Small producers have lengthy been cautious of the hashish trade coming underneath domination by multistate operators (MSO’s) with the worst practices of company America. However the revelations of Russian oligarch cash within the coffers of main MSO Curaleaf seem to vindicate even essentially the most cynical observers. These comply with a slew of controversies regarding product security and labor rights on the firm.
Now primarily based within the Boston suburb of Wakefield, adult-use hashish colossus Curaleaf appears to exemplify the trade’s trajectory — from its origins as an area operation for medicinal customers to its present standing as a globe-spanning titan producing unsavory headlines and a string of scandals.
The World’s Largest Hashish Firm
In the present day Curaleaf ranks as the biggest hashish firm on the earth. Final yr, it claimed $1.2 billion in income. Till just lately it had operations in 23 US states with 147 dispensaries, 22 cultivation websites, and 30 processing amenities.
Like different large MSOs, Curaleaf has achieved a dominant place within the hashish trade by organising operations primarily in “limited-license states … with pure excessive boundaries to entry and restricted market contributors,” a method that helps “to make sure the corporate’s market share is protected,” in accordance with the corporate’s annual investor submitting in 2020.
However these “excessive boundaries to entry” are hardly “pure.” They’re constructed and promoted by policy-makers, regulators, and a few opportunistic legalization advocates who favor limiting entry to profitable hashish enterprise licenses to a small variety of well-heeled candidates.
Curaleaf, a publicly-traded company, hasn’t fared as nicely in states which have decrease boundaries to entry. In January, the corporate introduced it was pulling out of California, Colorado, and Oregon, and shedding about 4% of its roughly 6,000 staff. The corporate is alleged to be in search of $40 million in value financial savings in 2023.
These cost-cutting measures, Curaleaf defined, will allow the corporate to focus extra on increasing its world operations. Curaleaf Worldwide, the biggest vertically built-in hashish firm in Europe, already has licensed merchandise in Italy, Poland, and Malta.
Modest Origins
Eileen Konieczny, a nurse by commerce now residing in Southern California, says she is the forgotten determine who was current on the creation of Curaleaf.
“I put collectively a group to go after a license in Connecticut in 2013,” she says. “I used to be listed on the appliance as ‘chief medical officer.’ ”
Konieczny says she performed an instrumental function in getting the Structure State’s medical marijuana legislation handed the earlier yr via her advocacy work. She later joined with the Connecticut Hashish Enterprise Alliance to assist shepherd via the laws and get an trade established within the state.
Curaleaf started as a cultivation and processing facility in Simsbury, a small city in Hartford County. However Konieczny’s involvement didn’t final lengthy. “After we gained the license, I received squeezed out inside six months,” she tells Venture CBD, citing tensions between her idealistic imaginative and prescient and aggressive enterprise priorities.
In December 2014, Konieczny filed go well with in federal courtroom in New Haven claiming she had been wrongfully ousted from the corporate she helped discovered. Konieczny demanded a one-third curiosity in Curaleaf, in addition to again pay, compensatory damages, and attorneys’ charges. However the go well with didn’t prevail.
“After I used to be fired, the historical past of Curaleaf was rewritten,” Konieczny now says. “I completely disappeared within the historical past of what this firm grew to become.”
New Possession & a Reverse Takeover
Robert Birnbaum, the chairman and CEO of Curaleaf in its early years, was assured about his firm’s prospects. Whereas visiting Northern California in September 2014, Birnbaum met with Venture CBD (amongst others) and boasted of plans to launch a nationwide hashish firm backed by “nine-figure” buyers, although he didn’t disclose the id of those alleged deep pockets.
“A “reverse takeover” is a enterprise tactic through which an organization acquires its personal “shell firm.”
