The cannabis industry has met its fair share of legal problems, to say the least. However, it appears the industry is in the midst of yet another legal issue, stemming from civil suits involving anti-racketeering laws. Indeed, we may have found the next legal threat to the cannabis industry.
‘Conspiracy’ Lawsuits: The Next Legal Threat To The Cannabis Industry?
Considering its longstanding status as a Schedule I narcotic, it should come as no surprise that there have been several roadblocks to making the cannabis industry a legitimate one. Most recently, a trio of suits alleging companies of being in violation of the Racketeering Influenced and Corrupt Organizations Act, or RICO.
The first case—an almost three-year-old lawsuit in Colorado—is set to go to trial in Denver this July.
In this particular case, a Colorado couple who own land adjacent to a licensed cannabis grow, allege they were being harmed by a licensed marijuana grower’s operation, citing “bad smell” and devalued property value due to the location of the grow operation in proximity to their home. As it stands, the couple is poised to win in the upwards of six figures because of cited RICO violations.
Brian Barnes, the attorney who filed the original lawsuit, believes cases like this pose an immense threat to the burgeoning cannabis industry. Specifically, those with indirect ties to cannabis businesses.
“Anyone who participates in what the law defines as an illegal drug conspiracy is potentially on the hook for damages caused by the conspiracy,” Barnes said. “We’ve basically proven that this can be done. I think it’s going to be a big problem for the marijuana industry.”
In these RICO cases, defendants considered “co-conspirators” can be financially liable for a boatload of money. Essentially, anyone somewhat involved with the case can be on the hook for as much as three times the financial damages, in addition to exorbitant lawyer’s fees.
Another case, similar to the instance in Colorado, happened in Oregon and involves mirroring claims about a devalued property. However, unlike the Colorado case, this case is headed for an out-of-court settlement, instead of a trial.
But much like the Colorado case, this appears to be working in favor of the plaintiffs.
“It was a really broad-reaching RICO action, very much modeled after what we saw in Colorado,” said Amy Margolis, an attorney for one of the Oregon defendants.
The third suit, which is the latest case of RICO action, was filed in September by a Massachusetts’ business owner. In this instance, the owner of the business filed a RICO suit against a cannabis business called Healthy Pharms, an MMJ retailer that has yet to even open its doors for business.
The suit follows the same format as the aforementioned cases, but this time, additional defendants include the Massachusetts Department of Health, which originally licensed the dispensary and Century Bank, which provided banking services for the up and coming business.
Final Hit: The Next Legal Threat To The Cannabis Industry
Undoubtedly, these civil suits pose serious threats to the industry as a whole. As businesses try to legitimize their field of work, cases like these can cause integral members of the operation to further shy away from doing business with cannabis companies.
California marijuana attorney Omar Figueroa said he has one simple message for his clients—be careful where you set up shop.
“I’ve advised clients on the potential for neighbors to bring RICO litigation,” Figueroa said. “It behooves investors and prospective operators to conduct due diligence and make sure the neighbors are friendly and aren’t going to file a RICO lawsuit.”