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[westcoastfarms765]

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[westcoastfarmb]

West Coast Farms

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[westcoastfarmf]

West Coast Farms

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[westcoastfarme]

West Coast Farms

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[westcoastfarms]

West Coast Farms

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[savvyherb]

As Russian Money Poured Into Cannabis, Giuliani Allies Scrambled to Partake

SAN FRANCISCO — At a restaurant meeting in California a few years ago, Brad Hirsch and one of his law clients gathered over a meal with two potential business partners: Andrey Kukushkin and Andrey Muraviev, an investor who had flown in from Russia.

Mr. Kukushkin and the Russian financier were hoping Mr. Hirsch could help them build a stake in the state’s burgeoning cannabis market, Mr. Hirsch said, and he helped them set up a real estate business that would cater to marijuana operators. Over the span of just a few years, Mr. Kukushkin would join or develop cannabis companies around San Francisco, Sacramento, Los Angeles and Las Vegas, establishing a foothold in everything from real estate and cultivation to retail and delivery.

There was a reason that people like Mr. Kukushkin, who was born in Ukraine and later worked at a Russian investment bank, had a unique opportunity to get in on the ground floor. Federal law still treats cannabis as an illegal substance, and traditional banks have been wary of getting involved. Wealthy financiers have moved in to fill the void — including a growing cast of investors from Russia and former Soviet Union countries who have helped shape the industry's growth.

One of the nation’s largest cannabis companies, Curaleaf, is led by one of Russia’s most influential financiers and backed by another, allowing the company to pursue rapid expansion and hefty acquisitions. Investment firms have taken their own stakes: A San Francisco-based venture capital fund run by the Russian tech entrepreneur Pavel Cherkashin, backed largely by investors from Russia and the former Soviet Union, has put $2 million into Pure Spectrum, a Colorado-based business marketing CBD products.

“I think there is a strong fear of missing out back in Russia,” Mr. Cherkashin said. “It’s one of the most promising and rapidly developing markets.”

Mr. Kukushkin and some of his business partners appear to have gone a step further, funneling political contributions to candidates in Nevada and elsewhere in a way that has drawn the scrutiny of federal prosecutors. Earlier this month, a federal grand jury indicted four men, including Mr. Kukushkin, in a scheme to use money from an unnamed Russian to support politicians who could potentially help them obtain retail marijuana licenses around the country.

The indictment attracted widespread attention because two of the men charged are associates of President Trump’s personal lawyer, Rudolph Giuliani, and worked with Mr. Giuliani in the past to collect potentially damaging information about targets of interest to Mr. Trump in Ukraine.

They were accused in a separate scheme to conceal the source of a $325,000 donation to a pro-Trump super PAC, as well as other political contributions.

But when it came to Russian money flowing into the United States, prosecutors focused on its role in the Nevada marijuana business formed by Mr. Kukushkin and the others. The case illustrates how Mr. Giuliani’s allies were operating not just to advance the president’s political interests, but to build a political network of their own that would give them entree into one of the country’s more promising new industries.

Big Investors

The reluctance of traditional banks to touch marijuana financing has attracted private investors not from just Russia, but from China, Japan, South America and from around the United States. Mr. Kukushkin, according to the indictment, said he was trying to disguise the source of the Nevada venture’s money because of the financier’s “Russian roots and current political paranoia about it.”

Mr. Kukushkin’s lawyer, Gerald B. Lefcourt, declined to comment on the case.

Other investors with Russian backgrounds have been public about their involvement in the cannabis industry, and law enforcement officials do not appear to have raised questions.

Curaleaf, based in Massachusetts, is led by Boris Jordan, a businessman born in the United States who went on to build the investment bank Renaissance Capital in Russia, where he now leads the Sputnik Group, which has a major private equity division. The company’s other major individual investor was Andrei Blokh, a Moscow businessman.

In May, Curaleaf announced a $950 million deal to acquire the Oregon-based Cura Partners in one of the industry’s largest deals ever. In July, it followed up with an $875 million deal to acquire the Illinois-based Grassroots Cannabis.

Vedomosti, a Russian business publication, reported earlier this year that it had talked with eight investment funds of Russian origin that were either considering cannabis investments or had already pursued them.

Some states, including Oregon and Maine, tried to reap the benefits of a cannabis industry by requiring that companies be locally controlled. But that has been a struggle as the industry has pushed for open markets in order to get access to funding, said Andrew Freedman, who helped the lead the development of Colorado’s legal cannabis market.

“A lot of these states are trying to keep the money and the ownership interest within the four corners of the state,” Mr. Freedman said. “It simply isn’t happening.”

