RICO Act Being Used by Attorneys to Hinder Legal Marijuana Businesses

RICO Act Being Used by Attorneys to Hinder Legal Marijuana Businesses


As the 2018 outdoor cannabis harvest heads into its final phase across most of the country — including swaths of illegal cultivations spotted in California and Oregon by Fish and Wildlife officers hanging from helicopters — an ominous legal game is afoot.

A small group of lawyers in several states is attempting to sue hundreds of people on behalf of clients who reside near cannabis grow sites and claim proximity to flowering marijuana plants has lowered their property values or offended their olfactory senses.

These attorneys are using the Racketeer-Influenced and Corrupt Organization (RICO) Act, to cast huge nets over individuals connected to the allegedly offending growers, however tangentially remote or removed.

Nathan Howard, a defendant in an Oregon case and president of Oregon’s East Fork Cultivars, told Marijuana.com that his hemp and cannabis farm is 200 miles from a plaintiff whose case is based on skunky weed smells emitted by edibles producer Oregon Candy Farm. Howard called the use of the RICO Act a new “cottage industry” for lawyers seeking to make money off the cannabis industry.

Passed by Congress in 1970, the RICO Act was meant to target organized crime and persons engaged in a “pattern of racketeering activity” that included murder, robbery, extortion, terrorism, and other serious offenses.

This new application of the racketeering defense has attorneys tracking down individuals involved in the cannabis supply chain, regardless of whether they have ever touched the product. In July 2018, equine-law attorney Rachel McCart filed lawsuits naming more than 200 businesses — essentially every company that had ever done business with the Oregon Candy Farm, first reported the Willamette Week in Portland, Oregon.

Growers, processors, bakers, delivery companies, dispensary workers, and even bankers are receiving legal notices for activities assumed to be legal in the four states where racketeering cases have sprung up — California, Massachusetts, Colorado, and Oregon. In Massachusetts, a Harvard Square mall tried to stop a dispensary from opening, according to a complaint filed in U.S. District Court in the state. The case is pending.

“Some people don’t even know they’re being sued,” said Howard of East Fork Cultivars.  “We got our notice in an email when I was at a festival.”

Gary Hartwick, president and CEO of California’s Exchange Bank, learned that his bank was being sued in late August 2018 when four families named him in a lawsuit claiming that noxious odors from a cannabis farm in Petaluma, California, prevented them from enjoying their homes.

Hartwick told Marijuana.com via email that his bank recorded a deed of trust for the cannabis farmers in 2015, long before a seed was ever planted, and has had no ties to the property since then.

Portland, Oregon-based attorney Andrew DeWeese expressed optimism when U.S. District Judge Michael J. McShanedismissed racketeering claims on Aug. 17, 2018, in the first of four pending cases in Oregon.

But DeWeese’s voice grew thin with anger at the mention of medical marijuana patients being pulled into the legal fray.

“Suing people who are fighting for their lives and who have no resources to pay for lawyers is predatory,” DeWeese told Marijuana.com.

“In a recent telephone conference between opposing parties, one of the defendants asked the plaintiffs’ attorney to reschedule a hearing because he had his chemotherapy treatment that day.”

DeWeese was referring to another lawsuit brought by attorney McCart against 43 defendants.

After successive attempts, McCart remained unavailable for comment.

RICO lawsuits against cannabis cultivators got their initial boost in June 2017 when the 10th U.S. Circuit Court of Appeals ruledin Colorado that neighbors of legal pot growers could sue over noxious odors.

Some in the industry are worried the lawsuits could threaten residential and small grow operations; experts are divided over the long-term threat they might pose.

Sebastopol, California-based cannabis attorney Omar Figueroa said that the publicity and increasing number of cases could encourage “copycat litigation.”

“These cases could eventually cause numerous headaches for the cannabis industry,” Figueroa told Marijuana.com.

Cristina Buccola, a New York-based attorney and cannabis and hemp business developer, said the flexibility and potential economic wins of RICO cases may seem plaintiff-friendly on the surface.

“But I don’t see an onslaught of disgruntled would-be plaintiffs lining up to pursue such claims without some barometer of how these cases are likely to fare in the long run,” Buccola told Marijuana.com. “Furthermore, litigation can be costly and there are no assured wins.”

Read more from the source: Marijuana.com

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