Will Pot + RICO Challenge State’s Federalist Trend?

Marijuana plants grow at LifeLine Labs in Cottage Grove, Minn., in 2015. (Jim Mone/Associated Press)

Writing in The Washington Post, legal commentator Jonathan H. Adler outlines both the context and challenges facing “legal” marijuana now that a law targeting gangsters is being used for civil resistance to state pot reforms. We’ve reported before that the federal 10th Circuit court has taken a stand and it’s significant.

Adler outlines the federal context, including how the U.S. Congress has linked marijuana to funding legislation, before going into the looming challenges.
He notes that “… a bigger potential threat [to state legalization efforts] comes from the fact that marijuana possession and distribution are predicate offenses under the Racketeer Influenced and Corrupt Organizations Act (RICO). This means that those who produce or sell marijuana are potentially subject to civil RICO suits, whether or not such activities are legal under state law. So held the U.S. Court of Appeals for the 10th Circuit earlier this year. A federal judge once described RICO as “the monster that ate jurisprudence.” Barring real reform at the federal level, it could be the monster that ate marijuana federalism, too. Here again, an appropriations rider is insufficient.
Adler is arguing that the RICO use is a threat to the “federalism” model for state control. 

Legal Pot Might Be Sued Out of Business

The original suit claimed that the aroma from a nearby marijuana grow made horse riding less pleasant.Thinkstock file photo

A ruling by the U.S. Court of Appeals for the Tenth Circuit is raising eyebrows in the legal marijuana industry and the Denver weekly newspaper Westword warns that the litigation “… is based on federal racketeering laws, that anti-marijuana forces hope will help them destroy the marijuana industry here and throughout the country.”
At issue is an argument that a Colorado pot-growing operation damages neighboring property owners — they say their horse-riding experience is diminished by the smell from marijuana and other concerns, including construction. In its decision, the 10th Circuit effectively found that the plaintiffs’ use of the Racketeer Influenced and Corrupt Organizations Act (RICO) statute had merit because the adjacent property violates federal laws against marijuana, which is specifically mentioned in the RICO laws.
Westwood breaks it down: “This ruling could be game-changing. If the Reillys and Safe Streets Alliance succeed, other individuals or groups would be able to file complaints against marijuana businesses using RICO on a scale so massive that the entire industry could sink under the weight of litigation — or so opponents hope.”
Read the story here:
How Bizarre Pot Smell Ruling Could Destroy Colorado’s Marijuana Industry

Deep-Dive Story Outlines Lawsuits, Pesticide Issues For Marijuana

Why don’t we have much data on how much pesticide weed smokers are being exposed to and what effects that exposure might be having on them? Photo Credit, Slate report, 4/20/16

Why don’t we have much data on how much pesticide weed smokers are being exposed to and what effects that exposure might be having on them? Photo Credit, Slate report, 4/20/16

It turns out that marijuana consumer seek the same “organic” and pesticide-free products that consumers seek in other agricultural products. The Slate magazine website has published a deep-dive into some of the legal and consumer issues facing the fast-growing legal marijuana business, including how the gap between federal and state laws can create an odd lack of health studies and other efforts. In particular, the piece looks at how pesticides impact pot products.

Says the Slate story of pesticides: “… this is an issue that consumers are becoming increasingly aware of, thanks to a series of recalls, lawsuits, and front-page exposes that have highlighted the gravity of a growing pesticide problem in the pot world. In the past year, Colorado has made 19 recalls of pot products after quarantining more than 100,000 plants that regulators feared had been treated with unapproved pesticides. In June, the Oregonian found abnormally high levels of pesticides on nearly half of the pot products sold in state dispensaries. Those pesticides included a common roach killer, half a dozen human carcinogens, and a fungicide that allegedly turned into hydrogen cyanide when heated. This March, the Emerald Cup (an outdoor cannabis competition) announced that it would tighten its contamination rules after a large percentage of entrants failed pesticide tests.”

Read the piece here: http://www.slate.com/articles/business/moneybox/2016/04/there_s_a_clean_natural_weed_movement_but_it_can_t_call_itself_organic_here.html

RICO Lawsuits Shape Legal Marijuana Landscape

A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary in Los Angeles, July 25, 2012. Photo Credit, International Business Times report, 3/25/16

A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary in Los Angeles, July 25, 2012. Photo Credit, International Business Times report, 3/25/16

It’s not exactly news that litigation can have serious impact even if it gets dismissed or dropped. And the International Business Times has a truly cautionary tale out of Colorado. The story is about how recent court victories set net legal milestones but the legal marijuana industry has a long way to go.

Part of the story details how one man lost his business in litigation that never even made it to the discovery phase. The marijuana dispensary owner was doing well, says the IBT, but “… when he made arrangements in 2015 to move to a nearby location and expand his operation to include recreational marijuana sales, the Holiday Inn located next door to the new spot pre-emptively sued Olson as well as the owner of the property he was going to occupy, his bank, his bonding firm, his accounting company and others associated with his business, alleging the marijuana shop would be a detriment to the hotel’s business. The affiliated companies were eventually dropped from the suit once they either severed ties with Olson or reached cash settlements with the hotel. As part of its deal with the landowner, the Holiday Inn purchased the property Olson was going to use. In November, with only Olson left as a defendant, Holiday Inn dropped its lawsuit before the case reached discovery. By that point, Olson, who said he heard a doughnut shop and housing were going to be built on the site, no longer had a dispensary. The lease on his old location had expired and, inundated with legal fees, he couldn’t afford to relaunch his business elsewhere.”

Read the excellent report here:

Marijuana Legalization Movement Just Won Multiple Courtroom Battles, But Will That Be Enough to Quash Future Legal Threats?

California City Remains A Lesson In Pot’s Unintended Consequences

Robert Taft Jr., director of the licensed 420 Central dispensary, with Ocean Grown Jack Herer sativa. “I'm fighting for the patients we have. People want to go to a safe store.” Photo Credit, Orange County Register report, 3/29/16

Robert Taft Jr., director of the licensed 420 Central dispensary, with Ocean Grown Jack Herer sativa. “I’m fighting for the patients we have. People want to go to a safe store.” Photo Credit, Orange County Register report, 3/29/16

Confusion and civil lawsuits abound in the Orange County, California city of Santa Ana over legal marijuana sales –and the fringe shops that may or may not be legal.

Attorney Arthur Travieso is representing a shop called Live2Love and four other unlicensed pot shops in lawsuits against Santa Ana, claiming the city’s lottery process was unfair because it allowed multiple entries by the same individuals, as long they applied and paid a $1,690 fee. Some shops also say they are legal under the state’s medical marijuana law and don’t have to follow city regulations.

The OC Register newspaper also notes that “… Santa Ana police garnered unwelcome international attention after a May raid caught on video showed officers forcing Sky High customers to the ground and eating merchandise. Three officers involved in the raid were charged this month with petty theft and vandalism.” And, you guessed it, that brought more lawsuits.

Read the cautionary tale here: http://www.ocregister.com/articles/city-709935-shops-pot.html