Federal prosecutors said the Russian money backing the business of Mr. Kukushkin and others was helping lay the groundwork of a multistate operation. The Russian partner, according to two people familiar with the case, was Andrey Muraviev — the man Mr. Kukushkin had brought to the meeting that day with Mr. Hirsch.

From Russia to California

Born in the Ukrainian port city of Odessa when it was still part of the Soviet Union, Mr. Kukushkin earned degrees at Odessa National Polytechnic University in engineering and finance in 1992, then worked in the Russian finance industry.

Even before entering the cannabis world, Mr. Kukushkin, 46, was living a comfortable life, with photos on Russian social media showing him vacationing at the elite French resort of Chamonix. Mr. Kukushkin listed himself as living in Ukraine, Russia and San Francisco.

In 2013, Mr. Kukushkin took up residence in a 1,400 square-foot condo a few blocks from San Francisco’s financial district.

Mr. Muraviev, meanwhile, was born in Russia and partially educated in San Francisco. He led a cement company in Russia before starting the investment company Parus Capital.

Together, their first foray into the cannabis industry appears to have been in 2015.

Records show that Mr. Kukushkin helped Mr. Muraviev steer a $1 million investment into a California cannabis management company, Venture Rebel, which helped run a San Francisco cannabis shop known as MediThrive.

Mr. Kukushkin and Mr. Muraviev expanded next into the Sacramento area, joining up with Mr. Hirsch, the lawyer who met with them in San Francisco, and his client, Garib Karapetyan. Mr. Hirsch said he lost his enthusiasm for the partnership when Mr. Kukushkin began to do things like demanding new terms in the 11th hour of negotiations.

In regulatory applications, another Kukushkin company, Oasis Venture, proposed a large cannabis cultivation site east of San Francisco, including a greenhouse that would have 22,000 square feet of cannabis canopy and a processing facility on an estate with garage space for 12 vehicles and panoramic views of the nearby Alameda County valleys and foothills.

In the last few months, Mr. Kukushkin has been pursuing a dispensary license in the Los Angeles area.

Sean Maddocks, a legal consultant who has helped in that effort, said Mr. Kukushkin approached him last year looking for guidance on where he could get additional licenses.

He said Mr. Kukushkin never discussed anything like campaign contributions or any improper effort to get a license.

Political Contributions

Federal prosecutors have seized on the issue of campaign contributions in the Nevada case, and that is where Mr. Giuliani’s associates from Florida entered the marijuana case: Lev Parnas, a native of Ukraine, and Igor Fruman, originally from Belarus — both now American citizens who have long lived in Florida — along with David Correia, another South Florida resident.

In the summer of 2018, according to federal prosecutors, those three men teamed up with Mr. Kukushkin to develop a multistate cannabis business strategy.

Two people familiar with the details of the federal case said the financier was to be Mr. Muraviev, who did not respond to emails or phone messages. Both Mr. Fruman’s lawyer, Todd Blanche, and Mr. Correia’s lawyer, Jeffrey Marcus, declined to comment. The lawyer for Mr. Parnas, Edward B. MacMahon Jr., did not immediately respond to a request for comment.

Mr. Correia drafted a document that considered between $1 million and $2 million of potential political donations to help win marijuana retail licenses in Nevada and elsewhere, according to the indictment. Though donations from foreign nationals to American political campaigns are illegal, the indictment says that the Russian arranged two wire transfers totaling $1 million to Mr. Fruman that were intended at least in part for political candidates.

Near the end of October 2018, the group apparently realized that the deadline for getting a license in Nevada had already passed — “unless we change the rules,” Mr. Kukushkin said, according to the indictment. They talked about needing the support of a Nevada state candidate.

The indictment does not name the candidate being discussed, but a week later, records show, Mr. Fruman donated the maximum amount, $10,000, to both Adam Laxalt and Wesley Duncan. Both Republicans, Mr. Laxalt was the state’s attorney general running for governor, while Mr. Duncan was running to succeed Mr. Laxalt.

Mr. Duncan and Mr. Laxalt both said through spokespeople that they were unaware of any illegal activity and were returning the donations.

If the contributions and support were intended to produce a result, they failed. Mr. Duncan and Mr. Laxalt both lost their elections.

Mike Baker reported from San Francisco and William K. Rashbaum reported from New York.

The post As Russian Money Poured Into Cannabis, Giuliani Allies Scrambled to Partake appeared first on Savvy Herb Mobile Cannabis Platform.

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[westcoastfarms765]

West Coast Farms

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[westcoastfarms765]

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West Coast Farms

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