In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations
(RICO) Act with the intention to combat organized crime. To be criminally
or civilly liable under RICO, the liable person must take part in an enterprise
that repeatedly engages in racketeering activity. Racketeering, in general,
refers to the act of obtaining money illegally, or illegally conducting
With the expansion of the marijuana industry has come a surge in the use
of RICO by private individuals against marijuana businesses on the ground
these businesses are still in violation of federal law. RICO provides
for both civil and criminal penalties and can therefore be brought on
behalf of the government or by private individuals.
Although many RICO cases have been brought throughout the United States,
a jury has not yet decided a case. However, a federal judge in Oregon
recently dismissed a case brought by a neighborhood group against a local
licensed marijuana cultivation facility. The neighborhood group complained
of the smell of marijuana produced by the facility, claimed the facility
diminished real estate values, and also that the facility “interfered
with the enjoyment of their properties”.
The Oregon judge set a high bar for private individuals seeking relief
in these claims and decided private individuals must prove a concrete
financial loss has occurred, such as through evidence the property will not sell.
Although a difficult burden to overcome, if a private individual succeeds,
RICO allows for that private individual to recover up to three times financial
damages and attorney’s fees, and these cases are not cheap to litigate.
How detrimental to the marijuana business industry could these lawsuits be?
For the industry itself it is difficult to say, but in an instance where
a private individual succeeds in proving concrete financial loss, a marijuana
business could easily be taken completely under. The only real protection
against RICO claims for industry operators is federal marijuana reform
that would decriminalize marijuana sales and therefore eliminate such
from being considered as a racketeering activity.
Until federal law sees major marijuana reform, the only way for marijuana
industry operators to mitigate federal risk and protect themselves is
through superior legal counsel. Our team at Feldmann Nagel Margulis encompasses
trained lawyers in the field with highly recognized litigation experience.
From former state and federal prosecutors, to successful business executives,
our seasoned attorneys produce real results for our clients. If you are
a marijuana industry operator defending against a RICO claim, contact
Feldmann Nagel Margulis today and our team will provide exceptional legal