Colorado jury’s pot verdict may discourage similar cases

SAN FRANCISCO >> A Colorado jury likely threw cold water on future legal challenges against cannabis companies by homeowners who consider filing racketeering lawsuits alleging proximity to pot operations hurts their property values, analysts and industry lawyers said Thursday.

A federal jury in Denver on Wednesday rejected claims involving the odor from a pot farm made in a case that was closely watched by the marijuana industry.

It was the first such lawsuit to reach a jury. Three others are pending in California, Massachusetts and Oregon.

“The big takeaway is that the verdict is likely to curb the enthusiasm for bringing these lawsuits in the future,” Vanderbilt University law professor Rob Mikos said.

He said it’s easy to show marijuana companies are violating federal laws against pot, but the Colorado verdict shows the difficulty In proving actual harm.

“There was a thought that this would be easy money,” Mikos said about such claims.

Congress created the Racketeer Influenced and Corrupt Organizations Act — better known as RICO — to target the Mafia in the 1970s. It allowed prosecutors to argue that leaders of a criminal enterprise should pay a price along with lower-level defendants.

The law also allows private parties to file lawsuits claiming their business or property has been damaged by a criminal enterprise. Those who can prove it can be financially compensated for damages plus attorneys’ expenses.

Scott Schlager, a lawyer who filed a similar lawsuit against a Cambridge, Massachusetts, dispensary agreed with Mikos, saying racketeering lawsuits are expensive to litigate.

“They shouldn’t be the next cottage industry,” he said. “There is a lot of uncertainty.”