Small producers have lengthy been cautious of the hashish trade coming beneath 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 a neighborhood 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
Right now Curaleaf ranks because the largest hashish firm on this planet. Final 12 months, it claimed $1.2 billion in earnings. Till lately it had operations in 23 US states with 147 dispensaries, 22 cultivation websites, and 30 processing services.
Like different massive 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 individuals,” a technique that helps “to make sure the corporate’s market share is protected,” based on 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 proscribing entry to profitable hashish enterprise licenses to a small variety of well-heeled candidates.
Curaleaf, a publicly-traded company, hasn’t fared as effectively 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 workers. The corporate is alleged to be searching for $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 International, 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 dwelling 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 applying as ‘chief medical officer.’ ”
Konieczny says she performed an instrumental function in getting the Structure State’s medical marijuana law handed the earlier 12 months by means of her advocacy work. She later joined with the Connecticut Hashish Enterprise Alliance to assist shepherd by means of the rules 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 received 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 suit in federal court docket 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 swimsuit 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 turned.”
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 identification of those alleged deep pockets.
Two-and-a-half years later, Birnbaum offered 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 referred to as Sputnik bought a 35% stake in Palliatech. (Extra on Sputnik in a second.) Integrated in Delaware, Palliatech would re-establish itself in Wakefield, Massachusetts. And in 2018, shortly earlier than it turned a publicly traded company on the Canadian inventory alternate, Palliatech modified its identify to Curaleaf.
A press release saying name-change acknowledged: “Curaleaf is a number one vertically built-in hashish operator in the USA.” It didn’t point out the modest effort in Simsbury, CT, the place the identify was born. Six months later, based on firm’s website, “Curaleaf turned a wholly-owned subsidiary of Curaleaf Holdings, Inc., by means of 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 lately begun to emerge — thanks, largely, to the highlight on Russian oligarchs due to the conflict 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 dealing with 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 in some way be topic to any US authorities financial sanctions now or sooner or later is wrong.”
Curaleaf mentioned that Boris Jordan, its founder, govt 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 some 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 response to its web site, the Sputnik Group focuses on “M&A” (mergers and acquisitions). Its founding within the Nineties got here at a propitious time — because the huge sources of the Soviet empire had been up for personal grabs. A glowing profile of Jordan by Benziga acknowledged: “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 12 months 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, acknowledged 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 lively 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 — right this moment majority-owned by Gazprom, the state-owned hydrocarbon titan that could 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 fees in 2012. The British press referred to as the $6.5 billion authorized battle the biggest private court case in the UK’s historical past.
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 web 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 beneath European Union sanctions. In March 2022, he reportedly sequestered two of his super-yachts in ports of non-EU member Turkey to forestall them from being confiscated.
To this point, Abramovich has not been sanctioned by the US, however the Justice Division obtained a warrant from a federal court docket in Manhattan to grab two of his private 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 searching for 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 in the end abortive peace talks between Russia and Ukraine in Istanbul in March 2022, Abramovich was on the scene — his presence noted by each Russian and Turkish sources. Turkish President Recep Tayyip Erdogan acknowledged Abramovich’s function within the talks. The implication was that he had offered himself as a helpful potential dealer for negotiations, to launder his picture and appease world opinion.
Nevertheless, there have been additionally stories that he had been poisoned at one of many Istanbul conferences — maybe indicating that he had not solely received the belief of some both on the Russian or Ukrainian facet. Poisoning appears to be a favored method of Putin’s Kremlin to eradicate 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 Files revealed that corporations 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 East Jerusalem. The Elad Basis’s claims to Palestinian lands and houses beneath the doubtful doctrine of “Absentee Property Rights” have led to physical confrontations in addition to litigation.
In December 2022, the investigative web site Forensic Information reported that the corporate now referred to as Curaleaf obtained a whole lot of hundreds of thousands of {dollars} in financing throughout its early years from Roman Abramovich. In response to Forensic News, 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, a non-profit that hosts leaked and hacked knowledge. In response to Forensic Information, the paperwork present that Abramovich was quietly funding Jordan and firms beneath his management by way of Cetus Investments, a agency primarily based within the British Virgin Islands.
