The Shifting Landscape of Marijuana Law

Trial attorneys are somewhat like first responders, meaning that it is frequently only after a lawsuit has been filed and litigated that lawmakers step in to enact statutes and regulations governing the subject activity or conduct. This is apparent in the nascent cannabis industry. A prime example is the recent line of cases dealing with competing land use rights of marijuana growers and their neighbors.

In Momtazi Family, LLC v. Wagner, Et Al.[i],  pending in the Eastern District of Oregon, the parties are currently battling over the question of whether a marijuana grow operation can be held liable for diminishing the property value of a neighboring vineyard, pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiff owns the vineyard, which produces grapes for making wine. The defendants own a nearby property where they grow marijuana for commercial sale. According to the complaint, one of the plaintiff’s repeat customers cancelled an order for six tons of wine grapes because the customer believed that the “notoriously pungent stench” of the defendants’ marijuana plants had contaminated the grapes and would alter the taste of the wine. The complaint also alleges that the defendants moved large amounts of soil onto their property to form terraces for growing marijuana, which caused dirt to flow downhill onto the plaintiff’s property and contaminate a fish-stocked reservoir. The plaintiff alleges that the defendants’ marijuana grow operation is a violation of federal law, and therefore, it can form the basis for a RICO claim.

Senior District Judge Anna J. Brown denied the defendants’ motion to dismiss the plaintiff’s complaint. Judge Brown explained that the plaintiff’s complaint alleges injuries that are concrete, particularized, and actual, which provides the plaintiff with constitutional standing. The court also found that the plaintiff established statutory standing under RICO. While Judge Brown cited two recent cases holding that a plaintiff could not sue a marijuana grow operation based on mere allegations of diminished use or enjoyment of property, she explained that this case is different. The plaintiff’s allegation that one of its customers cancelled a large order of grapes because of the defendants’ marijuana operation amounts to a concrete financial loss that provides the plaintiff with statutory standing to pursue their claim in court. Judge Brown further held that the customer’s decision to cancel its grape order demonstrates a direct causal link between the plaintiff’s claimed injuries and the defendants’ marijuana growing activities. Lastly, the court concluded that the plaintiff’s substantive allegations constituted a plausible RICO violation that was sufficient to get them past the pleading stage and potentially to a trial on the merits of their case.

As the cannabis industry continues to grow, we are seeing an increasing number of similar cases brought against marijuana growers by their neighbors and community members. Those cases include complaints about the smell of the marijuana plants, diminished enjoyment of the surrounding properties, and neighbors’ increased security measures they claim to have taken as a result of the marijuana operations. There are numerous possible legal grounds for such lawsuits, from statutory claims to common law actions sounding in negligence, nuisance, trespass, and more. On the other hand, marijuana growers have protected rights to pursue their chosen enterprise, at least in those states where their operations have been legalized. While federal, state, and local governments struggle to keep pace with this emergent industry, these types of lawsuits will set important legal precedents for cannabis businesses and their communities in the meantime.

[i] No. 3:19-CV-00476-BR

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