A federal court is set to hear a landmark case in Colorado which could have far-reaching implications for the young marijuana industry throughout the US. A couple is suing a cannabis company claiming that the odors from its indoor grow facility have made the couple unable to enjoy their property which is right next to the cannabis cultivation facility.
The plaintiffs are using the RICO (Racketeer Influenced and Corrupt Organizations) Act to claim that their property has lost value due to the “pungent, foul odors”. The law permits courts to award successful plaintiffs thrice the value lost in addition to legal fees.
The RICO Act was drafted and enacted decades ago to combat organized crime syndicates and organizations like the mafia. Under this law, the leaders of those organizations could also be liable when “the small fry” in their organizations were convicted.
The lawyers for the plaintiffs argue that it isn’t fair for their clients to be hurt by an industry which is illegal at the federal level.
The attorneys for the defendant intend to argue that the property in question hasn’t lost any value due to the presence of the marijuana grow. As part of their evidence, the defense will table proof that the property tax valuations of the land owned by Hope and Michael Reilly has been increasing over time. That increase cannot be possible if the value of that property has declined due to the existence of the grow facility in their neighborhood, they say.
The vulnerability to such lawsuits has been giving the legal teams of different cannabis businesses sleepless nights since the contradiction between state and federal law creates a gap which can potentially be exploited to hurt cannabis businesses and the entire industry.
The key concern in this Denver trial is whether the jury will agree with the plaintiffs or deny their claim. The extent to which the jury agrees (if it does agree) with the plaintiffs will also be watched closely.
For example, a decision that the property lost $5,000 dollars in value can have different implications for the cannabis industry when compared to a decision that sees the loss in value in excess of a million dollars.
Remember, the RICO Act stipulates that those who sue can get thrice the value lost in addition to the legal costs incurred during the litigation. Numbers are therefore important in such cases.
The precedent set by the outcome of the Colorado case can also open an avalanche of similar suits, or stem the tide before it makes landfall.
Marijuana industry players are keeping their fingers crossed as they follow the case in Denver. Youngevity International, Inc. (NASDAQ: YGYI) and American Premium Water Corp. (OTC: HIPH) certainly hope that any decision made by the federal court in Colorado doesn’t make it harder for marijuana businesses to operate since conditions are already hard as things stand (no access to banking services, etc.).
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