Two-and-a-half years later, Birnbaum bought his controlling curiosity in Curaleaf to Palliatech, a New Jersey-based entity, which had gained a foothold within the Backyard State’s fledgling medical marijuana trade. In 2013, a Russian personal fairness agency known as Sputnik bought a 35% stake in Palliatech. (Extra on Sputnik in a second.) Included in Delaware, Palliatech would re-establish itself in Wakefield, Massachusetts. And in 2018, shortly earlier than it grew to become a publicly traded firm on the Canadian inventory change, Palliatech modified its identify to Curaleaf.
A press launch asserting name-change said: “Curaleaf is a number one vertically built-in hashish operator in america.” It didn’t point out the modest effort in Simsbury, CT, the place the identify was born. Six months later, in accordance with firm’s web site, “Curaleaf grew to become a wholly-owned subsidiary of Curaleaf Holdings, Inc., via a reverse takeover, or RTO, on October 29, 2018.”
A “reverse takeover” is a enterprise tactic through which an organization legally acquires its personal “shell firm.”
This was the ignominious finish to the unique and now-forgotten Curaleaf 1.0 as a authorized entity. However the lurid particulars of the figures behind Curaleaf Holdings have solely just lately begun to emerge — thanks, largely, to the highlight on Russian oligarchs due to the battle in Ukraine.
Russian Oligarch Capital
In late February 2022, because the bombs and missiles started to fall on Ukraine, Curaleaf 2.0 moved to counter web rumors that the corporate was going through sanctions due to its executives’ ties to Russia.
“Rumors and misinformation unfold throughout turbulent occasions,” Curaleaf mentioned in a Feb. 25, 2022, press launch and message to shareholders posted to the corporate web site. “The hypothesis on social media that the corporate and its main shareholders and executives will by some means be topic to any US authorities financial sanctions now or sooner or later is inaccurate.”
Curaleaf mentioned that Boris Jordan, its founder, government chairman, and largest shareholder (some 20% of the $1.6 billion firm’s inventory), is a US citizen who was born on New York’s Lengthy Island and has by no means been a citizen of every other nation.
The assertion acknowledged that Jordan had labored in Russia for a number of years, and nonetheless has enterprise pursuits there.
An account on MarketWatch discovered that Jordan served as chair of Renaissance Capital, a Cyprus-based emerging-markets funding financial institution, which he based in 1995. He additionally served as managing director at Credit score Suisse in Moscow from 1992 to 1995. And he stays president and CEO of one other firm he based, the Sputnik Group, the aforementioned Moscow-based private-equity agency that invested in Palliatech earlier than it morphed into Curaleaf.
In line with its web site, the Sputnik Group makes a speciality of “M&A” (mergers and acquisitions). Its founding within the Nineteen Nineties got here at a propitious time — because the huge assets of the Soviet empire have been up for personal grabs. A glowing profile of Jordan by Benziga said: “Following the autumn of the Soviet Union in 1991, [Jordan] assisted Russia’s financial transition to capitalism and the launch of the Russian inventory market.”
Sputnik launched in 1998, a yr earlier than Vladimir Putin took energy in Russia. A 2007 diplomatic cable from then US ambassador in Moscow William Burns (the present CIA director), launched by Wikileaks, said that Jordan by his personal admission “as soon as had an in depth relationship with Putin.”
Curaleaf’s second-largest shareholder Andrei Blokh, mentioned to not be energetic within the firm, is a US citizen who additionally holds a Russian passport. The Curaleaf press launch misleadingly described Blokh as a “retired CPG [consumer packaged goods] entrepreneur.” However as his profile on Forbes notes, in 1998 Blokh served as president of Russia’s Siberian Oil Firm, or Sibneft — at the moment majority-owned by Gazprom, the state-owned hydrocarbon titan that may be a pillar of Putin’s energy.
Who’s Roman Abramovich?
However there’s a third determine with Russian connections not talked about in Curaleaf’s assertion: London-based oligarch Roman Abramovich, who owned a controlling curiosity in Sibneft till its absorption by Gazprom in 2005.
