Small producers have long been wary of the cannabis industry coming under domination by multistate operators (MSO’s) with the worst practices of corporate America. But the revelations of Russian oligarch money in the coffers of leading MSO Curaleaf appear to vindicate even the most cynical observers. These follow a slew of controversies concerning product safety and labor rights at the company.
Now based in the Boston suburb of Wakefield, adult-use cannabis colossus Curaleaf seems to exemplify the industry’s trajectory — from its origins as a local operation for medicinal users to its current status as a globe-spanning titan generating unsavory headlines and a string of scandals.
The World’s Largest Cannabis Company
Today Curaleaf ranks as the largest cannabis company in the world. Last year, it claimed $1.2 billion in profits. Until recently it had operations in 23 US states with 147 dispensaries, 22 cultivation sites, and 30 processing facilities.
Like other big MSOs, Curaleaf has achieved a dominant position in the cannabis industry by setting up operations primarily in “limited-license states . . . with natural high barriers to entry and limited market participants,” a strategy that helps “to ensure the company’s market share is protected,” according to the company’s annual investor filing in 2020.
But these “high barriers to entry” are hardly “natural.” They are constructed and promoted by policy-makers, regulators, and some opportunistic legalization advocates who favor restricting access to lucrative cannabis business licenses to a small number of well-heeled applicants.
Curaleaf, a publicly-traded corporation, hasn’t fared as well in states that have lower barriers to entry. In January, the company announced it was pulling out of California, Colorado, and Oregon, and laying off about 4% of its roughly 6,000 employees. The company is said to be seeking $40 million in cost savings in 2023.
These cost-cutting measures, Curaleaf explained, will enable the company to focus more on expanding its global operations. Curaleaf International, the largest vertically integrated cannabis company in Europe, already has licensed products in Italy, Poland, and Malta.
Eileen Konieczny, a nurse by trade now living in Southern California, says she is the forgotten figure who was present at the creation of Curaleaf.
“I put together a team to go after a license in Connecticut in 2013,” she says. “I was listed on the application as ‘chief medical officer.’ ”
Konieczny says she played an instrumental role in getting the Constitution State’s medical marijuana law passed the previous year through her advocacy work. She later joined with the Connecticut Cannabis Business Alliance to help shepherd through the regulations and get an industry established in the state.
Curaleaf began as a cultivation and processing facility in Simsbury, a small town in Hartford County. But Konieczny’s involvement didn’t last long. “After we won the license, I got squeezed out within six months,” she tells Project CBD, citing tensions between her idealistic vision and aggressive business priorities.
In December 2014, Konieczny filed suit in federal court in New Haven claiming she had been wrongfully ousted from the company she helped found. Konieczny demanded a one-third interest in Curaleaf, as well as back pay, compensatory damages, and attorneys’ fees. But the suit did not prevail.
“After I was fired, the history of Curaleaf was rewritten,” Konieczny now says. “I totally disappeared in the history of what this company became.”
New Ownership & a Reverse Takeover
Robert Birnbaum, the chairman and CEO of Curaleaf in its early years, was confident about his company’s prospects. While visiting Northern California in September 2014, Birnbaum met with Project CBD (among others) and boasted of plans to launch a national cannabis company backed by “nine-figure” investors, though he did not disclose the identity of these alleged deep pockets.
“A “reverse takeover” is a business tactic in which a company acquires its own “shell company.”
Two-and-a-half years later, Birnbaum sold his controlling interest in Curaleaf to Palliatech, a New Jersey-based entity, which had gained a foothold in the Garden State’s fledgling medical marijuana industry. In 2013, a Russian private equity firm called Sputnik purchased a 35% stake in Palliatech. (More on Sputnik in a moment.) Incorporated in Delaware, Palliatech would re-establish itself in Wakefield, Massachusetts. And in 2018, shortly before it became a publicly traded company on the Canadian stock exchange, Palliatech changed its name to Curaleaf.
A press release announcing name-change stated: “Curaleaf is a leading vertically integrated cannabis operator in the United States.” It didn’t mention the modest effort in Simsbury, CT, where the name was born. Six months later, according to company’s website, “Curaleaf became a wholly-owned subsidiary of Curaleaf Holdings, Inc., through a reverse takeover, or RTO, on October 29, 2018.”
