Lujan Eliminates Plaintiffs’ Standing In New Marijuana Cases
Lujan Eliminates Plaintiffs’ Standing In New Marijuana Cases

JURIST Guest Columnist Roxane Peyser of the Law Office of Roxane Peyser in Lyons, Colorado discusses the issues in question concerning challenges to Colorado’s legalization of marijuana…

The requirement that a plaintiff have standing is derived from Article III of the Constitution, limiting federal courts to adjudicate actual cases and controversies. Since Association of Data Processing Service Organizations v. Camp was decided in 1970, the test that plaintiffs must satisfy in order to show standing is “injury in fact, economic or otherwise.” The “injury in fact” test has particular importance in citizen lawsuits that seek to remedy government action or inaction. In citizen suits following Data Processing, federal courts have regularly relied on the requirement that a plaintiff demonstrate “actual” injury—not one that is merely speculative.

The “injury in fact” prerequisite articulated by Data Processing was further refined in Lujan v. Defenders of Wildlife, which denied standing to citizens who claimed injury as a result of the EPA’s failure to enforce environmental regulations, although a statutory provision expressly allowed regulatory beneficiaries to file suit. Since Lujan was decided in 1992, a plaintiff in a citizen suit must generally satisfy three requirements in order to show standing: (1) injury in fact; (2) injury causally linked to the defendant’s actions; and (3) relief that must be able to provide compensation for the plaintiff’s alleged injury. Referring to citizen suits as “generalized grievance cases,” Justice Scalia held that “an injury amounting only to the alleged violation of a right to have the Government act in accordance with law [i]s not judicially cognizable.”

On February 19, a set of anti-marijuana lawsuits was filed in the US District Court of Colorado. Unlike the lawsuit Nebraska and Oklahoma filed jointly in December 2014 against Colorado, these suits were filed by private citizens, representing a different approach to attacking the legality of recreational marijuana in the State of Colorado.

In one suit, the plaintiffs, Safe Streets Alliance and New Vision Hotels Two, LLC name as defendants multiple private parties, among them a marijuana retailer, its sole owner, the property management company that leased commercial property to the retailer and its officers, the accountant for the dispensary and other parties having any private business relationships with the dispensary. The second suit was brought by Safe Streets Alliance and Phyllis and Michael Reilly, and names both private parties similar to those entities in the New Vision case, in addition to state officials, including Governor John Hickenlooper, the Executive Director of the Colorado Department of Revenue, the Director of the Colorado Marijuana Enforcement Division, the Pueblo County Commission and the Pueblo County Liquor and Marijuana Licensing Board.

Both cases pin their claims on violations of the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Specifically, both cases use identical language claiming that the respective plaintiffs “file this suit to vindicate the federal laws prohibiting the cultivation and sale of recreational marijuana and their rights under [RICO].”

Although the New Vision suit does not specifically name government officials as defendants, both suits are essentially citizen suits—i.e., lawsuits filed by members of the public to challenge the legality of some governmental action or inaction.

In New Vision, plaintiffs allege that they have suffered damage to their hotel business as a result of a “planned” recreational marijuana operation expected to open less than 75 yards from the entrance of their hotel. All of their alleged injuries are highly speculative: “many parents and coaches will avoid booking with a hotel that is within a short walking distance and direct sight of a recreational marijuana store and grow facility”; “additional teams are likely to decide not to return after they learn of defendants’ nearby recreational marijuana operations”; “prospective New Vision guests also worry that Defendants’ recreational marijuana operations will attract crime.” [Emphasis provided.] Their alleged damages are further undercut by the fact that revenues from the sale of cannabis in Colorado—including from canna-tourism—have generated tens of millions of dollars to the benefit of the state’s economy.

Their sole proffer of current damages is the alleged statements of booking agents for two high school ski teams who have stayed at the hotel in the past, and allegedly said “that their teams will not return due to defendants’ marijuana operations.” Since plaintiffs are unable to prove that they have suffered any actual injury as a result of a marijuana business that has not yet even opened, their lawsuit is subject to dismissal on this ground alone.

Similar to the New Vision plaintiffs, the Reilly’s action is also subject to dismissal for failure to state a claim. The Reilly plaintiffs own approximately 105 acres of land adjacent to a recreational marijuana grow operation. The Reillys do not live on the land but “often visit on weekends” with their children and friends. They allege injuries as a result of the construction of the marijuana operation on the adjacent property that “has already marred the mountain views from the Reilly’s property.”

The Reillys also contend that their property is located in a residential development that is subject to restrictive covenants. While they concede that the marijuana operation is properly zoned and located outside the boundaries subject to those covenants, they continue to argue that “if it were within those boundaries [of the residential development], it would violate numerous covenants.” Finally, the remainder of their alleged damages stems from what they contend is the fact that “marijuana plants are highly odorous … and their offensive smell travels long distances.”

