What Is Sacramento’s Cannabis Connection with Moscow?

It’s a complicated story involving Russians, Ukrainians, pot cultivation facilities in the area, campaign funds, the feds and lots of money.
by Dale Kasler and Theresa Clift, The Sacramento Bee | October 23, 2019 AT 3:01 AM

(TNS) — Sacramento’s legal cannabis industry has been drawn into a campaign-finance scandal that’s part of the impeachment inquiry of President Donald Trump. The local story is complicated. Many questions remain unanswered.

But here’s what we know so far about the links between Moscow and Sacramento and our own cannabis industry.

Let’s Start In Russia

That’s where we meet a man named Andrey Muraviev, a 44-year-old businessman who runs a Moscow-based investment fund called Parus Capital Limited and has served as an executive for several Russian companies. He founded a huge cement operation. Muraviev also is one of the biggest investors in the online payment platform Qiwi. which has been called the Russian PayPal.

Muraviev, whose last name is sometimes spelled Muravyev, has close ties to the U.S., it turns out. He reportedly graduated in 1998 with a degree in finance from San Francisco State University.

And he has invested in California marijuana ventures, including in Sacramento. Here, Muraviev was partners in two businesses with Sacramento’s undisputed king of cannabis.

His name is Garib Karapetyan, and he is the permit holder on eight Sacramento pot shops.

Karapetyan, 35, is increasingly marketing his businesses under the brand name “Kolas.” He is an investor in three pot-cultivation facilities in Sacramento and an as-yet unopened pot-delivery business. Last year Karapetyan purchased a $1.1 million condominium in the Sawyer Hotel adjacent to Golden 1 Center.

We don’t know how our local pot king, Karapetyan, became involved with Muraviev, the Russian businessman.

But we know that Karapetyan owns one of his dispensaries — Twelve Hour Care, or THC, at 6666 Fruitridge Road — with a man named Andrey Kukushkin, a Ukrainian-born U.S. citizen. (A former owner of the dispensary, Matt Davies, claims in a lawsuit that Karapetyan stole the business out from under him while Davies was in federal prison; Karapetyan’s attorney says that’s nonsense.)

All three men, in fact, were in business together. Muraviev was a partner with Karapetyan and Kukushkin in two consulting companies: Legacy Botanical Company of Sacramento and KKMC Management of San Francisco, which was originally registered in Roseville.

We know Kukushkin and Muraviev are linked financially. In a lawsuit Kukushkin filed against the partners in a separate San Francisco medical marijuana business, MediThrive, Kukushkin initially claimed he had invested $1 million in the business. Later he acknowledged that only Muraviev had put money into the company.

Who Is Andrey Kukushkin?

Back to Sacramento. Ukrainian-born Kukushkin, 46, has partnered with Karapetyan in the THC dispensary on Fruitridge Road; a Sacramento pot-delivery company; a pot-cultivation facility called 88th Street Inc.; and the two consulting companies. For what it’s worth, here is Kukushkin on a boat:

About two weeks ago, we learned that Kukushkin, the Sacramento cannabis investor, is one of four men charged with scheming to funnel foreign dollars to American political candidates to smooth the way for U.S. marijuana businesses.

In a federal grand jury indictment, prosecutors allege that four men — Kukushkin, Lev Parnas, Igor Fruman and David Correia — made plans to form a recreational marijuana business that would be funded by a foreigner (identified only as “Foreign National-1”).

The plan was to get retail cannabis licenses approved in several states including Nevada by funneling the foreign money to politicians’ campaigns, the indictment alleges. It’s illegal for foreigners to donate to U.S. election campaigns.

Kukushkin is quoted in the indictment as saying the scheme had to be kept secret because of the unnamed financier’s “Russian roots and current political paranoia about it.”

Igor And Lev, And Rudy

Who are Lev Parnas and Igor Fruman, the associates of Sacramento cannabis investor Kukushkin?

