A budtender pours marijuana from a jar at Perennial Holistic Wellness Center medical marijuana dispensary in Los Angeles, July 25, 2012. david mcnew/getty images

By many accounts, Monday was a banner day for the marijuana movement in the courts. In the nation’s capital, the U.S. Supreme Court declined to take up a lawsuit filed by Nebraska and Oklahoma to overturn Colorado’s legalized marijuana program, meaning that if the two states’ attorneys general want to continue to pursue the matter, they will have to do so in federal district court. That same day in Colorado, a federal judge dismissed a lawsuit filed by southern Colorado horse ranchers against Rocky Mountain Organics, a marijuana company building a cultivation facility nearby, accusing it and affiliated businesses of violating both the U.S. Constitution and the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law designed to target organized crime.

The two suits were among four major legal challenges filed over Colorado’s marijuana regime in 2015. Another RICO lawsuit, filed at the same time as the horse ranchers’ suit and targeting a marijuana operation in the mountain town of Frisco last February, was dropped late last year, and a March 2015 lawsuit by a group of Colorado, Nebraska and Kansas sheriffs challenging Colorado’s recreational marijuana laws was dismissed in federal court last month.

While less publicized than the Supreme Court decision, some within the marijuana community consider the dismissal of the horse ranchers’ lawsuit the bigger win this week for the cannabis movement. After all, such RICO lawsuits, if found to be valid, could mean not just marijuana ventures but services that do business with them such as banks, insurance companies and accounting firms could be sued for organized crime. “It’s by far more important,” said Hilary Bricken, lead attorney at the Canna Law Group in Seattle. “It sets a very firm tone that the judge isn’t going to entertain an action that uses a law designed to take on organized crime to undermine state rights and private business actors. RICO is really scary. I am glad it is off the table.”

But with the recent dismissal of the RICO lawsuit, have those opposed to marijuana legalization really just lost a powerful courtroom tool? Or could the cannabis industry face additional high-profile RICO lawsuits in the months and years to come? After all, such suits can do major damage without winning in court. Just ask Jerry Olson, the owner of the marijuana shop in Frisco hit with the other RICO lawsuit.

Olson, a double liver transplant recipient who found cannabis helped with his pain and recovery, opened Medical Marijuana of the Rockies, one of Colorado’s first dispensaries, in the mountain town in 2009. But when he made arrangements in 2015 to move to a nearby location and expand his operation to include recreational marijuana sales, the Holiday Inn located next door to the new spot pre-emptively sued Olson as well as the owner of the property he was going to occupy, his bank, his bonding firm, his accounting company and others associated with his business, alleging the marijuana shop would be a detriment to the hotel’s business. The affiliated companies were eventually dropped from the suit once they either severed ties with Olson or reached cash settlements with the hotel. As part of its deal with the landowner, the Holiday Inn purchased the property Olson was going to use. In November, with only Olson left as a defendant, Holiday Inn dropped its lawsuit before the case reached discovery. By that point, Olson, who said he heard a doughnut shop and housing were going to be built on the site, no longer had a dispensary. The lease on his old location had expired and, inundated with legal fees, he couldn’t afford to relaunch his business elsewhere.

“I had a business that had millions of dollars’ worth of value in it,” said Olson, nursing a cup of coffee in a downtown Denver restaurant Monday evening. “Then it was gone. All of my assets. It’s disconcerting when someone can take advantage of the system to hurt the little guy and scare everybody else.”

Jerry Olson
Jerry Olson lost his dispensary, Medical Marijuana of the Rockies, thanks to a RICO lawsuit filed against his business, March 21, 2016. Joel Warner

Using organized crime laws to go after marijuana operations and leave them legally toxic in the business community has the potential to pay dividends not just for those looking to slow the explosive growth of the legal cannabis movement, but also individuals concerned about nearby marijuana shops impacting their homes or businesses. “The thing that makes RICO a potentially very powerful tool for people who don’t want to live next to marijuana operations is you can recover your attorney fees,” said Brian Barnes, an attorney for the Washington law firm Cooper & Kirk, which represented the plaintiffs in both RICO lawsuits. “Even if you have minimal damages, it is still economically feasible to file a lawsuit to get them shut down.”

Such RICO lawsuits can be financially lucrative without a judge’s decision. “Plaintiffs are unlikely to prevail in these suits, but they are still a costly nuisance to the industry,” said Sam Kamin, marijuana law professor at the University of Denver. “And unlike suits like the sheriffs’ or the states’, these suits have to be litigated one at a time on a case-by-case basis. The lawsuit against the Frisco dispensary was a pretty big, if quiet, success for the plaintiffs — they got a cash payment, an agreement from a bank not to do business with the industry anymore, and they were spared the expense of discovery.”

The risk of RICO lawsuits is already impacting the marijuana market. Earlier this month, the Colorado governor signed a bill to remove the surety bond requirement for cannabis businesses, a law precipitated by the fact that many bond companies stopped doing business with marijuana operations because they feared it would expose them to RICO liability.