A “reverse takeover” is a business tactic in which a company legally acquires its own “shell company.”
This was the ignominious end to the original and now-forgotten Curaleaf 1.0 as a legal entity. But the lurid details of the figures behind Curaleaf Holdings have only recently begun to emerge — thanks, in large part, to the spotlight on Russian oligarchs because of the war in Ukraine.
Russian Oligarch Capital
In late February 2022, as the bombs and missiles began to fall on Ukraine, Curaleaf 2.0 moved to counter internet rumors that the company was facing sanctions because of its executives’ ties to Russia.
“Rumors and misinformation spread during turbulent times,” Curaleaf said in a Feb. 25, 2022, press release and message to shareholders posted to the company website. “The speculation on social media that the company and its major shareholders and executives will somehow be subject to any US government economic sanctions now or in the future is incorrect.”
Curaleaf said that Boris Jordan, its founder, executive chairman, and largest shareholder (some 20% of the $1.6 billion company’s stock), is a US citizen who was born on New York’s Long Island and has never been a citizen of any other country.
The statement acknowledged that Jordan had worked in Russia for several years, and still has business interests there.
An account on MarketWatch found that Jordan served as chair of Renaissance Capital, a Cyprus-based emerging-markets investment bank, which he founded in 1995. He also served as managing director at Credit Suisse in Moscow from 1992 to 1995. And he remains president and CEO of another company he founded, the Sputnik Group, the aforementioned Moscow-based private-equity firm that invested in Palliatech before it morphed into Curaleaf.
According to its website, the Sputnik Group specializes in “M&A” (mergers and acquisitions). Its founding in the 1990s came at a propitious time — as the vast resources of the Soviet empire were up for private grabs. A glowing profile of Jordan by Benziga stated: “Following the fall of the Soviet Union in 1991, [Jordan] assisted Russia’s economic transition to capitalism and the launch of the Russian stock market.”
Sputnik launched in 1998, a year before Vladimir Putin took power in Russia. A 2007 diplomatic cable from then US ambassador in Moscow William Burns (the current CIA director), released by Wikileaks, stated that Jordan by his own admission “once had a close relationship with Putin.”
Curaleaf’s second-largest shareholder Andrei Blokh, said not to be active in the company, is a US citizen who also holds a Russian passport. The Curaleaf press release misleadingly described Blokh as a “retired CPG [consumer packaged goods] entrepreneur.” But as his profile on Forbes notes, in 1998 Blokh served as president of Russia’s Siberian Oil Company, or Sibneft — today majority-owned by Gazprom, the state-owned hydrocarbon titan that is a pillar of Putin’s power.
Who is Roman Abramovich?
But there is a third figure with Russian connections not mentioned in Curaleaf’s statement: London-based oligarch Roman Abramovich, who owned a controlling interest in Sibneft until its absorption by Gazprom in 2005.
After Sibneft was put together from privatized Soviet state assets, Abramovich struggled for control of the company with rival oligarch Boris Berezovsky. The feud between the two men wound up in the British courts, which cleared Abramovich of blackmail charges in 2012. The British press called the $6.5 billion legal battle the biggest private court case in the United Kingdom’s history.
The lurid details of the figures behind Curaleaf Holdings have only recently begun to emerge due to the spotlight on Russian oligarchs because of the war in Ukraine.
Abramovich, with a net worth estimated at $9 billion, was once a high-roller in Britain’s business elite — most famous as owner of the Chelsea Football Club. He also held a large stake in the Eviraz PLC steel and mining group. But since the start of the Ukraine invasion, he has been under European Union sanctions. In March 2022, he reportedly sequestered two of his super-yachts in ports of non-EU member Turkey to prevent them from being confiscated.
Thus far, Abramovich has not been sanctioned by the US, but the Justice Department obtained a warrant from a federal court in Manhattan to seize two of his private planes in June “based on probable violations” of the sanctions on Russia. These concern unauthorized flights to Russia after the start of the invasion. The US Commerce Department’s Bureau of Industry & Security also initiated administrative proceedings against Abramovich seeking penalties of up to twice the value of the planes.
