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RICO Madness: The Nuisance of Owning and Operating a Marijuana Facility

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By:  Bob Henry

On June 7, 2017, the Tenth Circuit Court of Appeals issued its opinion in Safe Streets Alliance, et al. v. Hickenlooper, et al., (No. 16-1048), an opinion that could open the doors to property use litigation involving marijuana facilities.   One of the issues in Safe Streets was whether a property owner can use the federal RICO statutory scheme to obtain relief arising out of a neighboring property owner using property for the cultivation of marijuana in a manner that causes an impact to the value, use, and enjoyment of one’s property.  

The pertinent factual allegations in Safe Streets (on the federal RICO issue) were straightforward.     The Reillys (the plaintiffs) own a parcel of property in Pueblo County, Colorado.   After Colorado legalized recreational marijuana, individuals to the immediate west of the Reillys began operating a “marijuana grow” facility.   The Reillys filed suit alleging, among other things, that the grow facility’s operations (1) causes a nuisance that interferes with the use and enjoyment of their property (because of the odor) and (2) diminishes the value of their property generally (because of the existence of a “criminal” operation next door).    The Reillys alleged that the individuals and entities involved with the grow facility were operating their facility in violation of the Controlled Substance Act, 21 U.S.C. §§ 801-904, which criminalizes the “leasing or maintaining property for the cultivation of marijuana.”   Accordingly, the Reillys contend that the individuals involved with the facility are engaging in “racketeering activity actionable under federal law” impacting their property rights for which they could seek relief under federal RICO. 

The District Court dismissed the RICO claim.  The Tenth Circuit, however, reversed the District Court, holding that the Reillys’s complaint should not have been dismissed because they had asserted a plausible claim under RICO.  The Tenth Circuit held that if indeed the criminal activity (under federal law) was causing a nuisance to the Reillys or that the activity had caused a diminution of value to their property, the Reillys could proceed with their claim.

The impact of this ruling is already causing other plaintiffs to pursue a similar path.   Just six days after the opinion in Safe Streets, a lawsuit making similar allegations was filed in Oregon District Court (McCart v. Beddow, et al., 3:17-cv-00927-AC), presumably seizing on the door opened by the Safe Streets opinion out of Colorado.   One might anticipate that other suits of this nature will soon follow whenever a marijuana grow facility (or perhaps any facility or activity involving marijuana) is involved and nearby neighbors believe that the activities going on “next door” are causing a negative impact to their property rights.