A high-profile racketeering lawsuit against a proposed Summit County marijuana shop and companies that did its banking, bonding and accounting settled in U.S. District Court this month — a substantial victory for cannabis opponents hoping to stun legalization efforts in America.
The lawsuit, filed by the anti-drug group Safe Streets Alliance on behalf of the Holiday Inn hotel in Frisco, focused on property owners’ rights under the Racketeer Influenced and Corrupt Organizations Act. It claimed the hotel’s business suffered because of Medical Marijuana of the Rockies’ plans to move its shop into a building across the parking lot from the hotel.
The shop never made the move and was “forced to close” its previous Summit County location as a result of the court case, according to a note on its website. Two companies that did business with Medical Marijuana of the Rockies settled for a total of $70,000, and the lawsuit was dismissed Dec. 10, according to court documents.
Suing Colorado over pot
“The concern was that the hotel’s customers would be put off by the opening of the facility, which was immediately across the parking lot from the hotel,” said Brian Barnes, a Cooper & Kirk attorney representing Washington, D.C.-based Safe Streets. “As we understand the law under RICO, anyone who provides services to a marijuana operation is exposing themselves to potential liability under RICO.”
The lawsuit was one of four filed against Colorado officials and businesses
challenging the state’s legal cannabis laws — and is the first to reach its end.
One defendant, Bank of the West, was dropped from the lawsuit in February after it closed all bank accounts belonging to Medical Marijuana of the Rockies owner Jerry Olsen and denied that it knew the nature of Olsen’s business. Another defendant, Merchants Bonding Company, settled for $50,000, according to vice president of marketing Therese Wielage.
“We do not work with marijuana companies,” Wielage said. “We made a decision not to do that anymore.”
A third defendant, Nederland-based Accounting Specialists, settled for $20,000, according to court documents. Owner Michael Massa, also named individually as a defendant in the lawsuit, declined to comment when he was contacted Wednesday.
“At that point, the hotel had basically recovered more in damages than it had actually sustained,” said Safe Streets’ attorney Barnes of the $70,000 in settlement money.
The federal conflict
Drug law expert Sam Kamin believes Safe Streets and the hotel would have lost at trial, but he understands why it was best for the non-marijuana companies to settle.
“There was a lot of fanfare when these suits were filed and very little when this one was settled,” said Kamin, a law professor at the University of Denver. “I still think that it’ll be impossible for any business to show that they were harmed by the location of a marijuana business.
“But it doesn’t mean that these suits are pointless or non-problematic for the industry,” he said. “In fact, they’re going to be incredibly problematic for the industry going forward. The folks who helped to bring this suit and sought out plaintiffs for this suit are looking for more and other lawsuits.”
Safe Streets is a plaintiff in another Colorado lawsuit that makes RICO claims against a marijuana company and businesses related to it. The case also claims the federal prohibition of marijuana sale and cultivation trumps state rules and names the Pueblo County commissioners, Gov. John Hickenlooper and other state officials as defendants.
In that lawsuit, co-plaintiffs Hope and Michael Reilly claim that construction of Rocky Mountain Organics’ recreational marijuana cultivation facility in Rye interferes with their views and plans to build a home and work space on 105 acres of land southwest of Pueblo.
That case is pending in U.S. District Court in Colorado.
Ricardo Baca: 303-954-1394, firstname.lastname@example.org or @bruvs