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Federal Charges linger over Pueblo marijuana growers 

click to enlarge Round 2 in a fight over stink and states' rights. - SHUTTERSTOCK/ERIC LIMON
  • Shutterstock/Eric Limon
  • Round 2 in a fight over stink and states' rights.

When Joseph and Jason Licata decided to expand the family business in 2014, they looked south from the casino-filled mountain town of Black Hawk to Rye, a much sleepier mountain hamlet in southwest Pueblo County.

The father and son partners wanted to grow more cannabis for their Black Hawk-based retail pot shop Rocky Mountain Organics, than their cultivation facility, could supply.

Thanks to Amendment 64 and Pueblo County's cannabis-friendly business environment, the Licatas embarked on a familiar path, acquiring licenses, permits, insurance and funding for their new 7,200-square-foot facility.

But they quickly ran into a familiar challenge — the neighbors.

Nearby residents raised concerns that the operation would increase traffic and attract thieves, that it would use too much water, and that it was too close to a school bus stop. Plus, the facility would not fit into the rural mountain surroundings.

"It would be nice to leave it as a family community, ranching area, horse property and not bring a drug into the community," Hope Reilly told the Pueblo County Commissioners during a 2014 hearing, according to a report by KOAA.

Still, county officials gave the Licatas a green light, and the pair moved forward with their plans. But that was hardly the last they'd hear from Reilly.

A few months later, she and her husband, Michael, filed a federal lawsuit against the Licatas, claiming the facility would mar their mountain views, constantly remind them of "illegal drugs" and lower their property value. Safe Street Alliance, the co-plaintiff in the case, is an anti-legalization group based in Washington, D.C.

To make their case, the Reillys' legal team deployed a tactic — generally reserved for taking down major organized-crime bosses and syndicates like the Hells Angels or Pablo Escobar — in an attempt to portray marijuana businesses as criminal enterprises.

The federal Racketeer-Influenced and Corrupt Organizations Act, better known as RICO, was signed into law in 1970 to prosecute those who order, assist and cover up crimes they don't themselves commit. It essentially provides a civil "cause of action" to prosecute the various players associated with a crime syndicate.

The lawsuit against the Licatas also included a business partner, a developer, an insurance company and a water supplier, along with several public-sector defendants, including Gov. John Hickenlooper, Colorado Department of Revenue Executive Director Barbara J. Brohl, the Pueblo County Commission, and others.

On Jan. 21, federal judge Robert E. Blackburn ruled that because government entities "cannot form specific criminal intent," they can't be prosecuted under RICO.

He also decided that the Reillys don't have a private cause of action, and that if federal prosecutors wanted to enforce the federal law that makes marijuana illegal, they would. Blackburn's ruling cites the Department of Justice's "conscious, reasoned decision" to let states that have enacted marijuana legalization proceed without federal interference.

But the Reillys weren't ready to give up. On Monday, Feb. 1, their attorneys filed an amended complaint.

Substantively, the new complaint isn't all that new. "Marijuana businesses make bad neighbors," it reads. "They emit pungent, foul odors, attract undesirable visitors, increase criminal activity, increase traffic, and drive down property values."

In discussing the amended complaint with the Independent, the Reillys' attorney, Brian Barnes of the Washington, D.C.-based law firm Cooper & Kirk, emphasizes that the Licatas' facility is no longer hypothetical. Around 700 marijuana plants are now living inside, growing bigger and, worst of all, smellier every day.

"It's a problem that's as old as property ownership," Barnes says. "Someone on Parcel A says some activity on Parcel B is causing them injury. That can be anything that makes their property less desirable, less valuable."

The Reillys are not currently trying to sell their property, nor are they required at this point in the case to provide evidence of a direct connection between the marijuana smell and alleged depreciated market value of their property.

"As of now, property values haven't been affected [by legal marijuana]," says Pueblo County Assessor Frank Beltran. "If anything, things have been going up in value."

Beltran sees the trend as part of a larger economic recovery, and whether marijuana plays a role is merely speculation. "It's a stretch to say any one factor causes a rise or fall in property value," he says.

Pueblo County has no odor regulations, but the Licatas' defense attorney, Matthew Buck of the Denver firm Corry & Associates, notes that the Licatas' facility has a state-of-the-art filtration system to prevent wafting odors.

Besides, Buck says, he doesn't buy that this case is truly about stench.

"These are special interests attempting to dismantle the marijuana industry without really understanding it," he says, referring to the involvement of the Safe Streets Alliance, which was also behind another RICO-based lawsuit in Colorado that was dropped but nevertheless led the dispensary owner to go out of businesses.

Buck says he expects the new complaint to be dismissed on the same grounds as the original. Both attorneys expect whoever loses to appeal. No matter how it shakes out, the threat of a lawsuit like the one facing the Licatas could very well have a chilling effect on the industry.

Barnes says the prospect of litigation "will be an important factor for someone considering committing a series of drug crimes." But, Buck insists, "there shouldn't be fear [in the industry] because attorneys like myself will always step up to defend them."

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