After Sibneft was put collectively from privatized Soviet state belongings, Abramovich struggled for management of the corporate with rival oligarch Boris Berezovsky. The feud between the 2 males wound up within the British courts, which cleared Abramovich of blackmail prices in 2012. The British press known as the $6.5 billion authorized battle the largest personal courtroom case in the UK’s historical past.
The lurid particulars of the figures behind Curaleaf Holdings have solely just lately begun to emerge as a result of highlight on Russian oligarchs due to the battle in Ukraine.
The Guardian notes that Abramovich was additionally a significant backer of Renaissance Insurance coverage — which is linked financially to Renaissance Capital, of which Jordan served as chair.
Abramovich, with a internet value estimated at $9 billion, was as soon as a high-roller in Britain’s enterprise elite — most well-known as proprietor of the Chelsea Soccer Membership. He additionally held a big stake within the Eviraz PLC metal and mining group. However because the begin of the Ukraine invasion, he has been underneath European Union sanctions. In March 2022, he reportedly sequestered two of his super-yachts in ports of non-EU member Turkey to stop them from being confiscated.
Up to now, Abramovich has not been sanctioned by the US, however the Justice Division obtained a warrant from a federal courtroom in Manhattan to grab two of his personal planes in June “primarily based on possible violations” of the sanctions on Russia. These concern unauthorized flights to Russia after the beginning of the invasion. The US Commerce Division’s Bureau of Business & Safety additionally initiated administrative proceedings towards Abramovich in search of penalties of as much as twice the worth of the planes.
Avoiding US Sanctions
Abramovich appears to have exercised some actual political ability to keep away from US sanctions. Within the tentative and finally abortive peace talks between Russia and Ukraine in Istanbul in March 2022, Abramovich was on the scene — his presence famous by each Russian and Turkish sources. Turkish President Recep Tayyip Erdogan acknowledged Abramovich’s function within the talks. The implication was that he had bought himself as a helpful potential dealer for negotiations, to launder his picture and appease world opinion.
Nevertheless, there have been additionally experiences that he had been poisoned at one of many Istanbul conferences — maybe indicating that he had not solely gained the belief of some both on the Russian or Ukrainian facet. Poisoning appears to be a well-liked methodology of Putin’s Kremlin to remove undesirable parts.
Abramovich can be a participant in Israel’s political scene — and has been linked to land-grabs by the Israelis in occupied East Jerusalem. A 2020 leak of financial institution paperwork often called the FinCEN Recordsdata revealed that firms tied to Abramovich donated $100 million to right-wing teams in Israel — particularly the Elad Basis, which has funded controversial settlement efforts in Silwan, a Palestinian neighborhood in occupied East Jerusalem. The Elad Basis’s claims to Palestinian lands and houses underneath the doubtful doctrine of “Absentee Property Rights” have led to bodily confrontations in addition to litigation.
In December 2022, the investigative web site Forensic Information reported that the corporate now known as Curaleaf obtained a whole lot of tens of millions of {dollars} in financing throughout its early years from Roman Abramovich. In line with Forensic Information, Abramovich’s investments within the firm and its principals amounted to round $225 million.
The report cited newly leaked paperwork from an accounting agency in Cyprus launched by the group Distributed Denial of Secrets and techniques, a non-profit that hosts leaked and hacked information. In line with Forensic Information, the paperwork present that Abramovich was quietly funding Jordan and corporations underneath his management through Cetus Investments, a agency primarily based within the British Virgin Islands.
Writes Forensic Information: “Tens of tens of millions of {dollars} in loans have been issued to Jordan and his firms, one thing that seems to have by no means been disclosed by Jordan or Curaleaf. A number of the loans included stipulations that the cash was solely to be spent on buying shares in Curaleaf …”
Hashish regulators in Connecticut just lately disclosed that they’re investigating whether or not Curaleaf violated state legislation when the corporate and its two largest shareholders accepted a whole lot of tens of millions of {dollars} in loans from firms owned by Abramovich.
