Will Colorado Win the Federal Racketeering Lawsuits Against It?

Judge

Will Colorado prevail against alleged claims that the recreational marijuana business violates federal racketeering laws?

By Michele Brooke, Esq.By Michele Brooke, Esq.

By Michele Brooke, Esq.

On Feb. 19, a group called Safe Streets Alliance filed two lawsuits aiming to put an end to marijuana legalization in Colorado.

One suit was filed by Safe Streets Alliance and Phillis Windy Hope Reilly and Michael Reilly, "to vindicate the federal laws prohibiting the cultivation and sale of recreational marijuana and their rights under the Racketeer Influenced and Corrupt Organizations Act (“RICO”)." The suit alleges that "the Reillys are Colorado property owners who have been injured by a conspiracy to cultivate recreational marijuana near their land, and they are members of Safe Streets." It names as defendants Governor John Hickenlooper; Barbara J. Brohl, Executive Director of the Colorado Department of Revenue; W. Lewis Koski,  Director of the Colorado Marijuana Enforcement Division, among others.

The other lawsuit, filed by Plaintiffs the Safe Streets Alliance and New Vision Hotels Two, LLC, was primarily against recreational marijuana businesses in Colorado (and persons who allowed the businesses to exist in the state). New Vision is a member of Safe Streets and the owner of the Holiday Inn in Frisco, Colo. It states that it is suffering injuries to its business and property caused by the operations of Summit Marijuana, a state-licensed recreational marijuana store that plans to open less than 75 yards from the front entrance of New Vision’s hotel.

Both lawsuits, according to the complaints, were filed to vindicate the federal laws prohibiting the cultivation and sale of recreational marijuana and their rights under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).

Recreational marijuana sales were targeted, but not the medical marijuana businesses, because medical marijuana laws do not conflict with federal law where there is an exception for medical relief under state laws.

The alleged legal violations are that since marijuana is a Schedule I drug under the Controlled Substance Act of 1970 (21 United States Code § 801, et seq), and since federal law trumps state laws, the recreational marijuana businesses are illegal as a matter of law. The other alleged violation relates to a crime called racketeering, in violation of 18 United States Code § 1961, et seq (RICO). Traditionally, racketeering crimes involve white collar crime, or crimes by notorious gangsters or members of organized crime. Racketeering usually is associated with illegal business activity such as illicit gambling rings, loan sharking, or transportation of stolen goods. Back in the day, gangsters who profited from alcohol prohibition by boot-legging would have been guilty of racketeering activity.

The RICO criminal statute (18 U.S.C.A. § 1961) describes the extensive crimes included in the full definition of racketeering, but begins its definition as follows, “(1) 'racketeering activity' means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law …” The main complaint of the plaintiffs in these cases is primarily that the defendants are engaged in illegal drug trade in violation of the Controlled Substances Act.

The complaints have all the same unsubstantiated rhetoric we have come to expect from those who object to cannabis use: devaluation of property values, alleged nuisance claims, crime rates, marijuana shop owners are bad neighbors, the smell, etc.

It is going to be a rough ride for the defendants named in these lawsuits. They are very serious. The potential liability–treble (triple) damages, awarding of attorney fees and loss of business–could be devastating. But the plaintiffs will have to prove the elements of each alleged offense. Here, I have doubts any jury will find these good people involved in organized crime or money laundering as it is traditionally known. This is going to be one of those uphill battles we face as a nation when the law and the trends of society are in deep conflict.

We are seeing similar conflict, for example, right now with immigration laws. Do we have a large number of illegal immigrants in our country who inadvertently (or intentionally) stayed long enough to become engrained in our societies (becoming our friends and neighbors)? Are they in violation of federal laws? Yes. Should we deport them all? It is issues like these that make us scratch our heads, wondering why timely progress in the federal government is such a rarity.

The fact is the federal government has permitted a violation of federal laws in both instances. The federal government has even made accommodations, e.g., the “love letter” (on Valentine’s Day last year)–offering guidelines to banks on assessing the risk of providing services to marijuana businesses (while still acknowledging that marijuana is federally illegal), or the defunding of the DEA late last year for prosecution of marijuana-related acts in states where marijuana has been legalized. The federal government is aware that the Controlled Substances Act needs to be changed to reschedule or de-schedule marijuana.

I expect to see many law firms and interested groups filing friend-of-the-court briefs if these matters are appealed at some point–which I would expect. Friend of the court briefs, or amici curiae (a fancy legal term), are where someone, usually a group that is interested in the outcome of the case, who is not a party (a plaintiff or defendant), who offers information or a legal opinion that is relevant, but who has not been requested by any of the parties to assist a court. These briefs attempt to ensure that the broad legal effects of a court decision (court orders or a judgment) will not depend solely on the parties directly involved in the case. For example, the NORML lawyers might put together a friend of the court brief to assist the court in seeing their legal reasoning on an issue.

These cases may get all the way to the Supreme Court, which could be a good thing. There may be enough give to prevail up there. That could take years, however, and in the meantime, a lot of money is being generated in anticipation of recreational marijuana, not only in Colorado, but all over the United States. Businesses and serious entrepreneurs are positioning themselves to grab their share of the pie, and this case will not get in their way. I do not anticipate the momentum will stop because of these cases. Some might pull back, but I expect they will be the exception, as millions of Americans are interested in the continued success of the marijuana industry.

In the meantime, whatever we can do to support our comrades in Colorado, we should do it. Will they prevail? I am cautiously optimistic.


Michele Brooke is an attorney in California who practices civil litigation and civil cannabis law. She is a member of Americans For Safe Access, NORML and the American Herbal Products Association, Cannabis Committee. Visit her website: www.brookelawgroup.com

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