Colorado Marijuana Industry Wins and Loses in Federal Court Decisions

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Colorado Marijuana Industry Wins and Loses in Federal Court Decisions

A U.S. Court of Appeals for the 10th Circuit just made a ruling that could affect the way marijuana cases are treated in the future. A couple named the Reillys, who own a Pueblo based ranch, have been given the go ahead to sue a neighboring marijuana cultivation facility for creating a bad smell, lowering their property value and violating federal law. While recreational and medical marijuana are legal in Colorado, they remain illegal on a federal level. In fact, marijuana is still classified as a Schedule I drug, the strictest category reserved for substances that are considered to have the highest risk and no medicinal value.

The Qualifications of Injury to Property

marijuana odor leads to colorado court case
The odor from a neighboring marijuana farm is leading to a lawsuit in Colorado.

As things stand the federal government ordinarily cannot interfere with state law on the topic of marijuana, but the Reillys filed their case under the federal RICO statute. The federal Racketeer-Influenced and Corrupt Organization Act (RICO) allows people to sue others who have harmed their business or property through their racketeering activities. Growing and distributing drugs that are illegal under federal law qualifies as racketeering. In this particular case, the plaintiffs could prove that the “noxious odors” that were coming onto their property were sufficient enough to qualify as injury to property. The claims under RICO will pay out 3 times higher than had the case been filed under a state nuisance law as well as covering attorney fees.

RICO Claims

This turn of events could open the door to neighbors of marijuana businesses across the state who feel that they can’t enjoy their property in the same way. A federal judge threw out the case earlier, claiming it was speculative but the 10th Circuit felt the case should be allowed to be sent to trial. They stated, “We are not suggesting that every private citizen purportedly aggrieved by another person, a group, or an enterprise that is manufacturing, distributing, selling, or using marijuana may pursue a claim under RICO. Nor are we implying that every person tangentially injured in his business or property by such activities has a viable RICO claim. Rather, we hold only that the Reillys alleged sufficient facts to plausibly establish the requisite elements of their claims against the Marijuana Growers here. The Reillys therefore must be permitted to attempt to prove their RICO claims.”

Dismissal of Neighboring States’ Suits

RICO cases could be used in neighboring colorado state cases
RICO cases are being weighed as an option in pushing cannabis-related lawsuits in Colorado.

The 3-judge panel for the 10th Circuit also managed to uphold several lower court dismissals that aimed to overturn parts of Colorado’s marijuana laws. 2 of these were from neighboring states, Nebraska and Kansas, who felt that their proximity to Colorado allowed too many residents within their states to get access to the plant. Only the Supreme Court has jurisdiction over disputes between states and these were dismissed last year.

Neighbors of cultivators may still have an opening towards legal action against those in the marijuana industry and this is bad news for the blossoming industry. As long as the plant remains illegal on a federal level there is some risk involved in being part of it. Several bills currently exist, seeking to reschedule or legalize the plant so perhaps it is only a matter of time before these risks become a thing of the past.

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