Shady Shareholders
In an announcement to Forensic Information, Curaleaf confirmed that Jordan and Blokh obtained funding from Abramovich’s Cetus: “As with every younger firm in its early days of securing capital, shareholders Boris Jordan and Andrei Blokh have been elevating funds via a number of sources and household places of work to develop Palliatech, which later grew to become Curaleaf.”
Hashish regulators in Connecticut are investigating whether or not Curaleaf violated state legislation by accepting a whole lot of tens of millions of {dollars} in loans from Roman Abramovich.
Curaleaf added that “Cetus was a lender to many companies around the globe. All loans [from Cetus] have been repaid lengthy earlier than Curaleaf was shaped or went public. Curaleaf has no debt with Cetus. We can not communicate on behalf of shareholders.”
However the report notes yet one more main Curaleaf shareholder instantly linked to Russia’s industrial elite. In line with the leaked paperwork, Cetus bought 663,900 Curaleaf shares in September 2021 to at least one Daria Plutnik for $8 million. Daria Plutnik is the spouse of Alexander Plutnik, who at the moment serves because the deputy managing director of Russian Railways, a state-owned firm that the US and the European Union each positioned underneath sanctions after the Ukraine invasion.
The report additionally particulars Abramovich’s relationship with Measure 8 Ventures, a New York-based hashish funding agency ostensibly based by Jordan. Information reviewed by Forensic present that Abramovich was truly its largest beneficiary. Forensic particulars an elaborate community of machinations involving Cetus by which Abramovich cash discovered its manner into Measure 8 via third events.
Investing in CBD?
Abramovich additionally invested smaller sums in numerous different US hashish firms. He owned $1 million value of shares in Inexperienced Gorilla Inc, which makes a speciality of natural CBD merchandise. Cetus additionally invested closely in such US hashish firms as Eaze, Tradiv, and Tilt Holdings.
In an interview with Bloomberg after the Forensic Information revelations, Jordan insisted the disclosures shouldn’t have an effect on Curaleaf.
“He lent me and Andrei cash to speculate,” Jordan mentioned of Abramovich. “All these funds have way back been repaid, earlier than the battle, in late 2020 or late 2021. Curaleaf at the moment doesn’t have Roman Abramovich as a shareholder to the most effective of our data.”
Jordan mentioned the financing went to Curaleaf’s predecessor firm Palliatech from 2015 to 2017, after he contacted the Abramovich household workplace via Blokh. Jordan in fact emphasised that neither Blokh nor Abramovich are at the moment underneath sanctions within the US.
“Earlier than the battle, he was one of the sought-after buyers on the earth,” Jordan mentioned of Abramovich. “Having him as an investor was seen as a really large constructive.”
Jordan additionally acknowledged to Bloomberg that he has personally met Russia’s autocratic chief — however was fast to place it up to now. “I haven’t seen or talked with Putin since 2003,” he mentioned.
Questionable Business Practices
Aside from its ties to slippery Russian financiers, Curaleaf has developed a repute for unsavory practices that don’t dwell as much as hashish trade requirements — or that even skirt the legislation.
In 2016, Curaleaf admitted that its facility in Simsbury, CT, uncared for to bundle hashish merchandise in child-resistant bottles, that it had no product recall provisions, that it bought marijuana previous to registering model names with the CT’s Division of Hashish Management, and that it inspired leisure consumption in adverts when rec use was not authorized within the state.
Curaleaf subsequently agreed to pay $300,000 “for a litany of manufacturing failures,” in accordance with the CT Publish, “from promoting hashish earlier than it was registered with state officers to permitting unauthorized personnel into its supposedly safe cultivation rooms.” In a separate settlement for $10,000, Curaleaf additionally acknowledged that insecticides or natural solvents have been used whereas rising hashish for CT dispensaries, though no tainted merchandise are mentioned to have reached shoppers.