Avoiding US Sanctions
Abramovich seems to have exercised some real political skill to avoid US sanctions. In the tentative and ultimately abortive peace talks between Russia and Ukraine in Istanbul in March 2022, Abramovich was on the scene — his presence noted by both Russian and Turkish sources. Turkish President Recep Tayyip Erdogan acknowledged Abramovich’s role in the talks. The implication was that he had sold himself as a useful potential broker for negotiations, to launder his image and appease world opinion.
However, there were also reports that he had been poisoned at one of the Istanbul meetings — perhaps indicating that he had not entirely won the trust of some either on the Russian or Ukrainian side. Poisoning seems to be a favored method of Putin’s Kremlin to eliminate undesirable elements.
Abramovich is also a player in Israel’s political scene — and has been linked to land-grabs by the Israelis in occupied East Jerusalem. A 2020 leak of bank documents known as the FinCEN Files revealed that companies tied to Abramovich donated $100 million to right-wing groups in Israel — especially the Elad Foundation, which has funded controversial settlement efforts in Silwan, a Palestinian neighborhood in East Jerusalem. The Elad Foundation’s claims to Palestinian lands and homes under the dubious doctrine of “Absentee Property Rights” have led to physical confrontations as well as litigation.
In December 2022, the investigative website Forensic News reported that the company now called Curaleaf received hundreds of millions of dollars in financing during its early years from Roman Abramovich. According to Forensic News, Abramovich’s investments in the company and its principals amounted to around $225 million.
The report cited newly leaked documents from an accounting firm in Cyprus released by the group Distributed Denial of Secrets, a non-profit that hosts leaked and hacked data. According to Forensic News, the documents show that Abramovich was quietly funding Jordan and companies under his control via Cetus Investments, a firm based in the British Virgin Islands.
Writes Forensic News: “Tens of millions of dollars in loans were issued to Jordan and his companies, something that appears to have never been disclosed by Jordan or Curaleaf. Some of the loans included stipulations that the money was only to be spent on purchasing shares in Curaleaf . . .”
Cannabis regulators in Connecticut recently disclosed that they are investigating whether Curaleaf violated state law when the company and its two largest shareholders accepted hundreds of millions of dollars in loans from companies owned by Abramovich.
In a statement to Forensic News, Curaleaf confirmed that Jordan and Blokh received funding from Abramovich’s Cetus: “As with any young company in its early days of securing capital, shareholders Boris Jordan and Andrei Blokh were raising funds through multiple sources and family offices to grow Palliatech, which later became Curaleaf.”
Cannabis regulators in Connecticut are investigating whether Curaleaf violated state law by accepting hundreds of millions of dollars in loans from Roman Abramovich.
Curaleaf added that “Cetus was a lender to many businesses around the world. All loans [from Cetus] were repaid long before Curaleaf was formed or went public. Curaleaf has no debt with Cetus. We cannot speak on behalf of shareholders.”
But the report notes yet another major Curaleaf shareholder directly linked to Russia’s industrial elite. According to the leaked documents, Cetus sold 663,900 Curaleaf shares in September 2021 to one Daria Plutnik for $8 million. Daria Plutnik is the wife of Alexander Plutnik, who currently serves as the deputy managing director of Russian Railways, a state-owned company that the US and the European Union both placed under sanctions after the Ukraine invasion.
The report also details Abramovich’s relationship with Measure 8 Ventures, a New York-based cannabis investment firm ostensibly founded by Jordan. Records reviewed by Forensic show that Abramovich was actually its largest beneficiary. Forensic details an elaborate network of machinations involving Cetus by which Abramovich money found its way into Measure 8 through third parties.
Investing in CBD?
Abramovich also invested smaller sums in various other US cannabis companies. He owned $1 million worth of shares in Green Gorilla Inc, which specializes in organic CBD products. Cetus also invested heavily in such US cannabis companies as Eaze, Tradiv, and Tilt Holdings.
In an interview with Bloomberg after the Forensic News revelations, Jordan insisted the disclosures shouldn’t affect Curaleaf.
“He lent me and Andrei money to invest,” Jordan said of Abramovich. “All those funds have long ago been repaid, before the war, in late 2020 or late 2021. Curaleaf today doesn’t have Roman Abramovich as a shareholder to the best of our knowledge.”
Jordan said the financing went to Curaleaf’s predecessor company Palliatech from 2015 to 2017, after he contacted the Abramovich family office through Blokh. Jordan of course emphasized that neither Blokh nor Abramovich are currently under sanctions in the US.
