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 discreetly investing in cannabis enterprises for years. According to Forensic News, the news outlet that obtained the secret documents, Roman Abramovich has contributed to funding the two largest shareholders of Curaleaf Holdings. The Russian businessman is also said to have close relations with Vladimir Putin, the Russian president.

Curaleaf, the alleged cannabis company Roman Abramovich has been secretly investing in, is a renowned recreational and medicinal cannabis dispensary in the U.S. Curaleaf is in 21 states and owns and runs 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 comes on the heels of Russian Oligarch Andrey Muraviev bribery and cannabis hush money charges from the FBI and state of Nevada.

The Wakefield, Massachusetts-based company, Curaleaf Holdings is one of the world's largest marijuana businesses, with a market valuation of roughly $3.08 billion. According to the report, Abramovich, whose net worth is projected to be approximately $9 billion, secretly funded Curaleaf Holdings shareholders.

When Russia attacked Ukraine earlier this year, the U.K. and E.U. sanctioned the Russian oligarch, but the U.S. did not. Nonetheless, the Department of Justice got a warrant in June to confiscate two of his planes worth over $400 million.

An American Success Story

Curaleaf was initially targeted when the Ukrainian war began because of its possible ties to Russia. Boris Jordan, the company's executive chairman, is said to be given the highest position due to his Ukrainian and Russian ancestry. Jordan, an American citizen, born in the United States, was suspected of having financial connections to Russian firms and oligarchs.

Jordan responded by saying Curaleaf is an American success story that he founded!. He urged the media to please refrain from spreading disinformation. He explained that he was born in the United States and currently lives and works there! "Being of Ukrainian and Russian origin, I pray for diplomacy and a peaceful conclusion that preserves the lives of all residents on all sides of this crisis," he added.

Jordan, who owns approximately 18.2% of Curaleaf, was estimated to have a net worth of roughly $1 billion in April. From the early 1990s, he spent nearly two decades in Russia, where he was regarded as one of the most influential foreign investment bankers. He once claimed to have a "tight friendship with Putin."

Russian Businessman Disguised As 'Cetus Investments'

Contrary to Jordan's assertions that "Curaleaf is an American success story," the published documents show that Abramovich was quietly financing Jordan and firms under his supervision. The Financing was executed through Cetus Investments, a British Virgin Islands LLC.

According to Forensic News, loans worth tens of millions of dollars were extended to Jordan and his enterprises, one which seems to have never been acknowledged by Jordan or Curaleaf. Some loans stipulated that the funds be used only to purchase shares in Curaleaf, formerly PalliaTech Inc.

For instance, 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 said the funds must be used to purchase 878,569 shares of PalliaTech stock. The note was then extended in October 2017 to include a second $10 million loan to buy an additional 418,253 PalliaTech shares.

According to the research, Abramovich lent roughly $69 million to Jordan's enterprises between 2017 and 2019.

Furthermore, Jordan wasn't the only Curaleaf shareholder to benefit from Abramovich's offshore company's loans. It is stated in the record that Abramovich also financed its second-largest stakeholder, Andrey Blokh, in a similar scheme.

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

$140M Direct Investment In Curaleaf from Cetus to Blokh and Jordan

According to Cetus' internal financial statements, the company Cetus lent roughly $140 million to Blokh and Jordan by the end of 2018. More importantly, public documents and filings from the United States Securities and Exchange Commission disclosed that Cetus lent $85 million directly to Curaleaf.

Ambramovich's investments in Curaleaf are reported to have begun before the cannabis firm went public. The Russian entrepreneur invested about $225 million in the firm and its principals. In fact, Curaleaf acknowledged to Forensic News that Cetus supported both Jordan and Blokh.

A company representative stated that during the company's early stage of raising capital, shareholders Andrei Blokh and Boris Jordan were soliciting cash through family offices and numerous sources to develop Curaleaf. The representative added that Cetus was a global lender to various enterprises. All the loans mentioned in your email were paid off before Curaleaf became public. Hence, Curaleaf owes Cetus nothing. However, the representative claimed the company can't e can't speak on behalf of shareholders.

Karen Greenaway, a former FBI financial crime investigator, told the publication about her concerns about these types of loans. In her words, this form of funding is troublesome for government authorities, law enforcement, and investment firms because it conceals the ownership of the investment funds.

She added that this financial arrangement sometimes poses impassable difficulties, especially for enforcement agencies, when investigating infractions of U.S. money laundering statutes. It is nearly hard to tell if the invested monies were from lawful revenue without establishing the primary investor's identity or the funds' origin."

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 invested over $1 million in significant cannabis startups in the United States, including Eaze and Tilt Holdings.

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