SACRAMENTO —
California regulators said Wednesday they are reviewing state cannabis licenses granted to Andrey Kukushkin, a Ukrainian-born businessman recently arrested on charges of conspiring with two associates of former New York City Mayor Rudolph Giuliani to violate federal campaign finance laws.
In the last year, a partnership involving Kukushkin has quietly obtained a dozen California state licenses to sell and distribute marijuana. The licenses are now being reviewed by the California Bureau of Cannabis Control.
Federal prosecutors allege Kukushkin was part of an effort to funnel foreign money into campaigns and disguise the true source of contributions supporting American politicians, including President Trump.
“We always have concerns when something like that happens, so we want to do our due diligence and look at them,” said Bureau Chief Lori Ajax about the federal indictment.
Sacramento Mayor Darrell Steinberg has separately called for a probe of his city’s permit system to determine how Kukishkin and another businessman were able to secure nearly one-third of the licenses issued by the city, despite Sacramento’s restrictions on multiple ownership of pot shops.
“The mayor is calling for an immediate investigation and will lead an effort to add additional safeguards to the licensing process,” his office said in a statement.
Named with Kukushkin in the
federal indictment were Lev Parnas and Igor Fruman, two Florida-based businessmen who were arrested on suspicion of violating campaign finance laws as part of a scheme to win marijuana retail licenses in Nevada and other unidentified states.
Parnas and Fruman are also business associates of
Giuliani, President Trump’s personal attorney. An attorney for Kukushkin, a 46-year-old U.S citizen, declined to comment on the federal charges.
The indictment has state and city officials returning campaign contributions and scrambling for answers.
Steinberg has provided a charity with $2,000 to cover a contribution that his 2016 mayoral campaign received from Garib Karapetyan, a partner with Kukushkin in the state-licensed cannabis businesses. Karapetyan was not implicated in the indictment.
The FBI has also been interviewing people in the Sacramento area about whether any cannabis firms have improperly acquired permits, according to the Sacramento Bee.
State marijuana agency officials wouldn’t say whether they have knowledge of an ongoing federal investigation, and an FBI representative also declined to comment. “As is the norm for all such inquiries, we can neither confirm nor deny such an investigation,” said Gina B. Swankie, a spokeswoman for the FBI.
Ajax said all of the state licenses issued to the partnership of Karapetyan and Kukushkin are provisional permits. To operate in California, firms must also eventually get a permanent permit that requires a detailed background check and full disclosure of the names of major investors in the business.
“We are looking at all of the files currently, surrounding the ones [Kukushkin] was associated with,” Ajax said. “We have been hearing so much about it and we are just looking at them. We are looking at the documents provided to us. We are looking to make sure everything” is properly documented.
State and local officials say there is no evidence that the licenses are out of compliance.
Karapetyan did not return calls for comment to his businesses, but his attorney, who also represents three other partners in Sacramento firms, said they have done nothing wrong.
“I want everybody to know my clients are in complete compliance with all laws and regulation governing them and their businesses,” said attorney Brad Hirsch, who added: “We will fully cooperate with the appropriate licensing authorities and provide them with complete and truthful information.”
Hirsch, who doesn’t represent Kukushkin, said he is “not at liberty” to comment on whether the FBI has contacted his client.
The indictment alleges Kukushkin, Parnas and Fruman talked with an unidentified foreign national about forming a business relationship during a meeting in Las Vegas last year.
The men planned to use the foreign national as the source of funding to candidates in Nevada, New York and other states “to facilitate acquisition of retail marijuana licenses,” the indictment said, adding that the unidentified sponsor provided $1 million to a Fruman-controlled account for the scheme.
However, the effort in Nevada fell apart, the indictment said, quoting a communication by Kukushkin to the others that said they were “2 months too late to the game unless we change the rules.”
California is not identified in the indictment as one of the states targeted by the business scheme.
In all 12 California state licenses, Karapetyan is listed as the owner and Kukushkin is listed as his partner, according to Alex Traverso, a spokesman for the state Bureau of Cannabis Control.
However, one of the firms given a state license for a distribution operation in Coalinga did not list either man as an owner in an application to the city, officials said.
Coalinga recently approved a conditional permit to a partnership to run a distribution operation, but the firm has not yet begun operating, according to Sean Brewer, the city’s community development director.
All license applicants undergo vetting by the Coalinga Police Department. Brewer said he was unaware of the indictment and the city has not been contacted by the FBI.
The partners also have state retail licenses to operate in Sacramento under business names that include Sharp Source, C9 Alliance Cooperative Inc., Doc’s Inc., Safe Accessible Solutions and Alternative Medical Center. The partners also have a license for a cannabis waste disposal company in Sacramento.
Assemblyman Kevin McCarty (D-Sacramento) said he supports the state and city probes and plans to give money that his campaign received from Karapetyan to charity.
“Any stain on our cannabis market is troubling,” he said.