“Before the war, he was one of the most sought-after investors in the world,” Jordan said of Abramovich. “Having him as an investor was seen as a very big positive.”
Jordan also acknowledged to Bloomberg that he has personally met Russia’s autocratic leader — but was quick to put it in the past. “I haven’t seen or talked with Putin since 2003,” he said.
Questionable Industry Practices
Apart from its ties to slippery Russian financiers, Curaleaf has developed a reputation for unsavory practices that don’t live up to cannabis industry standards — or that even skirt the law.
In 2016, Curaleaf admitted that its facility in Simsbury, CT, neglected to package cannabis products in child-resistant bottles, that it had no product recall provisions, that it sold marijuana prior to registering brand names with the CT’s Department of Cannabis Control, and that it encouraged recreational consumption in ads when rec use was not legal in the state.
Curaleaf subsequently agreed to pay $300,000 “for a litany of production failures,” according to the CT Post, “from selling cannabis before it was registered with state officials to allowing unauthorized personnel into its supposedly secure cultivation rooms.” In a separate settlement for $10,000, Curaleaf also acknowledged that pesticides or organic solvents were used while growing cannabis for CT dispensaries, although no tainted products are said to have reached consumers.
Questionable practices continued after the corporate hand-off to Palliatech:
- In July 2019, the federal Food & Drug Administration sent a warning to Curaleaf, scolding the company for illegally selling unapproved products that made “unsubstantiated claims [to] treat cancer, Alzheimer’s disease, opioid withdrawal, pain and pet anxiety.” Curaleaf had recently become the first supplier of CBD products to CVS, but the nation’s biggest pharmacy chain pulled their products after the FDA letter. Curaleaf’s stocks took a tumble in response to the news.
- In 2022, Curaleaf agreed to pay $100,000 to settle a class-action suit over a manufacturing error in which the company sold supposed CBD drops in Oregon that were actually loaded with THC. Several people reported disturbing symptoms (panic attacks, shaking, increased heart rate) after ingesting the drops that were sold under Curaleaf’s Select brand. Some were driving when they suffered the effects; others were rushed to medical clinics. Some 500 people were involved in the suit, receiving some $200 each.
- Additionally, Curaleaf reached settlements with 13 people who sued individually over the snafu. Most of the terms were private but Oregon’s Willamette Week revealed that one plaintiff received $50,000. One of the confidential settlements was for “wrongful death.” That lawsuit alleged that 78-year-old Earl Jacobe died two months after a traumatizing experience with the drops, which were said to be a “substantial factor” in his death.
- Curaleaf was also slapped with a $130,000 fine and 23-day suspension by the Oregon Liquor & Cannabis Commission. (In 2021, Curaleaf announced a partnership with Southern Glazer’s Wine & Spirits to distribute its Hemp and Select CBD products. Glazer’s, the world’s largest alcohol distributor, will also distribute Curaleaf products via its Proof e-commerce platform.)
- Curaleaf got into a hassle with New York regulatory authorities in August 2022, when it was forced to pull thousands of products from the shelves of its Empire State dispensaries for misleading labeling. Curaleaf apparently decided to start calculating THC content by “dry weight” rather than “wet weight” (the state norm) in order to jack up percentages. The NY Office of Cannabis Management said it couldn’t do that without prior official approval.
Curaleaf’s labor practices have also received unflattering media attention. In November 2022, the National Labor Relations Board (NLRB) ruled that the company violated US labor law by refusing to bargain with unionized workers at its Chicago locations.
An NLRB panel found that GHG Management LLC, which supervises the company’s Windy City Cannabis and Curaleaf Weed Street locations, was obliged to recognize and bargain with employees who had affiliated with Local 881 of United Food & Commercial Workers (UFCW).
“By failing and refusing since May 5, 2022, to recognize and bargain with the union as the exclusive collective-bargaining representative of the employees in the appropriate unit, the company has engaged in unfair labor practices affecting commerce within the meaning of federal labor law,” stated the order.
Windy City Cannabis, formerly an independent operator, was taken over by Curaleaf in 2021, as it continued to gobble up smaller companies around the country.
