U.S. cannabis giant’s Russian-American CEO equivocates

U.S.-based Curaleaf Holdings, one of the world’s largest cannabis companies, is furiously pushing back against rumors regarding its Russian connections while the company’s largest shareholder, American Boris Alekseyevich Jordan, appears non-committal regarding Russia’s war on Ukraine.

Curaleaf, 31% owned by Jordan, is actively countering speculation in social media that Andrei Blokh, a Russian citizen based in Moscow who is also a naturalized U.S. citizen and the company’s second-biggest shareholder, has financial ties to Russia’s oligarchs and could come under sanctions in the U.S.

“Rumors and misinformation spread during turbulent times,” Curaleaf said in a statement posted on its website. “The speculation on social media that the Company and its major shareholders and executives will somehow be subject to any U.S. government economic sanctions now or in the future is incorrect.”

Jordan has suggested that his status as an American-born citizen shields him from any U.S. federal action against his own assets. But American citizens can be sanctioned by the U.S. government, which maintains a list of Specially Designated Nationals who fit that category.

Jordan later issued a platitudinous, take-no-side statement on the war: “Being of both Ukrainian and Russian descent I pray for diplomacy & a peaceful resolution that protects the lives of all citizens on both sides of this conflict,” he said in one of a series of tweets as the attack on Ukraine unfolded.

Wakefield, Massachusetts-based Curaleaf sells cannabis flowers and makes THC and CBD capsules, lotions, tinctures, vape pens, and gummies, and operates a network of cannabis shops under the Curaleaf brand. The company has a market cap of about $5 billion, but its OTC-listed shares are down roughly 20% this year.

Almost immediately after Russia invaded Ukraine, Twitter and Reddit users posted technically inaccurate warnings suggesting Curaleaf could be hit by U.S. sanctions affecting a growing list of Russian oligarchs.

Independent cannabis analyst Betting Bruiser tweeted on Feb. 24 that “It doesn’t look to be a good day if your #PotStocks company is directly associated with russian oligarchs.”

“Our second-largest shareholder is Andrei Blokh, a successful retired CPG (consumer packaged goods) entrepreneur who is not active in the Company,” Jordan tweeted in response to the swirling innuendo on Feb. 25, the second day of the Russian assault on Ukraine. “Mr. Blokh is a U.S. citizen, who also holds a Russian passport,” said Jordan.

“Curaleaf is an American success story founded by Me! Pls stop spreading misinformation, I was born in the US and live and work in the US!,” he posted in another tweet.

Forbes duly reported Jordan’s pushback March 4, quoting several analysts who referred to the sanction rumors variously as “a silly storyline,” “Russian oligarch nonsense,” “xenophobic,” and “anti-Russian sentiment.”

“We’re both U.S. citizens, in my case, born and raised in the United States, and in [Blokh’s] case, naturalized,” Jordan repeated to the American financial publisher.

Curaleaf bought Blokh’s House of Herbs, a Nevada-based cannabis company, in 2017 and the two then invested in Curaleaf ahead of its launch on the Canadian Securities Exchange in 2018. The two “built the company together,” Jordan told Forbes.

In the story, Jordan referred to the conflict in Ukraine as a “catastrophe” and “disaster” and something “which none of us can believe is happening,” stopping well short of condemning Moscow’s war on its neighbor. “This is a major travesty for my family,” Jordan said.

“We – American patriots, who are very, very pro-American – are being attacked for financial gain,” Forbes quoted Jordan as saying. “There’s just a PR risk because of our heritage. And I think that that’s a travesty.”

“Both Boris Jordan and Andrei Blokh are U.S. citizens, so I disagree with the notion that Western sanctions on Russia would have a direct impact on Curaleaf’s business,” cannabis analyst Matt McGinley of Needham & Co. told Forbes. “If Curaleaf had the ability to raise capital from U.S. citizens who happened to become very wealthy from investing in Russia in the 1990s and 2000s, then so be it.”

Who is Blokh?

Forbes ranks Blokh 71st on its 2021 list of Russia’s richest oligarchs, with a $1.9 billion fortune.

Blokh served as the president of Russian oil company Sibneft for a period during the 1990s. He and a partner later consolidated Russian dairy assets into Unimilk, which merged with French food maker Danone SA in 2010 to form Danone Unimilk, estimated to control 21% of the Russian milk market.

Blokh is “well known as a former business associate of Russian oligarch Roman Abramovich,” according to a 2020 report by Barron’s. “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 to Danone made him wealthy beyond most imaginations,” Barron’s wrote.