Parnas and Fruman have drawn the most attention because they’re close to Rudy Giuliani, the president’s personal attorney, and were reportedly helping Giuliani investigate former Vice President Joe Biden and his son Hunter Biden, in connection with the younger Biden’s business dealings in Ukraine. The indictment says the defendants were funneling money from an unidentified Russian national to political candidates in Nevada and “other States.”

The federal indictment indicates that Parnas, Fruman, Correia, Kukushkin and the unnamed Russian businessman met in Nevada — where marijuana had been legalized for recreational use in 2017 — in early September 2018 to discuss the marijuana business. They formalized the plan soon after, with the Russian businessman sending the first of two $500,000 wire transfers to Fruman on Sept. 18, 2018.

Two months later, in November, Fruman donated $10,000 to Nevada’s then-attorney general, Republican Adam Laxalt, who was running for governor, and the same amount to the 2018 Republican nominee for state attorney general, Wesley Duncan, according to state campaign finance records.

Back in California, Parnas and Fruman have donated hundreds of thousands to Republican congressional candidates, including House Minority Leader Kevin McCarthy of Bakersfield and three who lost their re-election bids last November: Jeff Denham, David Valadao and Steve Knight. Valadao, who is trying to win his seat back next year, and McCarthy have pledged to donate the contributions to charity.

Karapetyan, meanwhile, has donated to various Sacramento politicians in recent years, including Mayor Darrell Steinberg, City Councilman Jay Schenirer, Democratic Assemblyman Kevin McCarty and Sheriff Scott Jones. Steinberg has said he’ll donate the contributions to the Boys and Girls Clubs of Greater Sacramento.

What’s Happening Now?

The Sacramento Bee learned last week that the FBI was investigating how Sacramento regulates its pot storefronts. This is a separate investigation from the campaign-finance probe involving Parnas, Fruman, Correia and Sacramento’s local investor, Kukushkin. On Thursday, Kukushkin and Correia pleaded not guilty to conspiring with the Giuliani’s associates.

While their case is making its way through federal court, Sacramento has launched its own audit into how pot dispensaries are managed. This week, the Bee reported significant issues with how those dispensary permits are handed out in Sacramento, and how one group could have accumulated so many while others have been left behind.

McClatchy DC bureau reporters Ben Wieder and Kevin Hall contributed to this report.

Why We Did This Story

Three years ago, California transformed a once-criminal enterprise, the sale and cultivation of marijuana, into a legal, regulated industry.

In Sacramento, that means city officials under the Office of Cannabis Management, have the responsibility to permit and monitor the 30 storefront shops allowed to operate here. This is a $142 million industry that has already had a huge impact on the city. The Sacramento Bee wanted to find out how these shops are regulated, and who is behind them.

The story took on new meaning when four men were indicted for allegedly funneling foreign money into U.S. campaigns and attempting to secure cannabis licenses in Nevada and “other States,” as the indictment said. It turned out, one of the men who was indicted was a Ukrainian-born businessman named Andrey Kukushkin who was co-owner of a pot dispensary in Sacramento.

How We Did This Story

This story is the result of several weeks of reporting by Bee staff, numerous public records requests and interviews with regulators and people associated with the cannabis industry.

We first began this story after hearing from sources that the City of Sacramento’s licensing system for pot dispensaries was only loosely regulated and effectively shut out people who were trying to obtain a permit to operate a storefront shop in the city.

The first and hardest task was dislodging the permit and ownership records from the city. That required multiple requests under the California Public Records Act and frequent negotiation and prodding. Once we obtained most of the records, we got a clearer picture of how ownership is transferred in Sacramento.

We scoured other public records as well, including state business documents, federal records, tax forms and court filings, and interviewed sources throughout the city. Those sources include current and former city officials, attorneys, cannabis dispensary owners, and many others connected to the industry. We also visited several of the storefront shops to obtain public business records, but in a few cases we were turned away by employees.

©2019 The Sacramento Bee (Sacramento, Calif.). Distributed by Tribune Content Agency, LLC.