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Lawsuits & Litigation

Colorado Suit Uses RICO to Push Off Legal Marijuana Grow

— October 29, 2018

A Colorado lawsuit, filed by two landowners who claim a nearby marijuana grow is devaluing their property, will move to trial today.

Scheduled for a session in a Denver federal court, the consequences could set precedent for other cannabis-related concerns.

The case, reports, was ‘filed in February 2015’ by the Safe Streets Alliance.

Safe Streets—a group which claims that recreational marijuana use can “deteriorate
neighborhoods—pushed the suit on behalf of members Phillis Windy Hope Reilly and Michael P. Reilly. WestWord notes the alliance’s legal foray was initially amateurish.

But despite spelling “marijuana” wrong in its first press release, the group has managed to keep its anti-pot crusade in the courts for three consecutive years.

One of the Reilly family’s attorneys said the couple bought property in southern Colorado for “its views of Pikes Peak.” While they’ve built a house on one parcel of rural property, they don’t appear to live full-time in the area.

However, Hope and Mike Reilly say they take their children there for outdoors excursions—excursions they suppose are now endangered by the “pungent, foul odors” emanating from a nearby marijuana grow. Identified as Alternative Holistic Healing, the business keeps its plants inside.

Then-Colorado Attorney General Christian Sederberg told Westward in 2015 that suits like the SSA’s are undermining the state’s attempts to make its communities safer.

“Colorado has demonstrated that regulating marijuana works. Our state has enacted sensible and strict regulations, developed through an inclusive stakeholder process, to ensure quality-controlled marijuana is available through safe and secure businesses,” Sederberg said. “This lawsuit is intended to undermine a set of laws and regulations specifically designed to make our communities safer. We are in the process of eliminating the underground marijuana market in this state. It’s disappointing to see outsiders coming into Colorado with the goal of reversing our progress.”

While the financial and social benefits of marijuana legalization have been contested, the drug nets hundreds of millions in taxes for Colorado each year. Image via Max Pixel. Public domain.

One way or another, attorney Brian Barnes says Alternative Holistic Healing’s organic scents pose a threat to Colorado’s youth.

“That’s just not right,” Barnes said. “It’s not right to have people in violation of federal law injuring others.”

Barnes’ and the SSA’s case seems to have two core components. First, they say the odors alone have the effect of decreasing the Reillys’ property value. Second, since federal law prohibits the use and possession of marijuana, they claim states like Colorado are illegally letting marijuana venders infringe upon their neighbors’ rights.

That second point could have far-reaching consequences.

The federal Racketeer Influenced and Corrupt Organizations Act—often abbreviated RICO—was created to target Mafia families in the 1970s. While it’s still mostly used for prosecution, RICO allows private parties to sue ‘criminal enterprises’ for damaging a business or property.

Successful claims can lead to plaintiffs being reimbursed for up to three times the cost of claimed damages, plus attorneys’ fees.

‘Starting in 2015,’ writes ABC, ‘opponents of the marijuana industry decided to use the strategy against companies producing or selling marijuana products, along with investors, insurers, state regulators and other players. Cannabis companies immediately saw the danger of high legal fees or court-ordered payouts.’

Industry concerns only expanded when, in 2017, a Colorado court let the Reillys’ RICO suit move forward.

The decision of whether to consider a Colorado case from a federal standpoint, reports ABC News, will be left up to the jurors.

“They can claim a $1 million drop in property value, but if a jury does not agree and says $5,000, that’s not that big of a deal,” said Rob MIkos, a law professor at Vanderbilt University. “That’s why there are a lot of eyes on this case.”

Attorney Adam Wolf told ABC News that believes the suits are intended to “scare” third-party companies into cutting ties with marijuana grows and other industry-affiliated businesses. But Wolf adds that the Supreme Court has traditionally taken an unfriendly stance toward lawsuits which aim civil racketeering claims against largely legitimate businesses.

“When the plaintiffs seemed to be saying is anybody who touched, in any matter, any marijuana business is potentially liable,” Wolf said. “And that is a soundly rejected argument by the courts.”


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