Who is Jordan?

Jordan, who was born in New York, has long had business ties to Russia and Europe. In a 2019 New York Times story that looked at the influence of Russian cannabis interests on U.S. elections, Curaleaf’s leader was referred to, unnamed, as “one of Russia’s most influential financiers.”

Jordan hit Russia during the country’s economic “transition to capitalism” in the early 1990s, years that followed the fall of the Soviet Union when future oligarchs maneuvered to grab key assets from the Russian state. He later assisted in the launch of the Russian stock market and the privatization of behemoth state companies.

After a stint as the director of the Russian Center for Privatization under the Russian government from 1992 until 1995, he later headed First Boston, Swiss banker Credit Suisse’s Russia investment banking division, one of the most active investment banks in the country that works in privatization, corporate finance and securities trading. He also created the Russian Direct Investment Fund.

Jordan started his own investment fund, Renaissance Group, and co-founded the Sputnik Group, private equity investors and advisers, in the late 1990s. Sputnik later founded Renaissance Insurance, one of Russia’s largest insurance companies, which went public last October.

Jordan’s worth

Jordan is reported to be worth $1.6–$1.9 billion. He is the principal owner of Renaissance Insurance, which is wholly independent from Curaleaf but which has received financial backing from EZRAV — the Russian conglomerate owned by Abramovich, no. 6 on Forbes’ Russian billionaires list with an estimated $12.3 billion fortune.

Jordan and his partners own 38.3% of the insurer; Moscow-based private equity firm Baring Vostok holds 13.7%; a company controlled by Abramovich owns 9.7%, and Abramovich partners Alexander Abramov, Alexander Frolov and Andrey Gorodilov hold a combined 13.7%, according to Interfax.

Abromov is ranked as the 24th richest Russian oligarch with an estimated net worth of $7.6 billion; Frolov ranks 39th with a net worth of $3.4 billion.

Jordan’s biggest business venture in Europe is reported to be Telecity, a group of data centers.

In a 2007 op-ed in The Washington Post, Jordan praised President Vladimir Putin following his party’s parliamentary victory that year: “Quite simply, Russians support their president because he did something rare for a politician: He delivered.

“Russia today is a resurgent economic power, with the tenth-largest economy in the world. Eighty percent of the economy is privatized, according to the Accounts Chamber of the Russian Federation,” Jordan wrote. “And the country is flush with oil revenue, having overtaken Saudi Arabia as the world’s leading producer of oil.”

In 2014 after Russia invaded sovereign Ukrainian territory in Crimea, Jordan told students in a workshop at the European University at St. Petersburg he considered Putin “one of the smartest presidents he has ever met,” as reported by Nicholas Watt of Enerpo Journal, a university website. “I think with politics, I am not sure Putin had another choice,” Jordan said of the 2014 invasion. “Politically speaking, he did what he had to do.”

Curaleaf, which calls itself “the largest national retail dispensary brand in the U.S.,” sells CBD under the Curaleaf Hemp brand; aside from its own-brand marijuana, the company sells pot under the UKU Cannabis and Select Cannabis brands.

Curaleaf Holdings subsidiaries include: Acres Cannabis; Bloom Dispensaries; GR Companies, Inc; Emmac Life Sciences Limited; Cura Partners, Inc.; Virginia’s Kitchen, LLC; Las Vegas Natural Caregivers, LLC; Curaleaf Midtown; PT Nevada, Inc., Glendale Green House; Blackjack Collective; Eureka Investment Partners; Maryland Compassionate Care and Wellness LLC; Spark Dispensary; Arrow Alternative Care # 3, Inc., Los Suenos Farms, LLC; Alternative Therapies Group, Inc.; Verdure, Inc.; GGM, LLC; Pallia Tech MD Processing, LLC; Phytotherapeutics Management Services, LLC; GX3, LLC; Thunderbird III Partners, LLC; Arrow Alternative Care #2, Inc.; Pallia Tech AZ, Inc.

The company has dispensaries in 16 states: Arizona, Arkansas, Connecticut, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New York, North Dakota, Ohio, Oregon, Pennsylvania, and Vermont.

Curaleaf Holdings last year settled 10 lawsuits after one of the company’s subsidiaries in Oregon mistakenly packaged and sold THC-infused tinctures that were labeled as containing only non-intoxicating CBD.

Shares in Curaleaf rose gradually beginning in March 2020, to reach a high of $16.86 March 23, 2021 before marijuana stocks started a slide last year. The company’s share price hit a low of $5.55 March 7, and closed at $6.74 Friday, March 18.