MJBizMag February 2021 - 46

Limiting Your Liability
As a result of the potential financial
risks of a case going to trial, some
defendants have chosen to settle RICO
lawsuits rather than fight them out
in court.
" You rarely know the settlement
amount, " Steineker said.
Robert Mikos, a cannabis law
professor at Vanderbilt Law School,
told Marijuana Business Magazine: " A
plaintiff might drop a suit for anything
from a few million (dollars) to, well, a
coupon for Arby's. "
The fact that the public rarely knows
the terms of a settlement is what made
a RICO case in Massachusetts unusual,
Steineker noted. The plaintiff's attorney
bragged about the settlement being
substantial, and a local newspaper later
reported the settlement as exceeding
$1 million.
" Settlements (like that) will chum the
water, " Steineker said.
Marijuana operations
LOCATION IS NO. 1
Steineker said that one way marijuana
business owners can reduce the
likelihood of being sued is being
cautious about where they choose to
locate their operation.
" Think about what your presence is
likely to do to your neighbors, " he said.
" Maybe RICO is a significant enough
risk to factor in your calculus on where
to locate. Do you want to locate near a
brand-new development? A winery? "
The owner of a vineyard in Oregon
sued an adjacent marijuana processing
operation under RICO, for example,
claiming that it had lost sales as a result
of the MJ facility. (See " RICO Suits From
Across the U.S. " )
BE A GOOD NEIGHBOR
Legal experts also stressed the importance
of being a good citizen-and being as
responsive as possible to neighbors'
concerns before they reach a critical point.
In some cases, that's as simple as
participating in neighborhood events
ranging from barbecues to crime-watch
programs.
also can try to head off
potential lawsuits by
making sure they've
installed the latest airfiltration
systems. But even
that might not be enough.
CannaCraft, the southern
Colorado company that
eventually prevailed in the
2018 federal jury trial, told
Marijuana Business Magazine
that it already had installed five
$15,000 air-sanitation units in each of
its flower rooms as well as a $150,000
HVAC system.
After a neighbor sued the company,
CannaCraft hired an expert to conduct
an odor analysis of the business. The
consultant conducted tests inside
the property and at the perimeter
of the company's land using a field
olfactometer.
While the facility in general got a
clean bill of health, CannaCraft-a
small-batch marijuana cultivator-tried
to further reduce odors by spending
several thousand dollars installing
air-purification units in its lobby.
46 Marijuana Business Magazine | February 2021
Parker Walton
A federal court jury
found in late 2018 that
CannaCraft wasn't
responsible for the alleged
damages under RICO. But
the ordeal still resulted in a
heavy cost to the business.
" We were never able to
recover any money-not
even one cent-for our
defense, " CannaCraft
owner Parker Walton said.
He said the business incurred
roughly $200,000 in legal expenses. It
was a tough four years, he said, " but
thankfully we've never been better " than
the company is now.
FEDERAL ACTION REQUIRED
Arth said the RICO risk won't go away
entirely until marijuana is removed from
the federal Controlled Substances Act.
While descheduling would be needed
to remove the RICO risk altogether, Arth
said other marijuana legislation, such
as cannabis banking reform, might help
reduce the number of RICO lawsuits.
" The more federal loosening, the
better, " he said.
Opening a marijuana business in
a location where neighbors are
unlikely to complain can potentially
head off costly litigation later.
MJBizMag February 2021

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