But if RICO lawsuits are so powerful, why haven’t there been more of them since Cooper & Kirk filed the first two in Colorado early last year? It could be that there just aren’t that many folks in the anti-marijuana contingent who have the interest and resources to mount such expensive and complicated legal attacks, even if they’re likely to pay political and financial dividends down the line. “One possibility is the war is over and there is nobody left on the field defending the territory of ‘Just say no,’ ” said Pat Oglesby, a tax attorney who studies marijuana at the Center for New Revenue in North Carolina.

“We are not in the lawsuit business. We are not filing lawsuits,” said Jeffrey Zinsmeister, executive vice president of the major anti-legalization organization Smart Approaches to Marijuana. Zinsmeister said fighting the various state legalization initiatives at the polls “is really where the action is, in terms of the fight.” Plus, he isn’t sure such lawsuits are attractive to attorneys looking to make money off such efforts, thanks to the nascent stage of the cannabis industry: “Collecting money from these judgments is still pretty difficult. The defendants don’t have many assets.”

But Denver attorney Matthew Buck, who represented Rocky Mountain Organics and several other defendants in the horse ranchers’ RICO suit, said such suits aren’t about collecting money from the defendants. He points out RICO lawsuits are exceedingly difficult to win — surveys of such cases have found that all but a tiny fraction are total losses for those behind the actions. Instead, he thinks the two suits were a way for a prestigious law firm like Cooper & Kirk eventually to argue the matter in the U.S. Supreme Court, as well as a publicity stunt for the Safe Streets Alliance, a Washington anti-drug organization that helped organize and fund the lawsuits and was listed as a plaintiff in both cases. “I think this is Safe Streets drumming up publicity for their 21st century prohibition movement against marijuana,” Buck said. “It allows them to get their name in the news, and it allows Cooper & Kirk to argue a case before the Supreme Court. That’s how a law firm like Cooper & Kirk pays its bills.”

Marijuana Legality by State | InsideGov

But if Safe Streets, which has been reluctant to talk to the press aside from comments from Barnes on the lawsuits, organized the legal actions for political or marketing reasons, there could be divisions within the organization as to whether additional RICO cases are the right move going forward. Safe Streets is chaired by attorney James Wootton, a member of President Ronald Reagan’s Justice Department who’s also former president of the U.S. Chamber Institute for Legal Reform, which advocates for “significant changes in the civil justice system at both the federal and state levels to reduce frivolous and wasteful litigation.”

According to Barnes, Cooper & Kirk isn’t currently planning on filing additional RICO suits against marijuana businesses — but that could change. “I think lawyers realize that our RICO suits involve a legal theory that no one has used before and are waiting to see if it works,” he said. “We certainly believe that the law is on our side on this, and if the courts ultimately agree I think you will see additional RICO suits filed.”

If other lawyers were watching the RICO suits to see if they should follow suit, they might have been given pause by U.S. District Judge Robert E. Blackburn’s dismissal with prejudice of the horse ranchers’ lawsuit Monday, which followed his dismissal in January of the lawsuit’s charges against Colorado’s governor and other officials and agencies. In his sharply worded decision Monday, Blackburn noted: “Plaintiffs provide no factual support to quantify or otherwise substantiate their inchoate concerns as to the diminution in value of their property. … They do not even cite to any study or statistics that might demonstrate a causal relationship between the operation of such [marijuana] businesses and decreased property values.”

But Cooper & Kirk isn’t giving up. The law firm is appealing Blackburn’s dismissal of their clients’ suit against government agencies and officials, and Barnes said the judge’s recent dismissal of the other half of the horse ranchers’ lawsuit, against Rocky Mountain Organics and its affiliated services, could be appealed as well. “The day we filed this suit, we knew the issue would be decided on appeal,” he said. “Really the critical question is going to be weighed by the Court of Appeals, and ultimately it will come down to what the Supreme Court has to say.”

Barnes added such lawsuits are about protecting its clients, not destroying other businesses. Take the other RICO lawsuit it filed last year, against Olson over the planned new location of his marijuana shop in Frisco. “He had a contract to buy this building for $1.6 million,” said Barnes. “We thought we were dealing with a defendant who was well-financed and had deep pockets and would be able to fight us. Frankly, it came as a surprise when it collapsed. It was good outcome, but we got there in a lot quicker and easier fashion than we anticipated.”

A good outcome for the plaintiffs meant a devastating one for Olson. He hasn’t been working since he lost his dispensary. “The whole event has been kind of stressful,” he said. I have been taking it easy.” He’s considering getting back into the medical marijuana in some fashion, but his recent experiences have soured his opinion of the cannabis industry. He said hardly any of his fellow marijuana entrepreneurs came to his aid, financially or otherwise, during the lawsuit — even though from his perspective, what was at stake wasn’t just his business, but the financial security of the marijuana movement.

“Everybody is so busy competing against each other they don’t help each other,” he said. “With the precedence of this, wouldn’t you want to see a positive outcome for the two defendants in these cases? But I didn’t see support at all.”