Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Wednesday, June 7, 2017

Tenth Circuit panel issues big, intricate and important ruling in RICO suits brought against state-legal recreational marijuana businesses

The Tenth Circuit this morning released a ninety-page panel opinion in Safe Streets Alliance v. Hickenlooper, No. 16-1048 (10th Cir. June 7, 2017) (available here), a significant and complicated federal case that could directly or indirectly have a big impact on recreational marijuana reforms in Colorado and other states. I will need to read and reflect on the whole Safe Streets opinion before I can readily opine on its merits and impact, but I can start this blog coverage of the ruling by quoting the opinions lengthy introduction (with footnotes omitted, emphasis in original):

These three appeals arise from two cases that concern the passage, implementation, and alleged effects of Amendment 64 to the Colorado Constitution, Colo. Const. art. XVIII, § 16.  Amendment 64 repealed many of the State’s criminal and civil proscriptions on “recreational marijuana,” and created a regulatory regime designed to ensure that marijuana is unadulterated and taxed, and that those operating marijuana-related enterprises are, from the State’s perspective, licensed and qualified to do so.  Of course, what Amendment 64 did not and could not do was amend the United States Constitution or the Controlled Substances Act (CSA), 21 U.S.C. §§ 801–904, under which manufacturing, distributing, selling, and possessing with intent to distribute marijuana remains illegal in Colorado.  See U.S. Const. art. VI, cl. 2.  The three appeals at issue and two related motions to intervene raise four principal disputes stemming from the alleged conflict between the CSA and Colorado’s new regime.

 

Two of the appeals were brought in Safe Streets Alliance v. Alternative Holistic Healing, LLC. First, in No. 16-1266, two Colorado landowners challenge the district court’s dismissal of their claims brought under the citizen-suit provision of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(c), against certain affiliates of a State- and county-licensed marijuana manufactory that allegedly has injured the landowners’ adjacent property.  We conclude that the landowners have plausibly alleged at least one § 1964(c) claim against each of those defendants.  We therefore reverse, in part, the dismissal of those claims and remand for further proceedings.

 

Second, in No. 16-1048, those landowners and an interest group to which they belong appeal the district court’s dismissal of their purported causes of action “in equity” against Colorado and one of its counties for ostensibly also having injured the landowners’ property by licensing that manufactory.  The landowners and the interest group allege that Amendment 64’s regime is preempted by the CSA, pursuant to the Supremacy Clause, U.S. Const. art. VI, cl. 2, and the CSA’s preemption provision, 21 U.S.C. § 903.   We conclude that neither the landowners nor the interest group purport to have any federal substantive rights that have been injured by Colorado or the county’s actions.  And because they have no substantive rights in the CSA to vindicate, it follows inexorably that they cannot enforce § 903 “in equity” to remedy their claimed injuries.  We therefore affirm the dismissal of their preemption claims.

 

The third appeal, No. 16-1095, was filed in Smith v. Hickenlooper.  In that case, a group of Colorado, Kansas, and Nebraska sheriffs and county attorneys sued Colorado on similar theories that Amendment 64’s regime is preempted by the CSA.  The district court dismissed their claims, and we consolidated the appeal with No. 16-1048. Because those plaintiffs also do not claim injuries to their federal substantive rights, we likewise affirm.

 

Finally, the States of Nebraska and Oklahoma moved to intervene in Safe Streets Alliance and Smith while they were pending on appeal.  T hose States claim that Amendment 64 injures their sovereign interests and those of their citizens, and that its enforcement is preempted by the CSA. We granted their motion in No. 16-1048 and heard their arguments, which confirmed that their controversy is with Colorado.  Given that fact, we must confront 28 U.S.C. § 1251(a), which forbids us from exercising jurisdiction over controversies between the States.  We therefore cannot permit Nebraska and Oklahoma to intervene, or even confirm that they have a justiciable controversy that may be sufficient for intervention.  Consequently, we vacate the order granting intervention in Safe Streets Alliance and deny the States’ motions in both cases.

https://lawprofessors.typepad.com/marijuana_law/2017/06/tenth-circuit-panel-issues-big-intricate-and-important-ruling-in-rico-suits-brought-against-state-le.html

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