Questionable practices continued after the company hand-off to Palliatech:
In July 2019, the federal Meals & Drug Administration despatched a warning to Curaleaf, scolding the corporate for illegally promoting unapproved merchandise that made “unsubstantiated claims [to] deal with most cancers, Alzheimer’s illness, opioid withdrawal, ache and pet nervousness.” Curaleaf had just lately change into the primary provider of CBD merchandise to CVS, however the nation’s largest pharmacy chain pulled their merchandise after the FDA letter. Curaleaf’s shares took a tumble in response to the information.
In 2022, Curaleaf agreed to pay $100,000 to settle a class-action go well with over a producing error through which the corporate bought supposed CBD drops in Oregon that have been truly loaded with THC. A number of individuals reported disturbing signs (panic assaults, shaking, elevated coronary heart price) after ingesting the drops that have been bought underneath Curaleaf’s Choose model. Some have been driving once they suffered the results; others have been rushed to medical clinics. Some 500 individuals have been concerned within the go well with, receiving some $200 every.
Moreover, Curaleaf reached settlements with 13 individuals who sued individually over the snafu. A lot of the phrases have been personal however Oregon’s Willamette Week revealed that one plaintiff obtained $50,000. One of many confidential settlements was for “wrongful dying.” That lawsuit alleged that 78-year-old Earl Jacobe died two months after a traumatizing expertise with the drops, which have been mentioned to be a “substantial issue” in his dying.
Curaleaf was additionally slapped with a $130,000 superb and 23-day suspension by the Oregon Liquor & Hashish Fee. (In 2021, Curaleaf introduced a partnership with Southern Glazer’s Wine & Spirits to distribute its Hemp and Choose CBD merchandise. Glazer’s, the world’s largest alcohol distributor, may also distribute Curaleaf merchandise through its Proof e-commerce platform.)
Curaleaf received right into a trouble with New York regulatory authorities in August 2022, when it was compelled to tug hundreds of merchandise from the cabinets of its Empire State dispensaries for deceptive labeling. Curaleaf apparently determined to start out calculating THC content material by “dry weight” relatively than “moist weight” (the state norm) as a way to jack up percentages. The NY Workplace of Hashish Administration mentioned it couldn’t do this with out prior official approval.
Union-Busting
Curaleaf’s labor practices have additionally obtained unflattering media consideration. In November 2022, the Nationwide Labor Relations Board (NLRB) dominated that the corporate violated US labor legislation by refusing to cut price with unionized employees at its Chicago places.
An NLRB panel discovered that GHG Administration LLC, which supervises the corporate’s Windy Metropolis Hashish and Curaleaf Weed Road places, was obliged to acknowledge and cut price with staff who had affiliated with Native 881 of United Meals & Industrial Employees.
“By failing and refusing since Could 5, 2022, to acknowledge and cut price with the union because the unique collective-bargaining consultant of the staff within the applicable unit, the corporate has engaged in unfair labor practices affecting commerce throughout the which means of federal labor legislation,” said the order.
Windy Metropolis Hashish, previously an unbiased operator, was taken over by Curaleaf in 2021, because it continued to gobble up smaller firms across the nation.
Curaleaf was dealt one other defeat by an NLRB administrative legislation decide in Boston in July 2021. The ruling discovered that Curaleaf violated labor legal guidelines after employees opted to affiliate with CWA Native 328 at its medical dispensary in Hanover, Mass. Whereas Choose Iran Sandron dismissed essentially the most critical prices from Native 328 — firing, transferring, and interrogating staff for his or her help of the union — he nonetheless discovered that the corporate illegally tried to discourage unionization efforts. Curaleaf was ordered to desist from underhanded ways reminiscent of “implicitly” promising advantages for resisting the unionization drive. The Hanover location was additionally ordered to put up a discover for 60 days stating that staff are legally allowed to type a union.
