RICO attacks on private marijuana sellers

Thanks to Joel Warner of the International Business Times for quoting me:

While some legal experts questioned whether the [RICO] lawsuit [that settled in Colorado] would have held up in court, the fact that it did so much damage not just to a marijuana enterprise but others who did business with it long before the judge ruled on it means RICO lawsuits could be a grave danger for the industry. Why would anyone want to be affiliated with a marijuana operation if it means they could be sued for organized crime? “RICO is the big deal here,” said Pat Oglesby, a tax attorney who studies marijuana at the Center for New Revenue in North Carolina. “The threat of being sued for that kind of tangential involvement with marijuana commerce could be paralyzing. These are probably not frivolous lawsuits that would allow the defendants to sue the plaintiff for damages for abuse of process.” Here is a more complete statement:

+++++

RICO is the big deal here.  (Sam Kamin is way ahead of me here: https://newrevenue.org/2016/01/05/state-marijuana-businesses-are-immune-from-rico/.)  The threat of being sued for that kind of tangential involvement with marijuana commerce could be paralyzing.  I emphasize tangential involvement. With a lawsuit, it’s almost not whether you win or lose – if you get sued, you lose.

These are probably not frivolous lawsuits – the kind that would allow the defendants to sue the plaintiff for damages for abuse of process.

I’d always heard RICO was overbroad – and with marijuana laws, as the Obama Administration looks the other way, it’s like the sheriff is not interested, but the vigilantes have impunity.

It’s not clear how great the chilling effect of RICO suits will be. A big unknown is whether there will be lots more RICO suits. I wonder why there aren’t more RICO suits.  Maybe it’s because it costs money to sue.  Maybe the funders of the first suits aren’t readily finding plaintiffs to sue neighbors.  Maybe these settlements will cause plaintiffs to come out of the woodwork.

Eventually, RICO suits could be so random and disruptive that they help prompt the federal government to step in and sort out the whole mess – banking and everything. But it’s hard to think of the RICO settlements as a good thing for marijuana commerce in the short or medium term.

So why aren’t there more RICO suits?  That’s not a rhetorical question.  Maybe it’s because it costs money to sue.  Maybe the funders of the first suits aren’t readily finding plaintiffs to sue neighbors.  I honestly don’t know.

I have some friends who work for marijuana sellers – clients that “touch the plant.” I’ve not done that, for various reasons. (Maybe sellers want a younger, more vigorous counselor.)  And for a policy analyst, there’s the danger of having my perspective twisted, and the appearance of impropriety.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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