Curaleaf was dealt another defeat by an NLRB administrative law judge in Boston in July 2021. The ruling found that Curaleaf violated labor laws after workers opted to affiliate with CWA Local 328 at its medical dispensary in Hanover, Mass. While Judge Iran Sandron dismissed the most serious charges from Local 328 — firing, transferring, and interrogating employees for their support of the union — he still found that the company illegally attempted to discourage unionization efforts. Curaleaf was ordered to desist from underhanded tactics such as “implicitly” promising benefits for resisting the unionization drive. The Hanover location was also ordered to post a notice for 60 days stating that employees are legally allowed to form a union.
Last June, Curaleaf issued a company-wide email informing employees that those represented by a union would not be receiving holiday pay for Juneteenth. This was just a year after Juneteenth was declared a national holiday amid much talk of redressing the country’s legacy of racial and social injustice.
And on Jan. 11, 2023, Phoenix New Times reported that a budtender at the Curaleaf dispensary in Gilbert, Ariz., filed a complaint with the NLRB over what she said was her retaliatory firing after attempting to organize her co-workers.
Big Weed in DC
The Curaleaf controversies have a particular media resonance at the moment because of the Ukraine war and the West’s showdown with Russia. But they raise a red flag about where the American cannabis business is going generally — with or without the taint of Moscow intrigues.
Small producers have long been wary of the cannabis industry coming under domination by multistate operators with the worst practices of corporate America.
In Washington, DC, the biggest marijuana companies are represented by the United States Cannabis Council (USCC), an organization that includes Curaleaf among its founding members. A critical exposè in The Daily Beast depicted the USCC as a front for Big Weed companies that seek to maintain their dominating position in the industry by lobbying Congress to “preserve and protect stable state markets.”
In effect, this means “enshrining state laws that restrict the number of businesses allowed to grow and sell cannabis,” according to a USCC whistleblower, in order to ward off competition and promote a Big Weed oligopoly.
Such laws have enabled the emergence of several billion-dollar cannabis companies in just a few years. By the end of 2020, there were nine MSO’s with market caps in excess of $1 billion — with Curaleaf leading the pack. Steven Hawkins, the CEO of the USCC, who until recently was also the executive director of the Marijuana Policy Project, praised Curaleaf “as a leader in corporate social responsibility” while dismissing questions about the backgrounds of its principals.
Contacted by Project CBD, Curaleaf had this to say about the the investigations into the loans from Roman Abramovich, which have now been opened in Connecticut and Massachusetts: “We have fully complied with all requirements regarding disclosure of our ownership and financing in Massachusetts and Connecticut, and we have a collaborative and transparent working relationship with regulators in both states. There is nothing to hide, and we are disappointed that the continued misguided narrative to malign the company continues among journalistic outlets — despite any evidence supporting these false and defamatory claims.”
The company rep added: “As always, we will fully cooperate with state regulators and address any concerns promptly. The matter concerning Curaleaf’s early creditors has been addressed repeatedly and we stand by our original statement.”
We were directed to a December tweet from the company, which asserted that the largest sum it ever owed to Abramovich or his conduit companies was $120 million, and that “all shareholder loans to Boris Jordan and Andrei Blokh were paid back years ago.” The tweet accused Forensic News of “gross exaggeration.”
Asked about legal settlements in Oregon over THC-spiked CBD drops, the company said: “Curaleaf is pleased to have resolved this issue and appreciates the work of the OLCC [Oregon Liquor & Cannabis Commission] in addressing the regulatory sanctions as a consequence of the May 2021 product mislabeling, which was determined to have been the result of human error. We are grateful to the OLCC for recognizing that Curaleaf ‘provided extraordinary cooperation in the investigation demonstrating acceptance of responsibility’ in the matter. Through a thorough customer outreach, we promptly recalled the effected products and offered appropriate compensation to every customer who reported being affected by the mislabeled product. This incident and Curaleaf’s response demonstrate why consumers continue to be best served by established, regulated and insured cannabis companies operating in the licensed market.”
Bill Weinberg, a Project CBD contributing writer, is a 30-year veteran journalist in the fields of drug policy, ecology and indigenous peoples. He is a former news editor at High Times magazine and produces the websites CounterVortex.org and Global Ganja Report. © Copyright, Project CBD. May not be reprinted without permission.
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