic News, the news outlet that obtained the classified documents, Roman Abramovich helped fund Curaleaf Holdings’ two largest shareholders. The Russian businessman is also said to have close ties to Russian President Vladimir Putin.

Curaleaf, the alleged cannabis company that Roman Abramovich secretly invested in, is a renowned recreational and medicinal cannabis dispensary in the United States. Curaleaf has a presence in 21 states and owns and operates 29 cultivation facilities and 145 dispensaries. The company focuses on densely populated areas such as Florida, Arizona, Illinois, New Jersey, Massachusetts, Pennsylvania and New York. This follows the bribery and cannabis hush-hush indictments of Russian oligarch Andrey Muraviev by the FBI and the state of Nevada.

Based in Wakefield, Massachusetts, Curaleaf Holdings is one of the world’s largest marijuana companies with a market valuation of approximately $3.08 billion. According to the report, Abramovich, whose net worth is estimated at approximately $9 billion, was secretly funding Curaleaf Holdings shareholders.

When Russia attacked Ukraine earlier this year, the UK and EU sanctioned the Russian oligarch, but the US did not. Despite this, the Justice Department received a warrant in June to seize two of its planes, valued at over $400 million.

An American success story

Curaleaf was initially targeted for its possible ties to Russia when the Ukraine war began. Boris Jordan, the company’s CEO, is said to be given the highest position due to his Ukrainian and Russian ancestry. Jordan, an American citizen born in the United States, has been suspected of having financial ties to Russian companies and oligarchs.

Jordan responded by saying Curaleaf is an American success story that he founded!. He urged the media not to spread disinformation. He explained that he was born in the United States and currently lives and works there! “As I am of Ukrainian and Russian descent, I pray for diplomacy and a peaceful conclusion that preserves the lives of all residents on all sides of this crisis,” he added.

Jordan, which owns about 18.2% of Curaleaf, was valued at about $1 billion in net worth as of April. From the early 1990s he spent almost two decades in Russia, where he was considered one of the most influential foreign investment bankers. He once claimed to have a “close friendship with Putin”.

Russian businessman disguised as “Cetus Investments”.

Contrary to Jordan’s claims that “Curaleaf is an American success story,” the released documents show that Abramovich was tacitly funding Jordan and companies under his watch. The financing was conducted by Cetus Investments, a British Virgin Islands LLC.

According to Forensic News, tens of millions of dollars worth of loans have been granted to Jordan and its companies that appear never to have been recognized by Jordan or Curaleaf. Some loans stipulated that the funds would only be used to purchase shares in Curaleaf, formerly PalliaTech Inc.

For example, in December 2016, Lafayette LLC, a Delaware-based company owned by Jordan, received a $14 million investment from Abramovich’s Cetus Investment Limited. The promissory note states that the funds must be used to purchase 878,569 shares of PalliaTech. The debenture was then expanded in October 2017 with a second loan of $10 million to purchase an additional 418,253 PalliaTech shares.

According to the research, Abramovich lent around $69 million to Jordanian companies between 2017 and 2019.

Additionally, Jordan wasn’t the only Curaleaf shareholder to benefit from Abramovich’s offshore company loans. The records say that Abramovich also funded his second largest shareholder, Andrey Blokh, in a similar scheme.

The leaked document also revealed that Blokh received a $50 million loan from Cetus Investment in 2016 to buy PalliaTech stock. Blokh also received a $12 million line of credit from Cetus to fund other cannabis businesses in the United States, such as dispensaries in Las Vegas and Los Angeles.

$140M direct investment in Curaleaf from Cetus to Blokh and Jordan

According to Cetus’ internal balance sheets, as of the end of 2018, the Cetus company loaned Blokh and Jordan approximately $140 million. More importantly, public documents and filings from the United States Securities and Exchange Commission disclose that Cetus loaned $85 million directly to Curaleaf.

Ambramovich’s investments in Curaleaf are said to have started before the cannabis company went public. The Russian entrepreneur invested around 225 million US dollars in the company and its clients. In fact, Curaleaf conceded to Forensic News that Cetus supported both Jordan and Blokh.

A company representative explained that during the company’s early stages of raising capital, shareholders Andrei Blokh and Boris Jordan solicited cash through family offices and numerous sources to further develop Curaleaf. The representative added that Cetus is a global lender to various companies. All of the loans mentioned in your email were paid off before Curaleaf went public. Therefore, Curaleaf owes nothing to Cetus. However, the representative claimed the company could not speak on behalf of shareholders.

Karen Greenaway, a former FBI financial crimes investigator, told the publication about her concerns about these types of loans. She says this form of funding is problematic for government agencies, law enforcement agencies and investment firms because it obscures ownership of the mutual funds.

She added that this financial rule sometimes poses insurmountable difficulties, particularly for law enforcement agencies when it comes to investigating violations of US money laundering laws. It is almost difficult to say whether the monies invested came from legitimate income without ascertaining the identity of the principal investor or the origin of the monies.”

Conclusion

According to the report, Abramovich allegedly invested in Measure 8 Ventures, a New York-based cannabis venture capital firm, and owned a $1 million investment in the first USDA-certified organic hemp CBD brand, Green Gorilla Inc In addition, internal financial papers show that Cetus has invested over $1 million in major cannabis startups in the United States, including Eaze and Tilt Holdings.

Curaleaf has been contacted for comment but has not commented at the time of publication.

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