With a growing number of states legalizing medical and adult-use marijuana, anti-cannabis plaintiffs have turned to innovative legal theories, including RICO racketeering and conspiracy claims, aimed at disrupting cannabis businesses. Over the past few years, RICO (the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961 et seq.) has become a novel tool for plaintiffs in civil actions against cannabis businesses in states including Oregon, Colorado, California, Massachusetts and New York. Because marijuana remains illegal under the federal Controlled Substances Act, state-legal marijuana businesses, by definition, involve racketeering activity in violation of RICO. Fortunately for the industry, plaintiffs have not seen much success in court so far. However, their failures have not deterred other plaintiffs from pursuing these claims, and the decisions disposing of many of these cases have simultaneously created blueprints on how new plaintiffs might succeed. Notably, the risks in these cases are high, with cannabis businesses and those associated with them facing mandatory treble damages and attorney fees. Until legalization takes place at the federal level, these claims will likely keep coming, and it is probably only a matter of time before the first succeeds.

Background

Perhaps most well known for its use prosecuting members of organized crime, RICO has broad applications to various enterprises that allegedly engage in racketeering and criminal activity. In recent marijuana-related RICO cases, the plaintiffs—often backed by, or associated with, anti-cannabis legalization groups—are typically property owners situated near a marijuana grower or dispensary, who allege that the value and use and enjoyment of their property have decreased due to the nearby operation of marijuana businesses. To succeed on civil RICO claims, plaintiffs must prove that: the defendant engaged in a pattern of racketeering activity under RICO; the plaintiff’s business or property was injured; and the defendant’s violation caused the injury.

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