Cannabis Companies Using RICO Lawsuits Against Unlicensed Dispensaries

Licensed cannabis businesses are turning the tables by deploying a legal weapon that has been used against them for years in order to target unlicensed marijuana retailers as well as law enforcement officials accused of corrupt dealings.

In the past two months, at least two civil lawsuits have been filed by cannabis industry executives in California under the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute that was originally intended as a legal weapon against the mafia but has since been used against marijuana businesses in lawsuits.

The first of the two recent marijuana cases was filed July 6 in San Diego County Superior Court by licensed retailer March and Ash.

That suit is aimed at a local group of businesses and individuals accused of propping up – and benefiting from – illegal marijuana dispensaries.

Defendants include the alt-weekly newspaper San Diego Reader, which the suit claims has carried numerous ads for unlicensed marijuana shops as well as landlords that were paid rent by illegal retailers, ATM owners that operated cash dispensing machines in the illegal stores and others that support the illicit cannabis businesses.

“Within the last four years, the racketeering enterprise being challenged in this lawsuit has worked … for the collective purpose of profiting off the unlicensed sale of cannabis,” the suit claims.

The case is scheduled for a hearing on Jan. 28, 2022.

The second suit was filed Aug. 9 in Mendocino County Superior Court by four licensed marijuana farmers.

That suit targets two law enforcement officials – a former Mendocino County Sheriff’s deputy and a former official with the state Department of Fish and Wildlife – and implicates the local district attorney and county sheriff’s office.

The suit alleges that a ring of corrupt authorities have conspired against legal cannabis operators for years, stealing from marijuana farmers and then covering up the thefts.

“Certain corrupt law enforcement officers are above the law because the Sheriff’s Office and the District Attorney’s Office have given officers the green light to steal marijuana, guns and cash under color of law,” the suit alleges. “At least some of the local judges have been willfully blind to unlawful conduct by local law enforcement that is common knowledge among many in the community.”

The case is scheduled for a hearing on Feb. 4, 2022.