How Bizarre Pot Smell Ruling Could Destroy Colorado's Marijuana Industry

The original suit claimed that the aroma from a nearby marijuana grow made horse riding less pleasant.
The original suit claimed that the aroma from a nearby marijuana grow made horse riding less pleasant.
Thinkstock file photo

Update: A court victory by two Colorado landowners who complained that the smell from a nearby marijuana grow made horse riding on their property less pleasant advances a strategy, based on federal racketeering laws, that anti-marijuana forces hope will help them destroy the marijuana industry here and throughout the country.

The June 7 ruling by the U.S. Court of Appeals for the Tenth Circuit rejected the argument that Amendment 64, the 2012 measure that legalized limited recreational cannabis sales in Colorado, was preempted by the Controlled Substances Act. The document, accessible below, states that neither the landowners, Phillis Windy Hope Reilly and Michael P. Reilly, nor Safe Streets Alliance, an anti-pot interest group supporting them, "purport to have any federal substantive rights that have been injured by Colorado or the county’s actions."

However, the court found that the plaintiffs' use of the Racketeer Influenced and Corrupt Organizations Act (RICO) statute had merit, stating that "the landowners have plausibly alleged at least one...claim against each of those defendants. We therefore reverse, in part, the dismissal of those claims and remand for further proceedings."

This ruling could be game-changing. If the Reillys and Safe Streets Alliance succeed, other individuals or groups would be able to file complaints against marijuana businesses using RICO on a scale so massive that the entire industry could sink under the weight of litigation — or so opponents hope.

Attorney David Thompson represented Safe Streets Alliance at the lawsuit's initial hearing.
Attorney David Thompson represented Safe Streets Alliance at the lawsuit's initial hearing.
CBS4 file photo

As we reported in February 2015, when the Reillys first took their gripes about the grow, owned by Alternative Holistic Healing LLC (also known as Rocky Mountain Organic), to court, the original lawsuit doesn't get around to talking about the pair's situation until page 25 of the document.

The married couple own three lots in a Rye, Colorado, development called the Meadows at Legacy Ranch — "approximately 105 acres of beautiful rolling pasture with sweeping mountain vistas that include views of Pike's Peak," the suit notes. And while they don't actually live on the land, they like to visit there on the weekends so that their kids can ride horses and hike.

A marijuana grow is adjacent to the Reillys' property, at 6480 Pickney Road — and that's a problem, the suit maintains, because "growing recreational marijuana is 'noxious, annoying or offensive activity' by virtually any definition because marijuana plants are highly odorous, and their offense smell travels long distances." Hence, the suit maintains, the grow violates assorted covenants governing Meadows at Legacy Ranch, thereby impinging on their ability to enjoy their land as they'd like.

On top of that, the sight of a building under construction on the grow site "exacerbates the injury, for when the Reillys and their children visit the property, they are reminded of the racketeering enterprise next door every time they look to the west."

The suit also maintains that the grow has hurt property values — plus, "the large quantity of drugs at marijuana grows makes them targets for theft, and a prospective buyer of the Reillys’ land would reasonably worry that the 6480 Pickney Road marijuana grow will increase crime in the area."

Pro-marijuana industry protesters made their presence felt at the 2015 hearing.
Pro-marijuana industry protesters made their presence felt at the 2015 hearing.
CBS4 file photo

At the time of the filing, we reached out to attorney Thomas Walsh for his views about the merits of the suit. He was unimpressed by most of the Reillys' claims, but he acknowledged that the pair and the SSA "have done a good job of linking many of the different players who play a role in the licensing and operation of a marijuana business," including Governor John Hickenlooper, various state officials with the Department of Revenue and the Marijuana Enforcement Division, the Pueblo County Commission, the owner of the land upon which the grow facility was being built, the business itself, the construction company building it, the insurance company that issued its surety bond, and the owner of a company that would transport water to the grow.

This linkage impressed the 10th Circuit court. The document notes:

"RICO is founded on the concept of racketeering activity. The statute defines ‘racketeering activity’ to encompass dozens of state and federal offenses, known in RICO parlance as predicates. These predicates include any act ‘indictable’ under specified federal statutes,” and among them is “drug-related activity that is ‘punishable’ under federal law." As relevant here, “racketeering activity” includes “dealing in a controlled substance or listed chemical as defined in” the CSA. Racketeering activity also includes “any offense involving...the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical,” as defined in the CSA, that is "punishable under any law of the United
States"....

It follows, therefore, that operating a marijuana cultivation facility of the type the Reillys described in their Second Amended Complaint necessarily would involve some racketeering activity. As just one example, cultivating marijuana for sale — which the Marijuana Growers admit they agreed to do and they allegedly began and are continuing to do — is by definition racketeering activity. We conclude the Reillys have adequately alleged that the Marijuana Growers are each engaged in racketeering activity.

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The ruling doesn't stop there. The document actually deals with three appeals based on two cases against Amendment 64, with the last of them pertaining to Smith v. Hickenlooper, in which a group of sheriffs from Colorado, Kansas and Nebraska sued the state over alleged violations of the Controlled Substances Act. "The district court dismissed their claims, and we consolidated the appeal," the judgment points out, adding, "Because those plaintiffs also do not claim injuries to their federal substantive rights, we likewise affirm."

Click to read Safe Streets Alliance et al. v. John Hickenlooper et al., as well as the original lawsuit.


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