Curaleaf holds the majority of U.S. marijuana companies by market share. The company entered the state markets and more international markets like Germany, by design. It does this to protect its position.

No matter its omnipotence, however, the scandals surrounding the company keep coming—including this summer—and there are some who are wondering about the ability of Curaleaf.

This new scrutiny could just be part of the wider media spotlight on cannabis in general due to global legalization and the implosion at Juicy Fields. Indeed the deets on the self-destruction of the crowdfunding, e-growing company continue to be satisfyingly “juicy,” including recently revealed connections to German aristocracy to blood the hounds for more.

Partly, this scrutiny happens because the stakes have never been higher. It is clear, however passionate one may be about reforming cannabis, that the less sleazy side of the business has not diminished in large measures.

No matter the reason, this summer’s sudden interest in cannabis scoundrels seems a bit like a repeat of the purging seen in 2019—of executives if not the companies themselves—and which affected large and supposedly indomitable companies including CannTrust and Canopy.

Whatever the immediate trigger, Curaleaf’s PR department has their work cut out for them.

Russian Connection: Fund Source

Industry is facing increasing difficulties finding funding. In part this is because of the spectacular flameouts so far of other “innovative” strategies to raise cash. This is partly because legalization allows for easier access to finance.

Curaleaf is facing one of its biggest liability. This is the reason.

Curaleaf’s owners have long-standing and significant Russian roots. Social media was abuzz with rumors about Curaleaf’s owners facing sanctions in spring 2015 after Russia invaded Ukraine.

These facts are not to be doubted. Boris Jordan and Andrey Blkh, founders of the company, have longstanding business relationships with Putin as well as sanctioned tycoon Roman Abramovich. Although there is no evidence linking these two men to Russian oligarchs, questions remain about where the funds came from. Experts suggest that any business having ties to Russian money in the past should be suspicious, regardless of its vertical. It is well-known that oligarchic capital flows all over the globe and is likely to have made its way into global cannabis markets, even at Curaleaf.

That said, the company has been the target of this kind of allegation since Barron’s published the same in 2018. The truth is, regardless of the assertions that Jordan or Blokh may have made regarding their dual citizenship status or American patriotic leanings and their American heritage, both men were able stay in business even though Putin took over control of the private sector.

Opponents of the company argue that Main Street cannabis should be preferred to Wall Street cannabis. This is the best way to drive these influences out of the industry. The state market, and now Europe are moving to legalize cannabis. This means that the small-business side of the industry faces serious threats from foreign investors looking for lucrative niche markets.

Probleme with Labelling

The company’s reputational issues do not stop with its founders, however. These operations have been bringing the company into the limelight, even landing them in court. It is not an attractive look because it shows (at least) poor production standards. Specifically, in 2021, reports emerged that Curaleaf’s Select CBD brand contained psychoactive Delta 9 THC. A single batch of THC products from Curaleaf was not correctly labeled, the company claimed. However, it didn’t matter if there was one or more affected batches. Consumers became sick in hundreds, with an Idaho man suffering stroke-like symptoms and dying a few weeks later.

Curaleaf is currently in the process of settling 10 cases, but it has yet to settle the wrongful death case. The company faces a new class action from the people whose claims are still unresolved.

Unsurpassed Legal and Financial Liabilities

These problems are not the end. Curaleaf has also been involved in lawsuits against a company that failed to provide CBD.

It is also facing legal action for violating labour law in several U.S. states—and for particularly egregious infractions that appear to indicate that management, much less the founders, do not care about the welfare of either consumers or employees. Specifically, the company now stands accused of illegally collecting employees’ tips in violation of the Fair Labor Standards Act (FLSA)—an Illinois state law. Massachusetts found the company to have broken labor laws in trying to keep employees unionized.

There are many people, investors included, wondering if Curaleaf will survive the reputation-damaging legal problems. Although Curaleaf has certainly raised significant cash, most of it has gone to acquisitions. Even though the company continues to perform well financially—revenue was up 20% year-over-year for the first quarter of this year and operating income increased 21%—there are clearly clouds on the horizon, and all take cash to solve.

What is the Google of Cannabis?

There have been many successful entrepreneurs since legalization began. They have made a lot of history, if not much money, and have had a vision of monopolizing the industry. But, regardless of their success, legitimacy and market control are not guaranteed.

Canopy Growth was one example. They exploded onto the European market with bravado, money, and a lot of luck in the middle decade. Within a matter of years they failed to get a German cultivation permit, had sold many of the earlier acquisitions and witnessed several exits of senior management. The board fired Bruce Linton as founder. This March it was delisted from the S&P/TSX 60 Index. Since its inclusion to the index during spring 2019, it has lost 90% of its stock value.

Realistically, when legalization is complete and definitive, there will be rules that favorably affect the roads. Mad MaxInstead of Mr. Roger’s NeighborhoodBegin to eliminate those who are unable to make the transition from legitimacy to autonomy.

You will find trap doors everywhere.

This summer may see consumers and investors, as well as regulators, making other decisions.