Aside from the fact that their allegation concerning the foul odor of marijuana plants is subjective and that they are arguably hyper-sensitive plaintiffs in this regard—thus defeating claims for both public and private nuisance—they impliedly acknowledge that an industrial manufacturing plant could be properly zoned for the same location. Accordingly, the Reilly lawsuit asserts vague and speculative damages, and not actual harm, inviting dismissal for failure to state a claim on which relief can be granted.

What is actually at the core of these lawsuits, however, is the plaintiffs’ efforts in both actions to compel state official enforcement of federal laws—specifically, the Controlled Substances Act of 1970.

In their lawsuits, both sets of plaintiffs argue at the outset that the CSA makes dealing in marijuana a felony. Both lawsuits contend that, “Despite the express federal prohibition on marijuana, Colorado and many of its local jurisdictions have enacted laws, ordinances and regulations designed to promote growth of a billion dollar commercial marijuana industry.”

Essentially, the plaintiffs in both cases are arguing for official enforcement of the CSA, using alleged RICO claims as the vehicle to carry them to success. Both sets of plaintiffs are facing significant challenges with respect to their RICO claims. RICO laws have historically targeted white-collar conspirators and organized crime. The purpose of RICO is basically deterrence and punishment. RICO laws are very complex and an expanded discussion of it is well beyond the scope of this piece. It is sufficient to say that for purposes of these lawsuits, the State of Colorado officials, as well as the private entity defendants, are not likely to be found by a federal court as “criminal organizations” within the meaning of RICO.

The plaintiffs’ inability to show any injury in fact, combined with the failure of their RICO claims leaves them in the position of regulatory beneficiaries: members of the public who seek to have courts adjudicate the legality of official action.

In these recent cases, plaintiffs begin their argument by making a federal preemption argument. While the Supremacy Clause, contained in Article VI of the Constitution, establishes the US Constitution, federal statutes and treaties as “the supreme law of the land,” it is not without limitations. The Tenth Amendment, which is part of the Bill of Rights, states that the federal government possesses only those powers delegated to it by the Constitution. All remaining powers are reserved for the states or the people.

New York v. United States and Printz v. United States both recognized the tempering effect of the Tenth Amendment on the Supremacy Clause, when it articulated the anti-commandeering doctrine, which prohibits the federal government from commandeering state governments. Writing for the majority in New York, Justice O’Connor held that, “As an initial matter, Congress may not simply ‘commandee[r] the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.”

The anti-commandeering doctrine was further developed five years after New York, when the Printz court expanded the doctrine’s reach. Said the court, “We held in New York that Congress cannot compel the States to enact or enforce a federal regulatory program. Today we hold that Congress cannot circumvent that prohibition by conscripting the States’ officers directly. The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States’ officers, or those of their political subdivisions, to administer or enforce a federal regulatory program. It matters not whether policymaking is involved, and no case-by-case weighing of the burdens or benefits is necessary; such commands are fundamentally incompatible with our constitutional system of dual sovereignty.”

The presumption against federal preemption when it involves the exercise of historic police powers of the states is a well-established principle in American jurisprudence. State medical marijuana laws have generally been permitted this presumption, since they are enacted pursuant to traditional state police powers in defining criminal conduct and regulating drugs and medical practices.

In fact, the CSA on which the Colorado plaintiffs rely explicitly contains a statutory preemption provision that articulates Congress’s intent with respect to the relationship between state and federal law. Section 903 states: “No provision of this subchapter shall be construed as indicating an intent on the part of the Congress to occupy the field in which that provision operates, including criminal penalties, to the exclusion of any State law on the same subject matter which would otherwise be within the authority of the State, unless there is a positive conflict between that provision of this subchapter and that State law so that the two cannot consistently stand together.”

What this means is that the federal government is free to expend its own resources to implement and enforce its own laws, but it may not compel States to use its resources to enforce federal law.

Circling back to whether the Colorado plaintiffs have standing to “vindicate the federal laws prohibiting the cultivation and sale of recreational marijuana,” clarification can be found in Heckler v. Chaney, where Justice Rehnquist found that “when an agency refuses to act it generally does not exercise its coercive power over an individual’s liberty or property rights,” and therefore there is no aggrieved individual with standing to sue.

Since the Colorado plaintiffs are in actuality seeking state official enforcement of federal law, pre-trial motions will, in all probability, dispose of these twin lawsuits.

Roxane Peyser practices business and regulatory law, specifically focusing on the cannabis industry, from her offices in Colorado. She has represented a wide range of cannabis businesses, as well as those in supporting industries. Ms. Peyser received input on the RICO aspects of this issue from Michael J. Zomcik of Barnisa & Zomcik in Houston, Texas.

Suggested citation: Roxane Peyser, Lujan Eliminates Plaintiffs’ Standing In New Marijuana Cases, JURIST- Professional Commentary, Mar. 30, 2015, http://jurist.org/professional/2015/03/roxane-peyser-lujan-marijuana.php.


This article was prepared for publication by Josh Guckert, a Senior Editor for JURIST Commentary. Please direct any questions or comments to him at commentary@jurist.org


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