Jury rules in favor of Colorado marijuana grower in racketeering lawsuit

A Colorado jury gave a cannabis grower in a racketeering lawsuit an important victory this week, and it’s a landmark win for the marijuana industry as it fights claims alleging MJ cultivators create “noxious odors” and other nuisances that could hurt nearby property values.

The jury “found that we were not responsible for any of the alleged damages,” attorney Matthew Buck told the Colorado Sun. He represented the Colorado marijuana business and its owner, Parker Walton.

Walton, who runs CannaCraft, a small-batch marijuana greenhouse in southern Colorado, suggested in a recent interview with Marijuana Business Daily that if he were to suffer a large monetary loss related to the suit, it would put him out of business.

Here are basics you need to know about the Racketeer Influenced and Corrupt Organizations Act (RICO) and the cannabis industry:

How to fight back against RICO

Click here for advice about heading off racketeering lawsuits.

  • Suits using the same strategy have been filed in California, Massachusetts and Oregon, claiming the smell of marijuana damages neighboring owners’ ability to enjoy their land or depresses their property value. But this was the first time a jury heard a case.
  • A recent federal court ruling in Oregon also suggested plaintiffs face a high burden of proof. In that case, the judge dismissed claims, ruling the plaintiffs failed to show a concrete loss in the value of their property.
  • The suits have been filed under RICO, which allows private parties to claim their business or property has been damaged by a criminal enterprise.
  • RICO was first enacted to fight the Mafia in the 1970s but expanded to include illegal drug trafficking. The law allows plaintiffs to be compensated for their damages times three, plus attorneys’ expenses.

CannaCraft’s Walton runs a state-legal MJ business, and the lawsuit was filed under the premise that cannabis is illegal on a federal basis.

The Colorado lawsuit was filed by Michael and Phillis Hope Reilly, who bought property adjacent to the cultivation facility.

They claimed in court filings the marijuana operation emitted a “noxious odor” that had diminished the value of their property. They also complained about traffic, safety and impaired views.

9 comments on “Jury rules in favor of Colorado marijuana grower in racketeering lawsuit
  1. Robert Hunt on

    This victory has been a long time coming for the industry and it cannot be overstated how important this win is for us all. Had the decision gone the other way this could have opened the door to a massive wave of new litigation filed by conservative groups with the sole aim of quashing a safe, regulated and efficient cannabis marketplace.

    Now, we have at the very least state precedent that future courts can look to in making their own determinations as to the merits of similar claims. I would like to think that after this ruling many potential litigants will be far less inclined to incur the cost of litigation on what now appears to be a losing claim.

    May this ruling be celebrated across the cannabis industry as a whole and a big congratulations to Parker Walton and CannaCraft and a huge thank you to Matthew Buck for a job well done. Drinks on me in Vegas!

    Reply
    • Glen on

      Trial court verdicts do not establish any precedent. Only a favorable appellate court verdict will do that – or a new statute restricting such lawsuits. It’s important to remember that when assessing nuisances in homeowner communities, important property rights are on the other side as well. Traffic and personal/public safety are not imaginary detractions from enjoyment of private property – if proven. Imagine for a moment if the complaint had been against a large pig slaughtering facility or housing fly-infested animals – we’d see a lot more comments favoring the homeowners, I’m sure.

      Reply
      • Robert Hunt on

        Glen,

        While you are correct that only courts of higher authority may craft binding precedent, a lower court or even a court in a different jurisdiction, can create what is referred to as “persuasive authority” or “persuasive precedent” and its impact should not be underestimated when a question, such as this one, is being heard for the first time.

        There should be no doubt that the attorneys in the other RICO cases, in other states, are not going to cite this case as they prepare their clients defense. With nothing else to draw from in the way of binding precedent you may be fairly certain that the bench will look to this ruling and take it into consideration as it renders its own opinion.

        As for your example of a pig slaughtering facility, it is not germane to the question as there would be no RICO suit brought for this reason. Perhaps a question of quiet enjoyment, but certainly not a criminal claim such as this one.

        Reply
    • Dave on

      Lots of “Conservatives” smoke weed. We also grow and distribute but nice try anyways. Your point falls flat for the silly political slant.

      P.S. I run one of the largest Production and Cultivation facilities in Vegas. MAGA !!

      Reply
      • Robert Hunt on

        Dave,

        My point was not that Conservatives do not consume cannabis or even run cannabis businesses. Of course they do.

        It was that Safe Streets Alliance, the group that filed this suit, is a very conservative anti-cannabis, anti-drugs organization and it was trying RICO on for size to see if they could find a novel legal approach to push their agenda. Had it succeeded it would have no doubt emboldened other similar conservative groups to try the same…

        potentially in NV…

        maybe against one of the largest production and cultivation facilities in Vegas…

        perhaps against a fellow conservative whose view of the 10th Amendment is a bit different than theirs…

        It could happen and you should be pleased that after last week that chance is now a bit more remote. Good luck to you and your business!

        Reply
  2. Michael Reilly on

    I want to make it clear that the Michael Reilly who initiated this lawsuit is NOT me, and there is no connection between us. Some of you may know me from the Cannabis Dispute Resolution Institute, of which I am a Co-Founder. I am obviously in favor of legal cannabis.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *