Reilly vs Walton has settled in favor of cannabis and state law.
Hopefully, this might slow the anti-cannabis groups using federal laws to shut down state legal cannabis operations. Colorado, where cannabis is fully legalized for recreational and medicinal use, was the scene of a neighbor dispute that threatened to bring down the whole Colorado cannabis business. And have far reaching consequences for other states. Reilly vs Walton would have been a precedent-setter that would devastate cannabis businesses in the United States. But, cannabis won! This time.
The scene of the drama was Rye, Colorado, 30 miles outside Pueblo. Michael P. and Phillis Windy Hope-Reilly, owners of Meadows and Legacy Ranch, live next door to Canna Craft, a medium-sized cannabis grow. Three years ago, the Hope-Reillys sued their neighbor, claiming that the odor, noise, and view of the cannabis operation was bringing their property value down and Canna Craft should be forced to move. This was before Parker Walton, the owner, even set up shop.
The Reilly vs Walton suit began in 2015, one year before recreational cannabis became legal in Colorado, so it held significantly more weight back then. Much of the case rested on anti-racketeering laws under the Racketeer Influenced and Corrupt Organizations (RICO) Act.
If the Hope-Reillys had won, Canna Craft (owned and operated by Parker Walton) would likely have had to close. The RICO Act ensures that plaintiffs must pay triple the monetary damages described by the jury, as well as any attorney fees that the plaintiffs had accrued. In some cases, this can be up to a million dollars in fees. It’s debilitating and often, catastrophic for small businesses.
Image credit: RICO and the CCE
Safe Streets Alliance, a Washington-based anti-cannabis group were financially backing the ranchers. The group often backs cases to bring down cannabis businesses in legal states by conjuring federal cannabis laws.
It should be noted that Canna Craft had all of the necessary permits from Pueblo County and was in full compliance of the laws in its state and county.
What Would Have Happened if Anti-Cannabis Had Won?
The lawsuit caused major concern for those in the cannabis industry, as well as cannabis advocates. Had Reilly vs Walton gone in favor of the former, this would have set precedent for other similar lawsuits and would have likely resulted in small-scale cannabis producers being shut down or at least taking a serious financial hit.
Professor Sam Kamin, from the University of Denver Law Department, studies cannabis law. Professor Kamin explains that Canna Craft’s victory is positive for the industry. Had it gone the other way, it would have encouraged anti-cannabis groups and individuals to bring other cases forward. One by one, this would have wiped out the growing number of small cannabis farmers.
In fact, that’s exactly what Safe Streets Alliance had in mind.
Should Cannabis Businesses in America be Worried?
While the RICO Act definitely poses a threat to cannabis companies, Professor Kamin is hopeful that maybe the jury’s decision in Reilly vs Walton may act as a precedent for future juries. But we shouldn’t get too confident. “This isn’t the kind of loss where plaintiffs would be forever forbidden from bringing these kinds of suits. But it might chill the enthusiasm for bringing them in the future,” Kamin explained.
Parker Walton’s lawyer, Matthew Buck, was obviously pleased with the outcome of the case. He described a potential loss as “the loss of his [Walton’s] business.”
Buck argued that the decline in property value was an inaccurate argument as the Hope-Reilly property value has actually gone up – as is true for all of Colorado. On top of this, the Hope-Reilly’s purchased an additional plot of land in the same subdivision!
Furthermore, he argued that Canna Craft odor-control system prevents odors from going into the Hope-Reilly property. After the trial, Buck explained that the difficulty of proving damages in these types of lawsuits is “almost impossible,” particularly when “property values are skyrocketing” in Colorado.
Let this serve as a warning shot to anyone thinking of bringing nefarious suits against cannabis business….you’re not going to win.