Editor’s note: This commentary is by Rick Veitch, Stuart Savel and Jean Kiewel of Vermont Home Grown.
Vermont’s latest attempt at taxing and regulating cannabis, S.54, is being criticized for a lot of solid reasons. The current draft being fast-tracked through the House is vague on details, envisioning a vast new bureaucracy of over 20 political appointees to write and administer rules with no legislative oversight. It places a 20% tax on retail sales. It threatens Vermonters with draconian fines and prison sentences for selling cannabis outside the state-regulated market.
But one section in particular has Vermonters raising their eyebrows. S.54 creates a special tier of vertically integrated licensing that will allow a single business entity to operate at all levels of the proposed regulated market. What stands out like a sore thumb is how the bill makes these integrated licenses available exclusively to the five medical cannabis dispensaries currently operating in Vermont. It also gives those dispensaries a six-month head start on retail sales ahead of all other licensees.
In other words the dispensaries are to receive special treatment from the state, by law, that will allow them to dominate the regulated market.
This is good news for Curaleaf, the largest cannabis conglomerate in the world. According to a Jan. 20 report in the Burlington Free Press, Curaleaf is a major investor in two of those five Vermont dispensaries, Vermont Patients Alliance out of Montpelier and Phytocare Vermont in Bennington.
Curaleaf, funded by Russian bankers and investors, has spent $1.8 billion in the last year alone buying up licensed cannabis businesses across the country. They bought into the two Vermont dispensaries when they acquired Grassroots Cannabis for $875 million. Curaleaf has lost no time alerting potential investors that it has become the “largest license holder in Vermont” and possesses two of the five lucrative vertically integrated licenses in S.54.
Curaleaf is based on Vermont’s southern border in Wakefield, Massachusetts. It is led by Boris Jordan, a businessman who built the investment bank Renaissance Capital in Russia, and 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.
According to the Burlington Free Press report, a third Vermont dispensary, Grassroots Vermont in Brandon, has for years operated with funds from New York and Toronto based iAnthus Holdings. iAnthus’ operates cannabis businesses in 11 states. Its merger last year with a Canadian cannabis firm was valued at $1.6 billion. The founder of Grassroots Vermont is the sister of the CEO of iAnthus.
So regulated cannabis in America has become big money, with a large part of the pie owned by Russian investors. The New York Times has been following the influx of Russian cash into American cannabis and in October reported that Russian and Ukrainian associates of Rudy Giuliani were actively buying into cannabis businesses across the west and south. Giuliani’s associates have also been caught offering bribes for licenses in California and trying to rig research grants at Veterans Affairs. Even the mayor of Fall River, Massachusetts, has been arrested for shaking down cannabis licensees for millions of dollars.
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This is the dark side of regulated cannabis; it has evolved into an increasingly corrupt game of “Regulatory Capture” being played by shadowy international investors; two of whom, Curaleaf and iAnthus, are firmly entrenched in three of our five dispensaries. S.54, if it becomes law, will give the retail cannabis market to a bunch of folks who have decidedly un-Vermont ways of doing business.
Vermont can do better than this. We urge all Vermonters to call or email their legislators and ask them to vote “NO” on S.54.
Free the flower!