A bud sits in a display jar at the Helping Hand marijuana store in Boulder on Sept. 16, 2015. (Jeremy Papasso, Daily Camera)

Colorado pot lawsuit twist: Gov, other state officials out as defendants

A federal judge this week removed the governor and other state and Pueblo County officials as defendants in a high-profile racketeering lawsuit that is attempting to stop legal marijuana in Colorado.

Pueblo County horse ranchers Hope and Michael Reilly and Washington, D.C. anti-drug group Safe Streets Alliance sued to stop construction of Rocky Mountain Organics’ cannabis cultivation facility, claiming that federal pot laws supercede Colorado’s pot laws and alleging violations of the Racketeer Influenced and Corrupt Organizations Act.

The case, known as the “horse ranchers’ lawsuit,” named the grow, businesses that work with it, Gov. John Hickenlooper, the Pueblo County Commission, the head of the state Department of Revenue and other officials and agencies as defendants.

But U.S. District Judge Robert E. Blackburn on Tuesday issued a written order siding with previous federal court rulings saying that government entities are not subject to RICO claims and “that there is no private right-of-action under the (U.S. Constitution) Supremacy Clause itself.”

Brian Barnes, a lawyer for Safe Streets and the Reillys, said the case will proceed against the other named defendants, including the Black Hawk pot shop Rocky Mountain Organics, which grows its cannabis in Pueblo County, and the plaintiffs are contemplating a possible appeal to the 10th Circuit of Appeals.

“We’re exploring our appellate options at the moment,” he said, “but we haven’t made any final decisions about how we’re going to proceed.”

Pueblo County spokeswoman Paris Carmichael said the county has spent more than $100,000 on the case.

“It’s pretty clear it was a frivolous lawsuit being pushed by an ideological agenda, and the net result is it costing Pueblo County taxpayers time and money to fight it,” said Pueblo County commissioner Sal Pace. “The folks who would have liked to see them succeed would have been the black market drug cartels, since they’re the biggest losers under decriminalization and legalization in Colorado.”

Attorney Matthew Buck, who represents Rocky Mountain Organics and a number of other defendants still facing charges, called the ruling Tuesday “great news for our clients.

“And it likely signals where the court is going to go in our RICO action — I believe all of the cases will be dismissed when they get around to it,” said Buck. The court addresses cases in order of importance, Buck said, which is likely why Judge Blackburn ruled on the state and county issues before those involving private parties.

“RICO was designed to allow people to go after the mafia in civil court, to allow the government to go after the mob civilly — not for out-of-state special interest groups to go after local businesses for complying with Colorado law,” Buck said.

Attorney General Cynthia Coffman, who represented Hickenlooper and other state officials in the case, said Wednesday she will continue to defend the Colorado law that legalized the recreational use and possession of marijuana.

“I continue to believe these cases lack merit and are not the way to fix America’s marijuana policy; a policy which continues to raise significant challenges for our state and legitimate concerns by our neighbor states,” Coffman said in an e-mailed statement.

She was referring to the next big legal challenge to Colorado’s pot laws, a case filed by Nebraska and Oklahoma asking the U.S. Supreme Court to overturn Amendment 64. The states claim marijuana flowing across the border undermines their own pot prohibitions and stresses criminal justice systems. The high court has not yet said whether it will hear the case.

University of Denver law professor Sam Kamin compared the ranchers’ Supremacy Clause claims to the Nebraska and Oklahoma case.

“In the same way that our neighbors to the east are trying to step into the shoes of the federal government, Safe Streets is also trying to do what they wish the federal government would do, which is shut down our marijuana laws and its regulatory apparatus,” said Kamin, who specializes in cannabis law. “To me, what (the judge) was saying here is, ‘You wish federal policy were different, but that is not how we do this. You wish the federal government would enforce (the Controlled Substances Act) more robustly, but the federal government has spoken, and you don’t get to second-guess them.'”

Kamin pointed toward the Cole Memo, a 2013 document written by former U.S. Deputy Attorney General James Cole that outlines the Justice Department’s enforcement priorities in legal marijuana states — which was also mentioned in Judge Blackburn’s order filed Tuesday.

A recent Denver Post analysis found that three of the four cannabis lawsuits filed against Colorado officials and businesses were organized and funded by out-of-state anti-drug organizations and socially conservative law firms.

Kamin said he’s “been skeptical all along about the ultimate success of these” suits but that “they can still be affective without winning.

“They impose costs, concerns and they have a chilling effect on people who would get into the industry and people who will work with the industry,” Kamin said. “This may make some public officials breathe a little easier, but for the businesses involved and those helping them, these suits are still a real annoyance.”

Ricardo Baca: 303-954-1394, rbaca@denverpost.com or @bruvs

Mobile users: View the defendant dismissal order in the federal court case.