Marijuana Business Lawsuits Allege Federal Racketeering

Although a federal judge last month dismissed a racketeering lawsuit last month against numerous marijuana businesses, the plaintiff still has grounds to refile on the basis of a private nuisance claim. This matter in Oregon is noteworthy for our Southern California marijuana business lawyers because it’s one of several that take aim at cannabis industries and companies that are sanctioned by the state using a federal law that was passed for the purpose of tanking organized crime (drug cartels in particular).

The Racketeer Influenced and Corruption Organizations Act, commonly referred to as “RICO,” is a U.S. federal law providing criminal penalties as well as a civil cause of action for acts performed as part of an ongoing criminal organization. It was formed to target the mob.

According to one recent report, these lawsuits are part of a wider strategy nationally to “upend legal weed.” In Oregon, some law firms actually focus exclusively on suing marijuana businesses for racketeering under the RICO statute, 18 U.S.C. Chapter 96. As reported by Willamette Week, a single attorney represented a woman who has sued more than 200 businesses, all that had ever been involved with her neighbor, a single marijuana processing plant that squeezes the THC oil from the flower for use in cannabis-infused candies. That lawsuit alleged that every dispensary and grower that had ever done business with the neighbor conspired to commit crimes that damaged the value of plaintiff’s home. That crime was growing a product deemed illegal by federal law, specifically the Controlled Substances Act.

Aside from the immediate expense to the companies involved, the greater danger with marijuana RICO lawsuits is that if successful, they would be a potentially huge and expensive risk for cannabis companies next to annoyed neighbors. In Oregon particularly, many marijuana businesses are under immense financial strain because of the bargain basement wholesale prices thanks to an over-saturated market.

Plaintiff says that when neighbors grow marijuana next door, it slashes their own home prices because the smell wafting from the farm next door is powerful, “skunk-like” and unmistakable.”

The same attorney representing her has reportedly filed a number of complaints for others in rural Oregon targeting legal marijuana operations. One of those was settled out-of-court.

Attacking state-sanctioned marijuana businesses in courts using RICO is a novel use of the statute, but our L.A. marijuana attorneys recognize it is one that appears to be catching on in other areas of the country as well. Some law firms are actually offering education courses to potential plaintiffs for some $200 each to teach them how to sue marijuana companies using the RICO statute. More than a half a dozen of those cases have been filed in federal courts across the country. As of yet, none of these cases have gone to trial. However, a number of legal strategists think the tactic could work, and that’s something about which our California marijuana lawyers feel we need to warn clients. They need to be prepared for this kind of legal assault, and working with a long-time, well-sourced marijuana law firm is critical.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

A Racketeering Lawsuit Brought by an Oregon Equine Lawyer Is Part of a National Strategy to Upend Legal Weed, Aug. 22, 2018, By Katie Shepherd, Willamette Week

More Blog Entries:

New L.A. Bud Businesses Can’t Ignore Legal Snares, Sept. 28, 2018, L.A. Marijuana Attorney Blog