Another Racketeering Lawsuit Against Legal Cannabis Growers is Thrown Out

A lawsuit over the “sickening odor” of a Sonoma County cannabis cultivator has been dismissed in court, but the company will likely seek friendlier turf.
Class Action Lawsuit Against Canadian Cannabis Producer Will Go To Trial
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Despite losing their battle in court, four Sonoma County residents who sued a local cannabis cultivator over odor say they’ve ultimately won their war against Carlos Zambrano and his Green Earth business partners. By the time U.S. District Judge Jon Tigar dismissed the four’s RICO lawsuit against Zambrano, he had already shut down his growing operations for six weeks. In fact, Zambrano and Green Earth aren’t saying whether they’ll even try to start things up again in Sonoma County. But Judge Tigar’s ruling, which throws out another racketeering lawsuit against a legal cannabis company, sets a crucial legal precedent that favors cannabis growers in California.

The regulations governing California’s cannabis industry give significant authority to county and municipal governments to determine whether and how businesses set up shop in their jurisdictions. And while many California counties and cities have embraced the industry, others have taken extraordinary steps to ban it.

Failing statutes and ordinances, the truly disgruntled have attempted to sue cannabis companies under federal law. And their weapon of choice has been the Racketeering Influenced and Corrupt Organizations (RICO) Act of 1970. In its time, the RICO Act was landmark legislation aimed at crippling organized crime. But in recent years, plaintiffs have attempted to use RICO law against state-licensed cannabis operations.

Civil portions of the RICO Act allow plaintiffs to sue companies for losses and damages, for example. And the lawsuit brought against Zombaro and Green Earth by a law firm representing four Petaluma, California residents represents the first attempt to use RICO’s civil Chapters against a legal cannabis cultivator. That’s what makes Judge Tigar’s dismissal of their case so important. It sets a legal precedent that could help protect other California cultivators from civil legal action in the future.

Cannabis Cultivators in CA Can Breathe a Little Easier About Smell Complaints

Cannabis cultivation is undeniably an aromatic process. And controlling the smell is challenging, despite state regulators’ best attempts to write HVAC and other codes to deal with it. But for residents opposed to local cannabis businesses, keeping the air free of the floral, pungent scent is an inviolable right worth tremendous legal expense to protect. Or at least it was for the four Sonoma County residents who sued cannabis cultivator Carlos Zambrano over his operation’s “sickening cannabis odor” and loud noise.

In court, attorney Kevin Block argued that Zambrano’s grow diminished the value and enjoyment of his clients’ properties. But in his lengthly ruling, Judge Jon Tigar dismissed their case. Tigar wrote that while the smell of cannabis and the noises of cultivating it may indeed be nuisances, they are “not compensable under RICO.” Importantly, Judge Tigar’s ruling differs from the findings issued by a panel of federal judges in Colorado. There, the 10th Circuit Court of Appeals decided that prosecutors can use the RICO Act against cannabis companies with Colorado state licenses.

In California, however, the first attempt at using RICO to sue a legal cannabis cultivator over smells and noises failed. So Zambrano won’t have to pay damages to the four residents whose properties his grow adjoins. But the lawsuit did reveal that Zambrano’s grow was not fully compliant with local regulations. Indeed, many cultivators are finding full compliance, especially in counties with strict rules, difficult to achieve. Zambrano thought he was operating within the parameters of a “relief program” Sonoma County (like many others) set up to give existing growers a chance to comply with shifting regulatory requirements. In a settlement with Sonoma County, Zambrano has agreed to pay $415,000 in taxes and fees but admits to no wrongdoing.

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