How Russian Entrepreneurs Are Selling Cannabis in the US
In 2016, legal cannabis sales in the United States reached $6.7 billion, even though marijuana has not yet been legalized in all states and its sale remains illegal at the federal level. Currently, medical marijuana use is legal in 28 states, and in eight of those, it can also be purchased legally for recreational use. The market’s potential, once legalization expands, is estimated at $50 billion. By 2021, the legal cannabis industry is expected to grow into a $20 billion business.
This potential is what attracted two Russian bankers, who made their fortunes in Russia during the chaotic 1990s, to try their hand at selling cannabis. They believed they had found another emerging market that could bring them high profits, according to Bloomberg. Both businessmen were educated in the US but left America after the collapse of the Soviet Union, sensing opportunities in Russia as it took its first steps toward capitalism.
Boris Jordan
51-year-old Boris Jordan founded the investment company Renaissance Capital in 1995 and is still the main owner of Renaissance Insurance. Jordan served as chairman of the board at the oil company Sidanko and led Gazprom-Media after it acquired Media-Most’s assets. He currently heads the international investment group Sputnik.
In 2015, Sputnik acquired the American company PalliaTech, which grows and sells cannabis. Jordan’s plan is to turn this company into a national network for growing and selling cannabis, with retail locations in at least 13 states. Sputnik has already invested over $100 million in the startup.
“It’s like Russia in the 1990s. We’re talking about an industry that’s in its infancy, that needs to be built from scratch, including the legislation and everything else,” Jordan said.
“Our retail locations look like Walgreens. They’re filled with oils, pills, and creams,” he added.
PalliaTech is based in Massachusetts. The company was founded in 2010 as a manufacturer of medical equipment. When the wave of cannabis legalization began, PalliaTech was one of the first to enter this market segment.
Jordan is also a member of the New York Council on Foreign Relations. He shared that, on his initiative, a $200 million fund was created to invest in other opportunities within the cannabis industry, though he declined to name his partners in the fund.
Bernie Sucher
In 1993, Bernie Sucher founded the investment company Troika Dialog. In the 2000s, he was chairman of Alfa Capital, headed the Russian office of Merrill Lynch, and served on the board of directors of the investment company Aton.
Sucher calls the cannabis boom in the US “the gold rush of our time” and also compares the situation to Russia in the 1990s.
“Working in this industry makes me nostalgic, because it’s very similar to how I founded Troika Dialog 25 years ago. But this time, no one will get hurt,” he said.
Sucher is co-owner and CEO of Tikun Olam USA, a joint venture with Israel’s largest medical cannabis producer, where marijuana has been legal for over 20 years.
In Washington, Delaware, and Nevada, Tikun Olam products (the name means “Repair of the World” in Hebrew) are prescribed for chronic pain, post-traumatic stress disorder (PTSD), and many other conditions.
The company has spent about $9.3 million on licensing its own cannabis strains and marketing in these three states, but plans to continue investing in the industry.
“The only thing that qualified me to become CEO of this company was my Russian experience of turning an idea into a real business in unstable and even anarchic conditions,” Sucher said.
By 2021, the legal cannabis industry is expected to grow into a $20 billion business.