Leaked Files Show How a Putin Ally Bankrolled the US Weed Industry

February 18, 2023 · Vice

Records show Russian oligarch and former Chelsea FC owner Roman Abramovich invested hundreds of millions of dollars in the US cannabis industry.

One of the biggest backers of the legal US cannabis industry was Russian oligarch Roman Abramovich, leaked documents have revealed.

Records show Abramovich invested $130 million and provided $194 million in loans to US weed firms between 2016 and 2018, when US states were increasingly shifting from illegal to legal markets.

Abramovich was the owner of Chelsea Football Club, one of the world’s biggest football clubs, before he was sanctioned in the UK, Europe and Canada in the wake of Russia’s invasion of Ukraine last year. 

The main beneficiary of the oligarch’s millions was Massachusetts-based cannabis producer Curaleaf, which has 146 stores in 21 US states and is now the largest licensed weed company in the world. He also invested in other firms including a weed delivery service and cannabis vaping companies. 

The revelation came after a huge cache of 30,000 files from Cyprus-based accounting company Meritservus, of which Abramovich was a customer, was leaked onto the non-profit Distributed Denial of Secrets website in December. The records were processed by the Organized Crime and Corruption Reporting Project and analysed by news site Forensics News and financial magazine Barron’s. Abramovich has so far not responded to reports about his heavy investment in the US weed industry.

Files showed Abramovich pumped $225 million into Curaleaf, then known as Palliatech, between 2015 and 2017 via a British Virgin Islands-registered company called Cetus Investments. Abramovich was allegedly referred to by Cetus staff only as “Mr Blue” – Chelsea’s nickname is “the Blues”. 

The oligarch has a long-standing business relationship with Curaleaf’s American chairman, Boris Jordan, a prominent investment banker in Russia in the 1990s and 2000s, and Andrey Blokh, its biggest shareholder, a former president of Russian oil company Sibneft. 

“I’ve no beef with legalising cannabis and my family has Russian roots,” Bill Alpert, who investigated the story for Barron’s, told VICE World News. “But it’s interesting the lengths that Abramovich went to hide his activities. His essential role at Curaleaf and other publicly-held businesses is something other investors might have wanted to know.” 

The oligarch’s funding of the nascent US cannabis industry was, until the leak, obscured behind several trusts and offshore companies. Alpert said Abramovich’s name did not appear in any state licensing documents or company records relating to the companies he backed.  

Alpert said the files showed that shortly before Russia’s invasion of Ukraine in February 2022, Cetus sold $8 million of Curaleaf shares to the wife of an official at Russia’s state-owned railway. When the war began, Abramovich transferred his cannabis investments to members of his family. 

Cannabis regulators in Massachusetts, the Cannabis Control Commission, confirmed it is “aware of the allegations regarding Curaleaf” and said it has started an inquiry into whether Abramovich’s connection to Curaleaf should have been disclosed. 

In a statement sent to Barron’s, Cureleaf said: “Curaleaf was one of thousands of companies globally and in the U.S. that were beneficiaries of Mr. Abramovich’s financing. At the time he was a much sought-after investor and a well-recognised businessman around the world. He remains unsanctioned in the United States.” The company denied Abramovich had any role in decision-making and said “he is no longer a creditor to or investor in Curaleaf”. 

But Curaleaf was not the only cannabis business Abramovich got behind. He funded most of the $54 million for Jordan to start another cannabis venture fund called Measure 8 in 2017. He had shareholdings in Eaze, a California-based weed delivery service; Flowhub, which makes software for weed dispensaries; CBD brand Green GorillaTilt Holdings which focuses on cannabis vapes; and the now defunct Greenrush Media, which produced the video platform Toke TV. A spokesperson for Tilt Holdings said the executives involved in the Abramovich investment were no longer working there, while Eaze said it was never aware Abramovich owned Cetus Investments. 

The bizarre situation whereby America’s cannabis industry was kick-started with money from a close ally of President Vladimir Putin’ reflects a wider lack of scrutiny over who is funding America’s green rush, according to Steve Rolles, senior policy analyst for Transform Drug Policy Foundation.  

“Enriching Russian oligarchs and kleptocrats close to Putin is certainly not what health and social justice campaigners have spent years advocating for,” Rolles told VICE World News. Despite being so widely sanctioned for his close links to Putin, Abramovich has consistently denied such an association.

“The fact Russian oligarchs like Abramovich have been so central to the burgeoning industry, seemingly under the radar until now, is a depressing reflection of the lack of scrutiny and oversight. Some elements of the emerging legal cannabis markets have felt like a new Wild West for speculative capital. It raises questions about who else may have a finger in the pie, and lessons for jurisdictions in Europe and elsewhere in the process of legalising.

“The Abramovich cannabis cash situation is particularly odd given Russia’s very vocal and hawkish drug war posturing on the international stage, vigorously condemning cannabis legalisation on the UN stage and trying to use it as geopolitical leverage against reforming states, particularly the US and Canada. It seems unlikely that Putin’s people were unaware of the investments given their scale.”

There is no evidence in the leaked files to suggest that Putin was aware or involved in Abramovich’s weed investments.

One expert said there should be no surprise a Russian oligarch like Abramovich saw big money-making potential in such a raw market. 

“I’m not shocked that investors, who made great sums of wealth in the 1990s after the collapse of the Soviet Union, were attracted to the emerging legal cannabis sector,” said Alastair Moore, co-founder of UK-based cannabis industry advisor and investor The Hanway Company. “In that moment [in Russia] the value was created in the transition between two systems. Cannabis legalisation is the transition of value from the black market to the legal market.”

Moore said it has not been uncommon to see super rich speculators move quicker than policymakers in relation to the cannabis industry. 

“International investors have been voting with their wallets by investing in legal cannabis businesses since the first cannabis startups appeared on Canadian stock exchanges, even before patients and consumers could access cannabis in their home country.”

VICE World News reached out to representatives of Abramovich but no response was received by time of publication. (Full Story)

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