A lawsuit against a cannabis cultivator filed by its Colorado neighbors, which could have broad repercussions for the legal marijuana industry, began today in a Denver federal courtroom. In the suit, Hope and Michael Reilly contend that “pungent, foul odors” from the facility have impeded their enjoyment and lowered the value of their adjacent land.
The suit was filed in 2015 by the anti-pot group Safe Street Alliance on behalf of the Reillys against Alternative Holistic Healing LLC. The married couple owns “approximately 105 acres of beautiful rolling pasture with sweeping mountain vistas that include views of Pike’s Peak,” according to media reports.
In 2014, enticed by incentives from the Pueblo County government to stimulate a local cannabis industry, Parker Walton bought property adjacent to the Reillys’ land and launched Alternative Holistic Healing. Walton began growing cannabis outdoors and built a 5,000 square foot facility for the indoor cultivation and processing of marijuana.
Last year, the U.S. Court of Appeals for the Tenth Circuit held that the plaintiffs could sue the cultivator under the Racketeer Influenced and Corrupt Organizations Act (RICO). Passed in the 1970s as a tool to fight organized crime, RICO allows civil suits to recover losses from an ongoing criminal enterprise. In 2015, opponents of legalized cannabis began using RICO in states with legal pot, hoping to destroy the new industry with the costs and risks of marketing a product still illegal under federal law.
The suit alleges that “growing recreational marijuana is ‘noxious, annoying or offensive activity’ by virtually any definition because marijuana plants are highly odorous, and their offensive smell travels long distances.” Although the Reillys do not live on the property, the suit alleges the smell lessens their enjoyment of the land when they visit for hiking and horseback riding. Brian Barnes, one of the employees for the plaintiffs, said that lessened enjoyment and a potential drop in property values constitute a loss recoverable under RICO.
“That’s just not right,” Barnes said. “It’s not right to have people in violation of federal law injuring others.”
But Rob Mikos, a Vanderbilt University law professor who specializes in drug law, told the Denver Post that the plaintiffs’ attorneys also have to convince a jury they’ve suffered harm from the grow facility. County tax assessments show that the Reillys’ property has increased in value since the cultivation operation began.
“They can claim a $1 million drop in property value, but if a jury does not agree and says $5,000, that’s not that big of a deal,” said Mikos. “That’s why there are a lot of eyes on the case.”
Attack on an Industry
The original suit filed by the Reillys and the Safe Street Alliance seemingly named every person and entity in association with Alternative Holistic Healing and legalized pot in Colorado in general as defendants. Over time, defendants including Gov. John Hickenlooper, state officials with the Department of Revenue and the Marijuana Enforcement Division, the Pueblo County Commission, an insurance company, and the builder of the facility were pared from the suit by either court action or a settlement out of court.
California attorney Adam Wolfe said he believes the plaintiffs hope the fear of litigation will prevent other businesses from servicing the cannabis industry. But he isn’t sure the legal tactic will succeed.
“What the plaintiffs seemed to be saying is anybody who touched, in any matter, any marijuana business is potentially liable,” Wolf said. “And that is a soundly rejected argument by the courts.”