Final June, Curaleaf issued a company-wide e mail informing staff that these represented by a union wouldn’t be receiving vacation pay for Juneteenth. This was only a yr after Juneteenth was declared a nationwide vacation amid a lot discuss of redressing the nation’s legacy of racial and social injustice.
And on Jan. 11, 2023, Phoenix New Occasions reported {that a} budtender on the Curaleaf dispensary in Gilbert, Ariz., filed a criticism with the NLRB over what she mentioned was her retaliatory firing after making an attempt to prepare her co-workers.
Large Weed in DC
The Curaleaf controversies have a selected media resonance for the time being due to the Ukraine battle and the West’s showdown with Russia. However they elevate a purple flag about the place the American hashish enterprise goes typically — with or with out the taint of Moscow intrigues.
Small producers have lengthy been cautious of the hashish trade coming underneath domination by multistate operators with the worst practices of company America.
In Washington, DC, the largest marijuana firms are represented by america Hashish Council (USCC), a corporation that features Curaleaf amongst its founding members. A essential exposè in The Day by day Beast depicted the USCC as a entrance for Large Weed firms that search to keep up their dominating place within the trade by lobbying Congress to “protect and defend secure state markets.”
In impact, this implies “enshrining state legal guidelines that limit the variety of companies allowed to develop and promote hashish,” in accordance with a USCC whistleblower, as a way to chase away competitors and promote a Large Weed oligopoly.
Such legal guidelines have enabled the emergence of a number of billion-dollar hashish firms in only a few years. By the tip of 2020, there have been 9 MSO’s with market caps in extra of $1 billion — with Curaleaf main the pack. Steven Hawkins, the CEO of the USCC, who till just lately was additionally the chief director of the Marijuana Coverage Venture, praised Curaleaf “as a frontrunner in company social duty” whereas dismissing questions in regards to the backgrounds of its principals.
Curaleaf Responds
Contacted by Venture CBD, Curaleaf had this to say in regards to the the investigations into the loans from Roman Abramovich, which have now been opened in Connecticut and Massachusetts: “We have now totally complied with all necessities concerning disclosure of our possession and financing in Massachusetts and Connecticut, and we now have a collaborative and clear working relationship with regulators in each states. There may be nothing to cover, and we’re disenchanted that the continued misguided narrative to malign the corporate continues amongst journalistic retailers — regardless of any proof supporting these false and defamatory claims.”
The corporate rep added: “As all the time, we are going to totally cooperate with state regulators and handle any considerations promptly. The matter regarding Curaleaf’s early collectors has been addressed repeatedly and we stand by our unique assertion.”
We have been directed to a December tweet from the corporate, which asserted that the biggest sum it ever owed to Abramovich or his conduit firms was $120 million, and that “all shareholder loans to Boris Jordan and Andrei Blokh have been paid again years in the past.” The tweet accused Forensic Information of “gross exaggeration.”
Requested about authorized settlements in Oregon over THC-spiked CBD drops, the corporate mentioned: “Curaleaf is happy to have resolved this challenge and appreciates the work of the OLCC [Oregon Liquor & Cannabis Commission] in addressing the regulatory sanctions as a consequence of the Could 2021 product mislabeling, which was decided to have been the results of human error. We’re grateful to the OLCC for recognizing that Curaleaf ‘supplied extraordinary cooperation within the investigation demonstrating acceptance of duty’ within the matter. By means of a radical buyer outreach, we promptly recalled the effected merchandise and supplied applicable compensation to each buyer who reported being affected by the mislabeled product. This incident and Curaleaf’s response display why shoppers proceed to be greatest served by established, regulated and insured hashish firms working within the licensed market.”
Invoice Weinberg, a Venture CBD contributing author, is a 30-year veteran journalist within the fields of drug coverage, ecology and indigenous peoples. He’s a former information editor at Excessive Occasions journal, and he produces the web sites CounterVortex.org and International Ganja Report. Copyright, Venture CBD. Might not be reprinted with out permission.
