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17-02-2023
Bonno News
How Putin's Ally Roman Abramovich Bankrolled America’s Largest Marijuana Company
Who else may have a finger in the pie?
Leaked documents reveal that Roman Abramovich had invested $225 million (over Rs 1,800 crore) into America’s largest marijuana company, Curaleaf, between 2015 and 2017. The money was routed through the Russian billionaire's British Virgin Island-registered company called Cetus Investments
Russian billionaire and Vladimir Putin ally Roman Abramovich not only invested in America's largest marijuana company Curaleaf but also invested in other US weed firms between 2016 and 2018. File image/AFP
This new piece of information might get people high — high on anger.
Documents have revealed that America’s largest marijuana company — Palliatech, the company that in 2018 became Curaleaf — received hundreds of millions of dollars in financing from Roman Abramovich, the Russian oligarch with close ties to Vladimir Putin and former owner of the Chelsea Football Club.
The news has grabbed headlines and eyeballs as the US continues to aid Ukraine in the war against Russia, which is nearing the one-year mark. Incidentally, Abramovich has been sanctioned in the United Kingdom, Europe and Canada in the wake of Russia’s invasion of Ukraine last year. Interestingly, he hasn’t been sanctioned in the US.
Here’s a deep dive into how the Russian billionaire helped light the match for US’ biggest weed company.
Rolling out the moolah for Curaleaf
Leaked files show that Abramovich invested a whopping $130 million (Rs 1,076 crore) and provided $194 million (Rs 1,606 crore) in loans to US weed firms between 2016 and 2018. This was the time when America was seeing a shift to legalising weed.
The documents further revealed that a massive amount of money given by Abramovich went towards Massachusetts-based cannabis producer Curaleaf, which today boasts of 146 stores across 21 US states and is the largest licensed weed company in the world.
The Russian oligarch, according to the documents, used a British Virgin Island-registered company called Cetus Investments to pump in $225 million (Rs 1,863 crore) into Curaleaf between 2015 and 2017. As per a report in VICE, the Cetus staff referred to Abramovich as Mr Blue — Chelsea’s nickname is “the Blues”.
How Putins ally Roman Abramovich bankrolled Americas largest marijuana company
Russian oligarch Roman Abramovich has close ties to Curaleaf’s executive chairman Boris Jordan
The findings are courtesy a leak from Cyprus-based accounting company Meritservus where Abramovich was a customer. The records were then processed by the Organized Crime and Corruption Reporting Project and analysed by news site Forensics News and financial magazine Barron’s.
Bill Alpert, who investigated the story for Barron’s, told VICE: “I have no beef with legalising cannabis and my family has Russian roots. 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.”
Also read: How cannabis, the ‘food of the gods’, became illegal in India
Abramovich has close ties to Curaleaf’s executive chairman Boris Jordan, who was once a prominent investment banker in Russia. This is how the funding began and documents further reveal Abramovich provided loans of tens of millions of dollars to Jordan and his companies, something that appears to have never been disclosed by Jordan or Curaleaf.
Curaleaf’s second-largest shareholder, Andrey Blokh, was also bankrolled by Abramovich, the files show. Forensic News reports that the pattern of loans from Abramovich to Blokh was similar to the funding of Jordan. In late 2016, Cetus lent Blokh over $50 million, earmarked for use of purchasing Palliatech shares only.
What should be worrying for US officials is that Abramovich’s funding of the company and the weed industry in America itself, until the leak, was obscured behind several trusts and offshore companies.
As Steve Rolles, senior policy analyst for Transform Drug Policy Foundation, explains in a VICE report that the fact that America’s cannabis industry was kick-started by someone believed to be close to Putin reflects a wider lack of scrutiny in the country. “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. 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,” he told VICE.
How Putins ally Roman Abramovich bankrolled Americas largest marijuana company
Massachusetts-based cannabis producer Curaleaf today boasts of 146 stores across 21 US states and is the largest licensed weed company in the world. AP
Abramovich and Vladimir Putin ties
The Russian billionaire, who became an orphan at the age of three, has long had ties with Russian leader Vladimir Putin.
His financial rise began with the disintegration of the Soviet Union; he seized the oil company Sibneft from the Russian government in a rigged auction in 1995 for around $250 million. Reports say that he created his wealth under Russian president Boris Yeltsin. But prospered in the era of President Vladimir Putin.
After Putin took power in 2000, Abramovich was elected governor of Chukotka in Russia’s northeast. He gained popularity for investing his own money in the region’s social services. He stepped down in 2008.
What really propelled him to popularity across the world was his decision to purchase Chelsea, west London’s largest football club, in a deal worth over $233 million (Rs 1,930 crore).
His net worth peaked in 2018 at $23.5 billion (Rs 1.9 lakh crore) and he also owns the world’s second-largest yacht.
Abramovich has long denied having links to The Kremlin or Putin. However, as Russia began its invasion of Ukraine in February last year, he was sanctioned by Britain for having close links to the Russian leader. In its sanctions rationale, the British government wrote that Abramovich, “is associated with a person who is or has been involved in destabilising Ukraine and undermining and threatening the territorial integrity, sovereignty and independence of Ukraine, namely Vladimir Putin, with whom Abramovich has had a close relationship for decades.”
How Putins ally Roman Abramovich bankrolled Americas largest marijuana company
Roman Abramovich created his wealth under Russian president Boris Yeltsin. But prospered in the era of President Vladimir Putin. The Russian billionaire also served as the governor of the Chukotka region in the early 2000s. File image/AFP
Britain added that Abramovich obtained financial benefits from Putin and the Russian government, including tax breaks for his companies, the ability to buy and sell shares to and from the state at favourable rates, and lucrative contracts ahead of the FIFA World Cup in 2018.
“Therefore, Abramovich has received preferential treatment and concessions from Putin,” the British government said.
In March 2022, he was also allegedly a victim of poisoning at peace talks on the Ukraine-Belarus border. This also cast light on his reported role as a broker in talks between Ukraine and Russia. While the exact nature of his position was unclear, a spokesperson for the oligarch previously said his influence was “limited”. This shows that Putin does, in fact, consider him a close ally.
American cannabis market
America has a burgeoning cannabis market — the medical use of cannabis is legal with a doctor’s recommendation in 37 states and 21 states allow for the recreational use of the drug.
Top cannabis researcher Brightfield Group said that despite seeing a hit in 2022, the market is estimated to reach over $31.8 billion (Rs 2.6 lakh crore) annual sales the end of 2023, growing to $50.7 billion (Rs 4.1 lakh crore) in annual sales by 2028.
How Putins ally Roman Abramovich bankrolled Americas largest marijuana company
America has a burgeoning weed market. Medical marijuana is legal in 37 US states and 21 US states allow for the recreational use of the drug. AFP
The rise in sales could be attributed to a change in attitude towards marijuana. Once considered an illicit substance, the stigma around it is being shed at a breath-taking speed, and it appears marijuana is on its way to the mainstream.
According to a 2021 Pew Research survey, 67 per cent of Americans believe the use of marijuana should be legalised. This is double what it was in 2000 — 31 per cent —and five times what it was in 1969 —12 per cent.
A New York University study revealed the percentage of adults aged 50 to 64 reporting marijuana use has doubled in the past decade to nine per cent and use among adults 65 and older has increased seven times during the same period to nearly three per cent.
All in all, the situation seems paradoxical in nature. On one hand, the US is shelling out billions as aid to Ukraine amid the war. On the other hand, America’s big bucks are being minted thanks to an initial investment by a Russian.
