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Shadowy Ukraine intrigue? Another day at the office in Nevada pot business

John L. Smith
John L. Smith
Opinion
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Marijuana plants

Few who are trying to keep up with the plot twists in the state’s nascent marijuana industry were surprised when embattled Nevada Department of Taxation official Jorge Pupo was placed on leave last month and then later terminated.

Pupo’s cozy relationships with industry representatives courted controversy. No reason was given for the forced leave, but then none was needed. Any protests aside, I suspect we haven’t heard the last of Pupo’s questionable behavior.

The state’s cockeyed marijuana dispensary licensing process culminated in September 2018 with a disproportionate number of applications being approved for some companies at the expense of others. It’s not only drawn intense litigation from disappointed applicants, but also has redoubled Gov. Steve Sisolak’s call for greater regulation of the state’s new tax revenue gold mine.

The governor is onto something. But to paraphrase Roy Scheider in “Jaws,” I think Sisolak’s going to need a bigger boat. Although industry representatives and state officials surely must hope the Pupo mess remains a self-contained scandal, in reality it calls into question the whole licensing process.

Last week, it got weirder with the revelation that the four men charged with federal campaign violations in connection with President Donald Trump’s attorney Rudy Giuliani and the Ukraine impeachment investigation were pumping cash into Nevada politics in hopes of winning a lucrative marijuana dispensary license. In addition to fomenting conspiracy theories for Giuliani and Trump, Lev Parnas, Igor Fruman, David Correia and Andrey Kukushkin in early September 2018 met in Las Vegas with an unnamed foreign national to discuss a “business venture.” “While in Las Vegas, Parnas, Fruman, Correia, Kukushkin also attended a fundraiser for a state candidate in Nevada,” the indictment states.

An unnamed foreigner wired $500,000 from an overseas bank account through New York to the defendants, who used the money for contributions to two Nevada state political candidates, according to the indictment. Although not identified in the charging document, former gubernatorial candidate Adam Laxalt and fellow Republican attorney general candidate Wesley Duncan have been identified as the candidates involved. Both men, who lost their elections, have said they will return the donations — presumably not to the Fruman-Parnas-Correia-Kukushkin defense fund.

At this point, it begs the obvious to say that Nevada wasn’t prepared to regulate the marijuana industry it rushed to create. And playing catch-up won’t be easy. Although some companies are locally owned, others have far more complex histories.

Take Massachusetts-based Curaleaf Holdings, for instance. Although it failed to gain much interest in March, Curaleaf agreed to purchase Nevada’s Acres Cannabis for $70 million in cash and stock. A vertically integrated operation that has emerged as an industry giant in multiple states, Curaleaf is publicly traded on Toronto’s Canadian Stock Exchange, which marijuana industry insiders commonly refer to as the “Cannabis Stock Exchange” because of its popularity with pot business public offerings.

These days Curaleaf’s website touts its partnership with Blackjack Collective, but Nevada is only part of the what the company calls its “aggressive expansion West.” In July, Curaleaf grew even more and emerged as the undeniable leader when it agreed to pay approximately $900 million for privately held GR Companies. As of July, its 19-state reach included 68 dispensary locations and 131 licenses. That’s enormous — and expanding. By anyone’s measure, Curaleaf is a rip-roaring success. So it’s only natural that it would seek to expand into the lucrative Nevada market, right?

But if you’re looking for an intriguing business back story, look no further than Curaleaf and its “Deep Russian Roots,” as Barron’s described it. The company is the creation of Russian-heritage billionaires who are American citizens. Its chairman is Boris Jordan, a banking success who was integrally involved in Russia’s complicated capitalist transition. His major investment partner is Andrei Blokh, well known as a former business associate of Russian oligarch Roman Abramovich.

Abramovich is chronicled in the popular press as the owner of England’s Chelsea Football Club and for his behemoth “superyachts.” In some intelligence circles, Abramovich has made news for his close ties to Russian President Vladimir Putin and his friendly association with President Trump’s daughter Ivanka and her husband Jared Kushner.

For his part, Blokh grew immensely wealthy in Abramovich-tied oil deals and, of all things, milk products. His consolidation of the Russian dairy industry under the Unimilk umbrella and its subsequent 2010 sale in to Danone made him wealthy beyond most imaginations.

With a net worth of more than $12 billion, Abramovich can afford to miss an investment or two. When British officials declined to renew his investor’s visa in 2018, there was wide speculation that his proximity to Putin was behind it. Abramovich quickly gained citizenship in Israel.

In an interview with Barron’s, Jordan was emphatic: Blokh’s old friendship aside, Abramovich has nothing to do with the company. Curaleaf remains a remarkable success story with roots stretching from Russia all the way to Las Vegas.

It’s a good thing the company is so legitimate.

At this point, can Nevada be trusted to conduct a comprehensive background check?

John L. Smith is an author and longtime columnist. He was born in Henderson and his family’s Nevada roots go back to 1881. His stories have appeared in Time, Readers Digest, The Daily Beast, Reuters, Ruralite and Desert Companion, among others. He also offers weekly commentary on Nevada Public Radio station KNPR. His newest book—a biography of iconic Nevada civil rights and political leader, Joe Neal—”Westside Slugger: Joe Neal’s Lifelong Fight for Social Justice” is published by University of Nevada Press and is available at Amazon.com. Contact him at [email protected]. On Twitter: @jlnevadasmith

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