A Colorado federal jury sided last week with a cannabis cultivation business owner against his neighbor in one of the first Racketeer Influenced and Corrupt Organizations Act (“RICO”) lawsuits against a cannabis grower to reach a jury verdict in the nation. The plaintiffs in Reilly v. 6480 Pickney brought suit under the federal RICO statute, arguing that certain predicate acts related to marijuana cultivation led to odors and noises emanating from the defendant’s business facility that had damaged plaintiffs’ property. The RICO statute allows for treble damages where plaintiffs prove a quantifiable injury through a pattern of racketeering activity. Racketeering activity, in turn, can be shown through repeated predicate acts, including violations of the federal Controlled Substances Act (“CSA”). The Reilly plaintiffs had argued that defendants displayed a pattern of racketeering activity in their alleged violation of the CSA and that they had suffered a quantifiable injury to the value of their property as a result. Specifically, they argued that the adjacent cultivation facility’s odor and incessant noises had diminished the value of their own property and interfered with their use and enjoyment of that property.
At trial, plaintiffs presented evidence that the cultivation next door had overrun their property with strong odors and loud noises, while also contributing to increased traffic on nearby roads necessary to access that property. Defendants argued that their business was on agriculturally-zoned land, that the odors and noises complained of were from animal feed or landfills, and that plaintiffs’ property value had actually increased in the time since defendants had begun operating their cultivation business.
The case represents the first RICO jury verdict in favor of a legal cannabis business in a state or jurisdiction that has decriminalized or legalized cannabis. At least two other cannabis-related RICO actions nationwide are pending: New Vision Hotels Two v. Medical Marijuana of the Rockies in the federal District Court of Colorado and a case that we’ve written about on this blog before: Crimson Galeria v. Healthy Pharms in the federal District Court of Massachusetts. We’ll continue to update you on this and other cases in this space.