To Colorado, marijuana is a business—to the federal government, it’s a criminal conspiracy
More interestingly, the appeals court found that the odor is an injury to property under Colorado common law holding that a noxious odor can be a nuisance. (In prior cases, the disputed odors generally came from livestock.) Congress incorporated common-law property rules into RICO, and the court found that this was enough to survive dismissal at the pleadings stage.
Brian Barnes, an attorney for the Reillys, says that was a major victory. “At least as I read the 10th Circuit’s opinion, as long as we can prove that there’s this persistent foul odor … we’re going to win,” says Barnes of Cooper & Kirk in Washington, D.C., a law firm aligned with conservative causes.
But Matthew Buck of Corry & Associates in Denver, who represents several defendants, thinks the plaintiffs will stumble when it’s time to prove that the value of the Reillys’ property has been damaged.
“Frankly, none of the states with legal cannabis are the states where you’re going to be able to win that kind of case because they all have extraordinarily high property values,” Buck says.
Buck doesn’t think the goal of the lawsuits is to bankrupt the defendants, mainly because “it’s a simple nuisance case” without expensive discovery. Based on discussions in district court, he thinks the goal is to get before the Supreme Court.
But Barnes and Kamin think the outcome of the 2015 lawsuit in Colorado, Safe Streets Alliance v. Medical Marijuana of the Rockies, is illustrative. Accounting and bonding companies settled for $70,000; a bank dropped the marijuana business as a client; the business ended its plans to open a new location near the plaintiffs’ hotel. The plaintiffs then dropped the case.
“Even if the plaintiffs were never going to prevail on the merits, they essentially achieved their goal”—shutting down the marijuana business, Kamin says.
WHIFF OF FAMILIARITY
As another case in point, Kamin cites the Oregon lawsuit, McCart v. Beddow. For defendants, it names 21 people and 23 businesses—including Bank of America, whose involvement is limited to holding a mortgage on one property in which marijuana is produced.
In that case, lead plaintiff Rachel McCart, who’s also an attorney, is representing herself and her husband in a lawsuit against neighbors who grow marijuana. They say the growers have deliberately harassed the McCarts, trespassed, damaged an easement, created a stench of marijuana and disturbed the peace at all hours with their operation. These actions have damaged their property under RICO, according to the complaint.
McCart declined to comment for this article. But attorney Brooks Foster of the Chenoweth Law Group in Portland, who represents some of the defendants, says she previously had sued many of the same defendants in Oregon state court for nuisance, trespass and defamation. McCart voluntarily dismissed that previous case several days after filing the federal RICO claim.
McCart also has publicly opposed land use changes that would allow some of the defendants to run businesses from the neighborhood, including a nonmarijuana business.
Commercial litigator Clifford Davidson of Sussman Shank in Portland represents other defendants in the RICO case. He says the McCarts will have a challenge not present in Colorado: Oregon’s “right to farm” law. That law blocks common-law nuisance suits aimed at farming.
“If you’re on farmland and your neighbor’s pig farm smells like pigs, you can’t sue them,” says Davidson, who is active in the ABA Section of Litigation and the Section of Intellectual Property Law.
LESSONS IN LIABILITY
Barnes says he has no connection to the Oregon case, and his client the Safe Streets Alliance has been inactive since its founder’s death in 2016. But he’s aware of people in other areas still considering similar claims. He thinks the 10th Circuit’s ruling on odor opens the door for their victory.
The appeals court “had the caveat that, well, we’re not saying every marijuana business can be sued by just anyone anywhere, and that’s fair enough,” he says. “But I think just as a factual matter, most of these cultivations are going to be exposed to liability.”
But Foster notes that Oregon is in the San Francisco-based 9th Circuit, which isn’t bound by decisions of the 10th Circuit. And Blakey, who helped write RICO, says the plaintiffs still must prove their damages.
“I could turn around and say … I think that [marijuana farm] increases the value of my land because I could now sell it for marijuana,” he says.
This article appeared in the November 2017 issue of the ABA Journal with the headline “Noxious Neighbors? To Colorado, marijuana is a business—to the federal government, it’s a criminal conspiracy."