Why Cannabis Companies Need to Know Who Their Owners Are

March 6, 2023

As the cannabis industry continues to expand, so do the concerns around the sources of capital and ownership structures of licensed businesses. A recent investigation in Vermont is a clear indication that regulators are already looking into these issues, and that this trend is likely to continue once federal cannabis regulations are enacted.

According to a report by VT Digger, regulators in Vermont are currently investigating the links between Russian oligarch Roman Abramovich and multi-state cannabis operator Curaleaf. The inquiry follows a Vice report that found Abramovich invested $130 million and provided $194 million in loans to US cannabis firms between 2016 and 2018, with Curaleaf as the main beneficiary.

Proposed legislation in Congress, such as the States Reform Act (SRA), would remove cannabis from the Controlled Substances Act , allowing states to regulate the industry within their borders. The SRA would also grant authority to the U.S. Department of Treasury and the Alcohol and Tobacco Tax and Trade Bureau (TTB) to regulate the cannabis industry, similar to how they regulate the alcohol and tobacco industries.

The primary focus of the Alcohol and Tobacco Tax and Trade Bureau is to use their regulatory authority to protect public safety and collect revenue. The agency accomplishes these goals by developing and enforcing trade practice regulations which include preventing marketing towards more vulnerable populations, such as children. Additionally TTB, puts a lot of effort towards investigating the backgrounds of management, ownership, and the capital sources of alcohol and tobacco businesses, to ensure that no “bad actors” benefit from a federal license to enter the industry.

Current state-licensed cannabis businesses can expect similar scrutiny from these agencies once federal cannabis prohibition is lifted and national regulations are put in place. This is why it’s important to ensure that your cannabis business is NOT ONLY compliant with all state regulations and laws, but prepare for federal cannabis regulation, including those related to ownership and management structure, source of capital, and disclosure requirements.

Verde Compliance is here to help you navigate the complex and ever-evolving cannabis compliance landscape, so that you can focus on what you do best: growing your business. Contact us to learn more about our services and how we can help you stay compliant and grow your cannabis business.