A LEGAL VICTORY AGAINST THE MARIJUANA INDUSTRY – or How to get rid of your local pot farm using RICO.

Crimson Galeria Limited Partnership v. Healthy Pharms, Inc., (D MA 2018) Civil Action No. 17-cv-11696-ADB

The federal Racketeer Influenced and Corrupt Organizations (RICO) Act prohibits a person (also a corporation) from investing in, acquiring, or participating in the affairs of an enterprise that engages in racketeering activity. RICO applies to “medical” marijuana and recreational marijuana as both are illegal under federal law. In 2012, Massachusetts legalized the sale of marijuana for medical use through Registered Marijuana Dispensaries “RMDs.” In contrast, under federal law, the Controlled Substance Act (CSA) criminalizes the manufacture, distribution, or possession of marijuana. The inherent conflict between the federal law and the state’s marijuana regulatory regime lies at the heart of the RICO claims asserted in this case.

Defendant Healthy Pharms operates a marijuana cultivation facility that can hold as many as several hundred marijuana plants and they set up a marijuana dispensary in Harvard Square, Cambridge, Massachusetts. Plaintiffs are property owners in Harvard Square who claim that they were injured by the anticipated opening of a licensed marijuana dispensary in their neighborhood. They asserted claims under the RICO, 18 U.S.C. §§ 1962(c) and (d), and sought declaratory and injunctive relief against the dispensary and other related parties for acting and conspiring to distribute marijuana in violation of the Controlled Substances Act (“CSA”), 21 U.S.C. §§ 801–904. The claimed injuries include:

1. that the proposed RMD might emit odors of marijuana that will interfere with use and enjoyment of Plaintiffs’ properties;
2. that banks and investors will not finance certain planned projects due to the anticipated RMD;
3. that the stigma associated with marijuana and the fear of increased crime have already diminished the market value of Plaintiffs’ properties.

After some litigation, and after it was clear that the court was not going to dismiss the case, the defendants made a confidential settlement offer that was acceptable to the plaintiff and it was settled. This is a win for the plaintiff. This is also a win for people using the law to oppose the marijuana industry. The lawyer who handled this case is Brian Barnes from the law firm of Cooper Kirk