Writes Forensic Information: “Tens of hundreds of thousands of {dollars} in loans had been issued to Jordan and his corporations, one thing that seems to have by no means been disclosed by Jordan or Curaleaf. A few of the loans included stipulations that the cash was solely to be spent on buying shares in Curaleaf . . .”
Hashish regulators in Connecticut 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 hundreds of thousands of {dollars} in loans from corporations owned by Abramovich.
Shady Shareholders
In a press release 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 had been elevating funds by means of a number of sources and household places of work to develop Palliatech, which later turned Curaleaf.”
Hashish regulators in Connecticut are investigating whether or not Curaleaf violated state legislation by accepting a whole lot of hundreds of thousands of {dollars} in loans from Roman Abramovich.
Curaleaf added that “Cetus was a lender to many companies world wide. All loans [from Cetus] had been repaid lengthy earlier than Curaleaf was fashioned or went public. Curaleaf has no debt with Cetus. We can not converse on behalf of shareholders.”
However the report notes one more main Curaleaf shareholder straight linked to Russia’s industrial elite. In response to the leaked paperwork, Cetus offered 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 presently serves because the deputy managing director of Russian Railways, a state-owned firm that the US and the European Union each positioned beneath 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. Data 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 method into Measure 8 by means of third events.
Investing in CBD?
Abramovich additionally invested smaller sums in numerous different US hashish corporations. He owned $1 million value of shares in Inexperienced Gorilla Inc, which focuses on natural CBD merchandise. Cetus additionally invested closely in such US hashish corporations 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 take a position,” Jordan mentioned of Abramovich. “All these funds have way back been repaid, earlier than the conflict, in late 2020 or late 2021. Curaleaf right this moment doesn’t have Roman Abramovich as a shareholder to the perfect of our information.”
Jordan mentioned the financing went to Curaleaf’s predecessor firm Palliatech from 2015 to 2017, after he contacted the Abramovich household workplace by means of Blokh. Jordan in fact emphasised that neither Blokh nor Abramovich are presently beneath sanctions within the US.
“Earlier than the conflict, he was one of the crucial sought-after buyers on this planet,” Jordan mentioned of Abramovich. “Having him as an investor was seen as a really massive constructive.”
Jordan additionally acknowledged to Bloomberg that he has personally met Russia’s autocratic chief — however was fast to place it previously. “I haven’t seen or talked with Putin since 2003,” he mentioned.
Questionable Business Practices
Other than its ties to slippery Russian financiers, Curaleaf has developed a popularity for unsavory practices that don’t stay 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 offered marijuana previous to registering model names with the CT’s Division of Hashish Management, and that it inspired leisure consumption in advertisements when rec use was not authorized within the state.
Curaleaf subsequently agreed to pay $300,000 “for a litany of manufacturing failures,” based on the CT Post, “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 had been used whereas rising hashish for CT dispensaries, though no tainted merchandise are mentioned to have reached customers.
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 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 swimsuit over a producing error through which the corporate offered supposed CBD drops in Oregon that had been truly loaded with THC. A number of folks reported disturbing signs (panic assaults, shaking, elevated coronary heart charge) after ingesting the drops that had been offered beneath Curaleaf’s Choose model. Some had been driving after they suffered the results; others had been rushed to medical clinics. Some 500 folks had been concerned within the swimsuit, receiving some $200 every.
- Moreover, Curaleaf reached settlements with 13 individuals who sued individually over the snafu. Many of the phrases had been personal however Oregon’s Willamette Week revealed that one plaintiff obtained $50,000. One of many confidential settlements was for “wrongful demise.” That lawsuit alleged that 78-year-old Earl Jacobe died two months after a traumatizing expertise with the drops, which had been mentioned to be a “substantial issue” in his demise.
- Curaleaf was additionally slapped with a $130,000 high-quality and 23-day suspension by the Oregon Liquor & Hashish Fee. (In 2021, Curaleaf announced a partnership with Southern Glazer’s Wine & Spirits to distribute its Hemp and Choose CBD merchandise. Glazer’s, the world’s largest alcohol distributor, will even distribute Curaleaf merchandise by way of its Proof e-commerce platform.)
