Pubdate: Thu, 16 Jul 2015
Source: Daily Reporter, The (Columbus, OH)
Copyright: 2015 The Daily Reporter
Contact:  http://www.thedailyreporteronline.com/
Details: http://www.mapinc.org/media/4774
Author: Kristen Wyatt

MARIJUANA OPPONENTS USING RACKETEERING LAW TO FIGHT INDUSTRY

DENVER (AP) - A federal law crafted to fight the mob is giving 
marijuana opponents a new strategy in their battle to stop the 
expanding industry: racketeering lawsuits.

A Colorado pot shop recently closed after a Washington-based group 
opposed to legal marijuana sued not just the pot shop but a laundry 
list of firms doing business with it - from its landlord and 
accountant to the Iowa bonding company guaranteeing its tax payments. 
One by one, many of the defendants agreed to stop doing business with 
Medical Marijuana of the Rockies, until the mountain shop closed its 
doors and had to sell off its pot at fire-sale prices.

With another lawsuit pending in southern Colorado, the cases 
represent a new approach to fighting marijuana. If the federal 
government won't stop its expansion, pot opponents say, federal 
racketeering lawsuits could. Marijuana may be legal under state law, 
but federal drug law still considers any marijuana business organized crime.

"It is still illegal to cultivate, sell or possess marijuana under 
federal law," said Brian Barnes, lawyer for Safe Streets Alliance, a 
Washington-based anti-crime group that brought the lawsuits on behalf 
of neighbors of the two Colorado pot businesses.

Lawyers on both sides say the Colorado racketeering approach is novel.

"If our legal theory works, basically what it will mean is that folks 
who are participating in the marijuana industry in any capacity are 
exposing themselves to pretty significant liability," Barnes said.

The 1970 Racketeer Influenced and Corrupt Organizations Act sets up 
federal criminal penalties for activity that benefits a criminal 
enterprise. The RICO Act also provides for civil lawsuits by people 
hurt by such racketeering - in this case, neighbors of the two 
businesses who claim the pot businesses could hurt their property 
values. If successful, civil lawsuits under the RICO Act trigger 
triple penalties.

Filed in February, the Colorado lawsuits have yet to go before a 
judge. But one has already had the intended effect.

In April, three months after the RICO lawsuit was filed, Medical 
Marijuana of the Rockies closed. Owner Jerry Olson liquidated his 
inventory by selling marijuana for $120 an ounce, far below average 
retail prices.

"I am being buried in legal procedure," Olson wrote on a fundraising 
Web page he created to fight the lawsuit. The effort so far has 
brought in just $674.

The closure came after the pot shop's bank, Bank of the West, closed 
the shop's account and was dismissed as a plaintiff.

"Its policy is never to offer accounts to recreational marijuana 
businesses," the court order said.

And just last week, a bonding company in Des Moines, Iowa, paid 
$50,000 to get out of the lawsuit.

"We are out of the business of bonding marijuana businesses in 
Colorado and elsewhere until this is settled politically," said 
Therese Wielage, spokeswoman for Merchants Bonding Company Mutual.

The case of the mountain pot shop shows that racketeering lawsuits 
can affect the marijuana industry even if the lawsuits never make it 
to a hearing.

"This lawsuit is meant more to have a chilling effect on others than 
it is to benefit the plaintiffs," said Adam Wolf, Olson's lawyer.

In the other Colorado lawsuit, against a dispensary called 
Alternative Holistic Healing, the pot shop isn't going down so easily.

The shop owners are building a 5,000-square-foot warehouse in 
southern Colorado for growing pot, despite being sued by neighboring 
property owners for affecting their mountain views. A construction 
company and insurance company working with Alternative Holistic 
Healing haven't abandoned the job.

"It's a frivolous lawsuit," said the pot shop's lawyer, Matthew Buck. 
"It has not affected (the pot shop owners) whatsoever."

But the marijuana opponents funding the lawsuit say they're ready to 
expand the test lawsuits to more marijuana businesses. The end goal, 
they say, is clear: to stop the whole pot industry in its tracks.

"We're putting a bounty on the heads of anyone doing business with 
the marijuana industry," Barnes said. "Just because you see what 
appears to be this unstoppable growth of marijuana, we disagree. 
We're starting to change the economics of the marijuana industry."
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MAP posted-by: Jay Bergstrom