DENVER — A Colorado hotel franchise and two property owners filed lawsuits Thursday to bring a halt to the state’s legalization of recreational marijuana, citing violations of the federal Racketeer Influenced and Corrupt Organizations Act.
The federal lawsuits, which also list the anti-crime Safe Streets Alliance as a plaintiff, are the first of their kind challenging Colorado’s first-in-the-nation recreational marijuana market, which began operating in January 2014.
The lawsuits “ask the federal courts to order Colorado officials to comply with federal law and stop issuing state licenses to deal illegal drugs,” according to a Thursday statement on the alliance’s website.
“In addition to shutting down the operations targeted in its suit, Safe Streets hopes that its use of the federal racketeering laws will serve as a model for other business and property owners who have been injured by the rise of the commercial marijuana industry,” the statement said.
The latest challenges arrive two months after the attorneys general for Nebraska and Oklahoma filed lawsuits against Colorado alleging that recreational marijuana is seeping into their states illegally. That case is before the U.S. Supreme Court.
Tom Angell, chairman of Marijuana Majority in Washington, D.C., said he doubted the effort would be successful, but “if it is, its primary effect will be to push marijuana back into the hands of the cartel- and gang-controlled black market.”
“The legal marijuana industry has to abide by regulations and controls that seek to protect public safety, whereas organized crime groups have absolutely no incentive to play by the rules and keep marijuana out of the hands of young people or to test and label products for potency and purity,” Mr. Angell said.
Along with state officials, the lawsuits list as plaintiffs a number of pot shops, business consultants, bankers, construction companies and others accused of being part of the “racketeering enterprise.”
The first lawsuit was filed by Michael and Phillis Reilly, who own 105 acres adjacent to a recreational marijuana grow in Rye, Colorado, owned by 6480 Pickney LLC. The company has leased the land to Camp Feel Good, according to the brief.
The lawsuit alleges that those corporations, along with participating pot shops, a construction company and an insurance company, form a racketeering ring “for the purpose of cultivating marijuana,” which violates the RICO statute.
The Reillys, who own nearby lots used for horseback riding at the Meadows at Legacy Ranch, have had their property values reduced by the large marijuana cultivation facility, the lawsuit says.
“Furthermore, the large quantity of drugs at marijuana grows makes them targets for theft, and a prospective buyer of the Reillys’ land would reasonably worry that the 6480 Pickney Road marijuana grow will increase crime in the area,” said the lawsuit. “Prospective buyers would also worry that once it is complete the 6480 Pickney Road marijuana grow will emit pungent odors, thus further interfering with the use and enjoyment of the Reillys’ land.”
The second lawsuit was filed by New Vision Hotels Two, a company that owns a Holiday Inn franchise in Frisco, Colorado. A marijuana retailer, Summit Marijuana, is constructing a store that will share a parking lot with the hotel.
The hotel attracts large numbers of families and teen groups, including members of two youth ski teams whose booking agents have said they will not return to the hotel once the pot shop opens for business, according to the brief.
“Last year alone, those two teams were responsible for approximately $50,000 in revenue for the hotel,” said the brief. “Numerous other ski teams regularly stay with New Vision, and additional teams are likely to decide not to return after they learn of Defendants’ nearby recreational marijuana operations.”
The lawsuit could have an impact beyond Colorado.
Colorado and Washington state voters legalized recreational marijuana in 2012, followed by Oregon and Alaska last year. The District of Columbia has legalized the use of small amounts of marijuana for adults but not retail sales.
Although marijuana remains illegal under federal law, the Justice Department issued a guidance in August 2013 essentially allowing states that have legalized pot to proceed under certain parameters.