Sacramento’s Cannabis Industry Ensnared in Expanding Campaign Finance Investigation

Andrey Kukushkin, one of four businessmen indicted last week in a complex campaign finance investigation, is an officer at THC in Sacramento, according to reporting by Theresa Clift, Dale Kasler and Ryan Sabalow at the Sacramento Bee. 

Kukushkin is one of two named permit holders for THC, and he is the CFO of a company called Sharp Source, which, according to the Bee, owns THC. (As far as the business, THC stands for Twelve Hour Care.)

Garib Karapetyan is also named on the THC permit; he holds another seven cannabis retail dispensaries in Sacramento. The city allows a maximum of 30 cannabis retail storefronts.

The Bee points out that there is no overt connection between the funding for Karaptyan’s cannabis businesses and the broader campaign finance scheme detailed in a federal indictment—yet.

Broadly speaking, the investigation has targeted a cohort of foreign-born U.S. businessmen diverting international funds into U.S. political campaigns, including to Nevada politicians who may have been in a position to assist the four indicted men with cannabis business licensing in that state. The web of investigations is closely linked with the ongoing presidential impeachment inquiry in Washington, D.C., including the men’s ties to President Trump’s personal attorney, Rudy Giuliani.

Read the full Sacramento Bee story here.

Now that the campaign finance investigation has reeled in Kukushkin, the network of shared ownership interests in Sacramento’s cannabis market is under a microscope. Sacramento Mayor Darrell Steinberg has called for an investigation into Karapetyan’s consolidation of ownership in Sacramento’s cannabis market—and Kukushkin’s involvement.

“If this story is true, then our cannabis licensing process, which was designed to protect consumers and reward local law-abiding businesses, is being improperly exploited,” spokeswoman Mary Lynne Vellinga said in a public statement. “The mayor is calling for an immediate investigation and will lead an effort to add additional safeguards to the licensing process.”

Two sets of questions are raised here.

One is local: How did Karaptyan come to hold so many of the city’s cannabis dispensaries? And how is the city just now coming to realize the degree of ownership consolidation? What was Kukushkin’s involvement in the Sacramento businesses?

The other set of questions is an international concern: What is the extent of the campaign finance investigation’s inroads into the U.S. cannabis industry? Who else is involved?

Chris Kudialis at Leafly took a stab at the latter, detailing the misadventures of the four businessmen and their attempts at manipulating elections in Nevada to tilt the cannabis licensing process in their favor. Kukushkin, who already had a foothold in the California cannabis industry, played a visible role in this scheme.

According to the unsealed indictment in the Southern District of New York, Kukushkin was actively involved in funneling foreign cash into the 2018 gubernatorial race in Nevada, though he’d admitted to his fellow campaign finance violators that they were “two months too late to the game unless we change the rules,” referring to Nevada’s licensing deadlines last year. The businessmen sought to elect a Republican governor who could then nudge forward legislative amendments to Nevada’s cannabis law. Adam Laxalt, the Republican candidate in question, went on to lose the November 2018 election.

Read the full indictment below. The cannabis information begins at the bottom of page 10.

Along with the four businessmen, an unnamed “Foreign National 1” is listed in the indictment as the benefactor of this cannabis industry campaign finance scheme.

Mother Jones has connected a few dots and put forth an educated guess as to who Foreign National 1 might be—namely, a Russian businessman named Andrey Muraviev, who created a cannabis company in California with none other than Kukushkin and Karapetyan. The three men started a business called Legacy Botanical Company LLC, the license for which has since been suspended by the state of California. Muraviev’s role in the broader campaign finance investigation is as yet unconfirmed.

Nonetheless, after all of that, it’s clear that the campaign finance violations unfolding alongside the impeachment inquiry into Trump’s political dealings in Ukraine have at least some sort of connection to the cannabis industry. As this story develops, we’ll continue to track just how it all fits together.

U.S. v. Parnas et al by sandydocs on Scribd