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 business activities.
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 Cantafio & Song PLLC 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 assistance