Colorado jury rejects claim that smell from marijuana warehouse reduced nearby property values
November 7, 2018
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.
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Congress created the Racketeer Influenced and Corrupt Organizations Act — better known as RICO — to target the Mafia in the 1970s. The law allows private parties to file lawsuits claiming their business or property has been damaged by a criminal enterprise.
California attorney Ken Stratton, who represents a pot farmer being sued by eight homeowners near Petaluma, California, in the heart of wine country, said he was surprised the Denver case reached a jury.
"I think we'll see more and more of these knocked out before they go to trial," Stratton said. "The racketeering law wasn't meant to litigate land disputes."
He also predicted the Denver verdict will make other lawyers and disgruntled neighbors look elsewhere to settle their disputes with marijuana operations.
He said showing that cannabis operations impact land prices is difficult, especially if the homeowners are speculating rather than arguing they lost money in actual sales.