Two key parts of a closely-watched lawsuit in the cannabis industry were sent by a federal judge to a Colorado jury earlier this month. Now, major decisions hang in the balance that could determine the viability of a creative anti-cannabis legal strategy: can a landowner sue a neighbor and win by proving damage was caused by a cannabis crop?
The federal court case, known as Safe Streets Alliance vs. Alternative Holistic Healing, LLC, is worrying some in the cannabis industry because it opens up the possibility for private landowners to use a federal statute to shutter a neighboring cannabis business operating legally under state law. The 10th Circuit Court of Appeals allowed the case to move forward in June 2017 under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) statute — a rarely-invoked criminal law that can be used in civil lawsuits. Other cannabis lawsuits based on RICO have been brought forth in Oregon and Massachusetts.
As a part of his ruling earlier this month regarding the Colorado jury, US District Court Judge Robert E. Blackburn came to a significant conclusion: he agreed with the plaintiffs that a marijuana grow in Pueblo County, Colorado, is at least partly in violation of the federal racketeering law because of federal cannabis prohibition under the Controlled Substances Act. “Defendants have cultivated and sold marijuana at the facility continuously since February 2016,” Blackburn wrote. “Each act of cultivation and sale constitutes a separate violation of the CSA and therefore a predicate RICO offense.”
However, defense attorney Matthew Buck told Cannabis Wire that he believes there are other issues at play.
“Our position has always been that this is a publicity stunt by a conservative anti-marijuana DC law firm,” Buck said of Cooper & Kirk, the law firm behind the plaintiffs, which has ties to conservative causes. “They have used these plaintiffs to attempt to advance their agenda.”
Cooper and attorney David Thompson, the primary attorney involved with the Colorado lawsuit, did not respond to Cannabis Wire’s repeated requests for comment on the lawsuit or why the firm had taken on the case.
Attorney General Jeff Sessions and the Trump administration once reportedly considered Cooper & Kirk firm partner Charles Cooper for the US solicitor general post, one of the profession’s top jobs arguing cases on behalf of the government in front of the Supreme Court. Cooper, though, declined to be considered and called Sessions a “friend” in a statement to Politico. Cooper was also retained as Sessions’ private lawyer when he was called to testify in the congressional probe over Russian meddling in the 2016 election, according to media reports.
Sessions has been outspoken against cannabis, and while his Justice Department has rescinded Obama-era protections for the marijuana industry, federal prosecutors have not yet cracked down on the growing industry.
Judge Blackburn ruled that a jury would have to decide whether land owned by Phillis Windy Hope Reilly and Michael P. Reilly was damaged as a result of an adjacent cultivation operation. The Reillys made two primary arguments in the 2015 lawsuit: that they are now injured because of an alleged “offensive smell” and their land is now less desirable to future property owners because it’s located next door to a marijuana farm.
“Furthermore, the large quantity of drugs at marijuana grows makes them targets for theft, and a prospective buyer of the Reillys’ land would reasonably worry that the 6480 Pickney Road marijuana grow will increase crime in the area,” the lawsuit says.
An Economic Inquiry study published in January showed that home prices rose an average of 6% in Colorado after legalization.
Buck, the defense attorney, admitted that the Reilly suit could be successful “if the [cannabis-related] activity has led to even $1 worth of damage” but he believes that he will be able to disprove that they lost property value or that the grow is particularly pungent in its skunkiness. The cannabis is grown indoors and has multiple filtration systems, he said. “I don’t anticipate losing based on our scientific evidence,” Buck said. “We’re hoping that the jury can come down to the facility and smell for themselves.”
Buck’s remaining client in the lawsuit is Parker Walton, who runs the cultivation business Cannacraft, and does not want to risk losing his land if the lawsuit against him is successful. Others who were originally a part of the lawsuit have either settled out of court or have dropped off the case, including the case’s namesake parties, Safe Streets and Alternative Holistic Healing owned by Joe and Jason Licata, Buck said. The Licatas, the defense attorney said, cannabis business operators connected to the grow operation, and others originally named in the suit’s 17 defendants paid “insignificant” amounts to settle their pieces of the lawsuit. He would not disclose the exact settlement terms. (RICO has been historically linked with operations that target members of the mafia because it can hold individuals indirectly associated with crimes responsible for others’ misdeeds.)
If successful, the Reilly’s monetary reward could be up to three times the value of the damages assessed. Cooper & Kirk would also collect attorney’s fees for the case — a number likely to be in the millions.
Still, the Safe Streets case, said Robert Mikos, a Vanderbilt University law professor who has followed the case closely, shows that RICO is a limited strategy for anti-cannabis groups because it is a difficult, technical and time-intensive lawsuit.
“Companies that are in this industry are exposed to civil RICO liability and the real reason why this is not a huge deterrent is that it’s very tough to find plaintiffs who can actually bring a civil RICO case,” Mikos told Cannabis Wire. “You have to get someone who is injured in their business or property to actually bring a claim. It’s one thing that companies can manage by trying to stay on good terms with neighbors.”
The future role of RICO in the cannabis industry could depends on the outcome of the Safe Streets case, which is scheduled for trial October 29.
- Cannabis is rich territory for serious journalism. Legalization raises urgent questions about regulation and law, technology and taxation, science and business, criminal justice and individual liberties. It stands at the intersection of a booming billion-dollar industry and promising advances in medicine, all while remaining federally illegal.