A Sonoma County marijuana farmer, facing a civil racketeering lawsuit from neighbors unhappy with the smells and sounds, says the plaintiffs haven’t suffered financially and their claims should be tossed.
Carlos Zambrano, operator of the Green Earth Coffee cultivation site near Petaluma, said in a motion to dismiss filed Monday in federal court that the nine neighbors suing him haven’t stated a valid claim under the Racketeer Influenced and Corrupt Organizations Act, or RICO.
“Plaintiffs’ allegations of personal injuries and annoyances from the smells and sounds coming from the cannabis farm, as well as speculative reduction in their property value from living next to a cannabis business, are decidedly not actionable under RICO because they do not constitute concrete (i.e. ‘out of pocket’ monetary) damage to ‘business or property,’” wrote Kenneth Stratton, chief counsel for Rogoway Law Group in Santa Rosa, who is representing Zambrano and Green Earth Coffee.
➤➤ Get the latest cannabis lawyering, compliance and commentary straight to your inbox with Higher Law, a new Law.com briefing. Learn more and sign up here.
Residents living near the marijuana grown by Green Earth Coffee said it generates an overpowering “skunk-like stench” that permeates their homes, hinders outdoor activities and compounds various neighbors’ ailments. Some neighbors also cite the irritating drone of a running generator.
The neighbors in August sued Zambrano, Green Earth Coffee, property owner Flying Rooster, and deed of trust holder Exchange Bank for alleged violations of racketeering and state and local laws. The complaint, filed in the U.S. District Court for the Northern District of California, seeks treble damages on the racketeering claims as well as punitive damages, an order stopping the grow, attorney fees and legal costs.
“Defendants’ operation of the cannabis enterprise through repeated acts of racketeering has directly and proximately injured plaintiffs’ property,” the plaintiffs’ lawyers, Kevin Block and Roman Block of Block & Block in Napa, wrote in the complaint. “The open and ongoing commission of federal crimes near plaintiffs’ homes further diminishes their market value by causing potential buyers to fear associated criminal activity or by otherwise making the homes less attractive to potential buyers.”
Neighbors and opponents of marijuana operations around the country have increasingly turned to the federal racketeering act, better known for its use in organized crime prosecutions, to fight an activity that, while state-legal in some instances, is still prohibited by federal law.
The U.S. Court of Appeals for the Tenth Circuit last year reinstated claims brought by landowners near a Colorado grow. A federal judge in Oregon in August dismissed RICO claims brought by grow-site neighbors, saying the plaintiffs had failed to show they had suffered financial harm. A racketeering complaint against a medical marijuana dispensary is still pending in Massachusetts federal court.
Green Earth Coffee operations has been under Sonoma County regulators’ scrutiny since May, when a code enforcement inspector found that marijuana was being grown on the Adobe Road site without a permit. The company applied for a county license in April but had not been granted one by the time of the inspection.
Under terms of a settlement agreement with the county, a copy of which was included with the Oct. 15 motion to dismiss, Green Earth Coffee this month agreed to stop all marijuana operations at the site by Nov. 15. The company also agreed to pay the county $415,000 for costs, current and back taxes and penalties. The agreement also requires the property owner, Flying Rooster, to record a covenant “permanently prohibiting” commercial cannabis operations at the site.
The grow’s impending closure, Stratton wrote, means that the neighbors’ claims don’t support a required finding under RICO that the alleged wrongdoing threatens long-term criminal activity.
Block said in an email Tuesday that the settlement, if fully complied with, will only affect the neighbors’ request for an injunction, not their claims for damages and attorney fees.