Russian billionaire Roman Abramovich in foreground
Russian billionaire Roman Abramovich (foreground) watches from the stands as Metalist plays Sampdoria in a UEFA Euroleague football match in Kharkov, Ukraine in October 2010. Credit: Iurii Osadchi / Shutterstock

(Updated 12:45 p.m.) Cannabis regulators in Connecticut said that they are looking into 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 embattled Russian billionaire Roman Abramovich.

Two of Abramovich’s companies, Cetus Investments and Meliastove Investment, pumped over $400 million into the pockets of Curaleaf and at least two of Curaleaf’s top shareholders from 2017 to 2021, according to leaked financial documents, which were first reported in December by Forensic News.

Loans are generally permitted for cannabis operators, as long as the individuals providing the loans are disclosed to the state Department of Consumer Protection and also meet the state’s definition of a “backer” for the cannabis industry, according to spokesperson Kaitlyn Krasselt.

“As with any allegation of an undisclosed financial interest, the Department will review the allegations,” she said in an emailed response.

A spokesperson for Curaleaf responded after this article was published to say the company has complied with state standards.

“We have fully complied with all requirements regarding disclosure of our ownership and financing in the state of Connecticut, and have a collaborative and transparent working relationship with CT regulators,” a spokesperson said. “There is nothing to hide, and we are disappointed that the continued misguided narrative to malign the company continues among journalistic outlets – despite the absence of any evidence supporting these false and defamatory claims.”

According to the state’s definition, a backer is someone or members of the same family who either owns at least 5% of a cannabis establishment, or has a direct or indirect role in control, management or operation of the business. Aside from his offshore companies holding debt in Curaleaf, it is not immediately clear what stakes or control, if any, Abramovich has over Curaleaf.

The reporting revealed a series of loans to Curaleaf founder and Executive Chairmen Boris Jordan and Andrey Blokh with specific instructions to invest that money in PalliaTech, which became Curaleaf in 2018. Johnson and Blokh are currently the two largest shareholders of Curaleaf stock.

Curaleaf began operating as a cultivator in Connecticut in 2014. In 2020, the company acquired a collection of dispensaries formerly owned by Arrow Alternative Care and Grassroots, allowing it to be vertically integrated in the state.

Starting in late 2017, and continuing through the end of 2018, Cetus loaned about $140 million to Jordan and Blokh, with an additional $85 million loaned directly to PalliaTech, which was reported to the SEC. That $85 million was issued in August 2018, but was completely repaid as of Dec. 20, 2019, according to SEC filings.

Later, Meliastove Investment, another company owned by Abramovich, loaned $180 million dollars directly to Curaleaf starting in 2020, with a third of that amount coming in December 2021 – within two months of Russia’s invasion of Ukraine.

There has been increasing scrutiny of Abramovich and his finances ever since Russia’s invasion on Feb. 24, 2022.

The United Kingdom and European Union both announced sanctions last March against Abramovich based on his perceived closeness with Russian President Valdimir Putin. Three months later, the US Department of Justice announced that it had seized two of Abramovich’s planes, though no formal sanctions from the United States have been announced. 

In response to the Forensic News article, Curaleaf issued a statement on social media defending the initial loan from Abramovich and saying that it had been repaid prior to the start of the war between Russia and Ukraine.

“Mr. Abramovich was one of many worldwide sources of capital raised over several years to build PalliaTech, a medical cannabis start-up that later became Curaleaf,” said the unsigned statement. “Those loans, which were legal, well-documented – and not secret – were repaid before the start of the war.”

Curaleaf noted that Abramovich’s vast variety of investments do not necessarily indicate control in those holdings.

“PalliaTech was one of thousands of companies globally and in the US that were beneficiaries of Mr. Abramovich’s financing (including many blue-chip firms and several cannabis companies),” said the statement. “At the time he was a much sought-after investor and a well-recognized businessman around the world. While the narrative has changed due to the current media environment, he remains unsanctioned in the United States.”

Massachusetts Authorities Also Investigating

Following the reporting of previously undisclosed loans, independent reporter Grant Smith Ellis reported that the Massachusetts Cannabis Control Commission (CCC) had opened an investigation into whether Curaleaf’s loans were properly reported to the state.

“The Cannabis Control Commission is aware of these allegations. As they pertain to an open inquiry, the agency has no further comment at this time,” wrote a CCC spokesperson in an emailed response confirming Ellis’ report.

Curaleaf issued an additional statement following reporting from Ellis that also included allegations that Curaleaf concealed a radiation machine from regulators that allowed the company to remediate contaminated flower prior to lab testing and that the company has been operating an unlicensed research lab since 2019.

“We have been working with Massachusetts regulators for over two years on this facility,” said the unsigned statement. “Our facility in Newton received its provisional license from the Cannabis Control Commission last year; we look forward to receiving our final license later this year. In the meantime we continue to comply with applicable state rules and regulations.”

On Monday Curaleaf through a spokesperson reiterated that Massachusetts regulators knew of the radiation.

“The radiation based treatment of cannabis products at our Webster facility is commonly used in the industry as a safe and effective way to enhance the quality of our flower products,” the company said. “The machine is fully licensed by the Massachusetts Department of Health and is not “hidden” from anyone. Our team members are trained on the manufacturer’s standard policies and procedures to safely operate the machine.”

Curaleaf claimed that they had not yet been notified of any investigation from the state of Massachusetts.

“At this time, we have not been contacted by the CCC and are not aware of any investigation,” said the statement. “As always, if contacted by Massachusetts officials we will fully cooperate and address any concerns promptly. The matter concerning Curaleaf’s early creditors has been addressed repeatedly and we stand by our original statement.”

Both confirmations from Massachusetts and Connecticut of concurrent investigations came after Curaleaf’s initial denial.

Editor’s note: This article has been updated with additional comment from Curaleaf.