In a recent ruling, the Tenth Circuit addresses multiple controversies where private citizens, sheriffs and county attorneys, and neighboring states brought several suits attempting to limit or interfere with Colorado’s Amendment 64 which legalized recreational marijuana in Colorado.
- In the first suit, the Reillys, individual landowners who own property adjacent to a marijuana grow facility, brought suit under 18 USC § 1964(c) which provides that private citizens can bring a civil suit against members of a RICO enterprise if they are damaged by a RICO activity. The Reillys allege that the facility emits noxious odors which impede on their enjoyment of their property and which have (potentially) diminished the value of their land. The district court dismissed this action, finding that the Reillys had not pled facts to show that there was plausible injury to their property.
- In the second suit, Safe Streets Alliance and the Reillys alleged that Amendment 64 is preempted by the Controlled Substances Act and that the CSA confers upon them a federal substantive right to equitable remedy which they asserted should be to prevent Colorado and the local governments issuing licenses to the marijuana growers.
- In the third suit, Colorado, Kansas and Nebraska sheriffs and county attorneys sued Colorado under similar preemption theories asserted by the Reillys.
- In the fourth suit, Nebraska and Oklahoma moved to intervene in the first three cases, claiming that Amendment 64 injures their sovereign rights and those of their citizens, also relying on the theory that the CSA allows preemption of Amendment 64.
Who Won and Who Lost?
- The only potential winner is the Reillys. The Tenth Circuit determined that the district court inappropriately dismissed their action noting that Colorado state law acknowledges that invasion of one’s property by noxious odors gives rise to a nuisance claim and results in direct injury to property. Because the Reillys assert that their property had lost value due to invasion by noxious odors, the Tenth Circuit granted the Reillys the right to prove their damages in the District Court. However, the Tenth Circuit did not recognize any right to recover for injury attributable to emotional, personal, or speculative future injuries (e.g., any disappointment they experience because a marijuana grow impedes their mountain views or because there is federally illegal behavior openly occurring next to their property). So, the Reillys have the opportunity to prove their monetary injuries in the District Court.
- The preemption arguments all failed. The Court held that the CSA’s preemption clause did not confer Safe Streets and the Reillys with any federal substantive rights which would permit them to force the local regimes to stop issuing licenses or permitting federally illegal conduct. Without such rights, there is no remedy available. Based on the same reasoning, the Court held that the Colorado, Kansas and Nebraska sheriffs and county attorneys also do not have any federal substantive rights which allow them to bring a claim.
- Nebraska and Oklahoma’s moved to intervene in the case after the Supreme Court declined jurisdiction over their claims against Colorado. The Tenth Circuit affirmed that only the Supreme Court has jurisdiction over controversies between the states and rejected their intervention. Further, the Court distinguished the preemption arguments available to private citizens vs. sovereign states.
Interesting and Not Insignificant Side Note
- In addressing the Reillys RICO claims, the court addressed the following question: who are the defendants, or in RICO parlance, who are the members of the RICO enterprise, against whom the injury claims can be alleged. Initially, the Reillys included a contractor who provided water to the marijuana grow facility as a defendant. The Tenth Circuit held that “delivering water to the Marijuana Growers’ operation” was insufficient to establish that the contractor was part of the enterprise. The Tenth Circuit relied on another Tenth Circuit case, George v. Urban Settlement Servs., 833 F.3d 1242 (10th Cir. 2016) holding that “a defendant must do more than simply provide, through its regular course of business, goods and services that ultimately benefit the enterprise.” This holding should provide some protection for anyone who provides services as a contractor to a state licensed marijuana business.
The opinion is available here: Safe Streets v. Hickenlooper et al