Federal Judge Rules Oregon Vineyard Can Sue Neighboring Cannabis Business

A federal judge has ruled that an Oregon vineyard has established the legal authority to sue a neighboring cannabis growing operation. In the ruling, U.S. Senior District Judge Anna Brown found that Momzati Vineyard’s allegation that the proximity of the marijuana cultivation business had caused a “concrete financial loss” and the lawsuit for violations of the Racketeer Influenced and Corrupt Organization Act (RICO) could continue.

A motion from the defendants, Mary and Steven Wagner and their son Richard, to dismiss the suit because the Yamhill County vineyard’s claims of lost grape sales, reduced grape marketability, and reduced property rental income weren’t concrete financial losses caused by a RICO violation was denied by Brown with the 20-page ruling.

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.

In its lawsuit, Momzati Vineyard claims that an order was canceled because a customer feared that the cannabis nearby would taint the grapes with the smell of marijuana.

“The customer’s concerns, whether valid or invalid, arose directly from the proximity of defendants’ marijuana-grow operation,” Brown wrote.

The RICO lawsuit was filed by the owners of the vineyard, the Momzati family, earlier this year due to the continued illegality of cannabis under federal law. The lawsuit alleges that the Wagners are running a “criminal enterprise” and seeks three times the damages caused by the alleged racketeering operation.

Anti-Cannabis Bias Behind RICO Lawsuits

Alex Tinker, an attorney who is representing a marijuana grower in another lawsuit, said that several similar RICO cases have been filed, many by plaintiffs who oppose the legalization of cannabis.

“These are part of a coordinated effort to fight the cannabis industry through the courts,” Tinker said.

In a case against a cannabis grower in Lebanon, Oregon, a federal judge ruled that an alleged drop in plaintiff’s property values wasn’t considered a “compensable property injury” under RICO and dismissed the lawsuit. The 9th U.S. Circuit Court of Appeals, which has jurisdiction over much of the Western United States, has ruled that damage claims must be more than “purely speculative” to proceed under the RICO statute.

With the success of the Momzatis against the motion to dismiss their case, the potential contamination of agricultural crops may become a “template” for litigation against cannabis growers, according to Tinker.

“They’re looking for ways to create a replicable model,” Tinker said.

However, it will continue to be “a tough thing to prove causation,” the attorney added.

Oregon isn’t the only state that has legalized marijuana to see RICO lawsuits against cannabis cultivators. In November of last year, a Colorado jury found a cannabis grower was not responsible for alleged damages caused by the “noxious odors” emanating from the operation. And in January, a federal judge dismissed a lawsuit against a cultivator in Sonoma County, California.