- Curaleaf received into a hassle with New York regulatory authorities in August 2022, when it was pressured to tug 1000’s of merchandise from the cabinets of its Empire State dispensaries for deceptive labeling. Curaleaf apparently determined to begin calculating THC content material by “dry weight” reasonably than “moist weight” (the state norm) to be able 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) ruled that the corporate violated US labor legislation by refusing to discount with unionized employees at its Chicago areas.
An NLRB panel discovered that GHG Administration LLC, which supervises the corporate’s Windy Metropolis Hashish and Curaleaf Weed Avenue areas, was obliged to acknowledge and discount with workers who had affiliated with Native 881 of United Meals & Industrial Staff (UFCW).
“By failing and refusing since Might 5, 2022, to acknowledge and discount with the union because the unique collective-bargaining consultant of the staff within the acceptable unit, the corporate has engaged in unfair labor practices affecting commerce inside the that means of federal labor legislation,” acknowledged the order.
Windy Metropolis Hashish, previously an unbiased operator, was taken over by Curaleaf in 2021, because it continued to gobble up smaller corporations across the nation.
Curaleaf was dealt another defeat by an NLRB administrative legislation choose 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 fees from Native 328 — firing, transferring, and interrogating workers 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 similar to “implicitly” promising advantages for resisting the unionization drive. The Hanover location was additionally ordered to submit a discover for 60 days stating that workers are legally allowed to type a union.
Final June, Curaleaf issued a company-wide e mail informing workers that these represented by a union wouldn’t be receiving holiday pay for Juneteenth. This was only a 12 months after Juneteenth was declared a nationwide vacation amid a lot speak of redressing the nation’s legacy of racial and social injustice.
And on Jan. 11, 2023, Phoenix New Times reported {that a} budtender on the Curaleaf dispensary in Gilbert, Ariz., filed a grievance with the NLRB over what she mentioned was her retaliatory firing after making an attempt to prepare her co-workers.
Massive Weed in DC
The Curaleaf controversies have a specific media resonance in the meanwhile due to the Ukraine conflict and the West’s showdown with Russia. However they increase a crimson flag about the place the American hashish enterprise goes typically — with or with out the taint of Moscow intrigues.
In Washington, DC, the most important marijuana corporations are represented by the USA Hashish Council (USCC), a corporation that features Curaleaf amongst its founding members. A vital exposè in The Daily Beast depicted the USCC as a entrance for Massive Weed corporations that search to take care of 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 prohibit the variety of companies allowed to develop and promote hashish,” based on a USCC whistleblower, to be able to push back competitors and promote a Massive Weed oligopoly.
Such legal guidelines have enabled the emergence of a number of billion-dollar hashish corporations in only a few years. By the top of 2020, there have been nine MSO’s with market caps in extra of $1 billion — with Curaleaf main the pack. Steven Hawkins, the CEO of the USCC, who till lately was additionally the chief director of the Marijuana Coverage Venture, praised Curaleaf “as a pacesetter in company social duty” whereas dismissing questions concerning the backgrounds of its principals.
Curaleaf Responds
Contacted by Venture CBD, Curaleaf had this to say concerning the the investigations into the loans from Roman Abramovich, which have now been opened in Connecticut and Massachusetts: “We’ve got 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 disillusioned 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 deal with any considerations promptly. The matter regarding Curaleaf’s early collectors has been addressed repeatedly and we stand by our unique assertion.”
We had been directed to a December tweet from the corporate, which asserted that the biggest sum it ever owed to Abramovich or his conduit corporations was $120 million, and that “all shareholder loans to Boris Jordan and Andrei Blokh had 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 situation and appreciates the work of the OLCC [Oregon Liquor & Cannabis Commission] in addressing the regulatory sanctions as a consequence of the Might 2021 product mislabeling, which was decided to have been the results of human error. We’re grateful to the OLCC for recognizing that Curaleaf ‘offered extraordinary cooperation within the investigation demonstrating acceptance of duty’ within the matter. Via an intensive buyer outreach, we promptly recalled the effected merchandise and provided acceptable compensation to each buyer who reported being affected by the mislabeled product. This incident and Curaleaf’s response reveal why customers proceed to be finest served by established, regulated and insured hashish corporations 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 Instances journal and produces the web sites CounterVortex.org and Global Ganja Report. © Copyright, Venture CBD. Might not be reprinted with out permission.
