Reilly Complaint
Reilly Complaint
Reilly Complaint
v.
Defendants.
______________________________________________________________________
Plaintiffs the Safe Streets Alliance (“Safe Streets”), Phillis Windy Hope Reilly, and
Michael P. Reilly file this suit to vindicate the federal laws prohibiting the cultivation and
sale of recreational marijuana and their rights under the Racketeer Influenced and
Corrupt Organizations Act (“RICO”). The Reillys are Colorado property owners who
have been injured by a conspiracy to cultivate recreational marijuana near their land,
and they are members of Safe Streets. Plaintiffs seek redress under RICO, which
production of marijuana—to pay those they injure treble damages, costs, and attorneys’
fees. Plaintiffs also seek an injunction under RICO directing the marijuana operations
affecting their land to stop violating the federal drug laws. In addition to their RICO
claims, Plaintiffs are also suing the state and local officials who are facilitating and
that is injuring their property, through a licensing regime that purports to authorize
federal drug crimes. Because state and local government actions that promote the
marijuana industry directly conflict with the federal Controlled Substances Act (“CSA”),
those actions are preempted under the Supremacy Clause of the U.S. Constitution and
I.
INTRODUCTION
the supreme law of the land. State laws that are flatly inconsistent with constitutionally
authorized federal law have no force or effect. On the issue of recreational marijuana,
federal law is clear: it is a felony under the Controlled Substances Act of 1970 (“CSA”)
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and many of its local jurisdictions have enacted laws, ordinances, and regulations
designed to promote the growth of a billion dollar commercial marijuana industry. Yet
cultivation, sale, and possession remain serious federal offenses in Colorado, just as
they are everywhere else in the United States. Indeed, those associated with
Colorado’s largest-scale marijuana producers risk being sent to federal prison for the
rest of their lives. The people of Colorado are free to advocate for a change in this
federal criminal prohibition, but they must do so through their elected representatives in
Congress. Under our federal system, Congress alone can authorize revision of federal
largely declined to bring prosecutions under the federal marijuana laws, prompting
hundreds of millions of investment dollars and thousands of new customers to flow into
Colorado’s commercial marijuana industry. But the Justice Department’s current policy
of non-enforcement does not strike a single word from the U.S. Code or deprive private
Justice can no more amend a federal statute than can the State of Colorado, and
marijuana remains just as illegal under federal law today as it was when Congress
odors, attract undesirable visitors, increase criminal activity, increase traffic, and drive
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crime and illegal drug dealing, and the Reillys are property owners who have suffered
injuries caused by the operations of a nearby marijuana business. Together, they are
filing this suit to vindicate their federal rights under RICO, 18 U.S.C. §§ 1961 et seq., the
liable for three times the economic harm they cause plus costs and attorneys’ fees.
Those who conspire with racketeers by agreeing to assist them are likewise liable.
RICO also gives federal courts the power to order racketeering enterprises and their
coconspirators to cease their unlawful operations. Accordingly, the Reillys ask this
Court to award them the damages, costs, and fees to which they are entitled, and all
Plaintiffs request that the Court order the RICO defendants to cease their open and
5. Furthermore, the CSA preempts the practice of state and local officials in
licenses not only purport to authorize but also affirmatively assist the criminal conduct of
those who receive them by making it easier for license holders to attract investors and
customers. Recreational marijuana business licensing directly conflicts with and poses
a major obstacle to federal law’s goal of reducing marijuana trafficking and possession
Accordingly, Plaintiffs ask this Court to order the named state and local governmental
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defendants to withdraw the recreational marijuana licenses they have issued so far and
II.
JURISDICTION AND VENUE
6. This Court has subject matter jurisdiction over Plaintiffs’ RICO claims
under 18 U.S.C. § 1964 and 28 U.S.C. § 1331. This Court has subject matter
jurisdiction over Plaintiffs’ federal preemption claims under 28 U.S.C. § 1331, and the
Plaintiffs seek remedies for their federal preemption claims under 28 U.S.C. §§ 1651,
the Defendants reside in Colorado and a substantial portion of the events giving rise to
this suit occurred in Colorado. Venue over Plaintiffs’ RICO claims is also proper under
18 U.S.C. § 1965(a) because the RICO defendants reside in Colorado and transact
affairs in Colorado.
III.
PARTIES
Windy Hope Reilly and Michael P. Reilly are members of Safe Streets, as are numerous
other individuals and organizations throughout Colorado. The Reillys and other Safe
Streets members have suffered injuries caused by the operations of the Colorado-
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9. Plaintiffs Phillis Windy Hope Reilly and Michael P. Reilly are Colorado
residents who own approximately 105 acres of land immediately east and adjacent to
Organic, is a Colorado corporation that has its principal place of business at 5412
Holistic Healing and is one of its two members. He resides at 1300 West 70th Avenue,
Denver, CO 80221.
Holistic Healing and is one of its two members. He resides at 212 Elk Place, Black
Hawk, CO 80422.
13. Defendant 6480 Pickney, LLC owns the marijuana cultivation at 6480
Pickney Road in Rye, CO. Defendant Parker Walton (“Walton”) is the sole member,
manager, and owner of 6480 Pickney, LLC. Walton’s last known residence and the
principal office of 6480 Pickney, LLC, are located at 3275 S. Clermont Street, Denver,
CO 80222.
formed and that, on information and belief, Walton owns and controls. Camp Feel Good
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leases Walton’s land from 6480 Pickney, LLC. Camp Feel Good’s mailing address is
5412 Highway 119. Guzman’s mailing address is P.O. Box 1743, Evergreen, CO
80437, and Blackhawk Development Corporation’s mailing address is also P.O. Box
17. Defendant John Doe 1 constructed the marijuana grow facility at 6480
Pickney Road. Defendants Alternative Holistic Healing, Joseph Licata, Jason Licata,
6480 Pickney, Walton, Camp Feel Good, Guzman, Blackhawk Development Corp.,
Washington International Insurance Co., and John Doe 1 are hereinafter referred to as
responsible for overseeing the enforcement and administration of the state’s marijuana
laws. The Governor’s mailing address is 136 State Capitol, Denver, CO 80203.
Department of Revenue and is named in her official capacity. The Colorado Marijuana
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promulgates regulations under the Colorado Retail Marijuana Code. It also issues
Enforcement Division and is named in his official capacity. The Marijuana Enforcement
Division’s principal office is located at 455 Sherman Street, Suite 390, Denver, CO
80203. Defendants Hickenlooper, Brohl, and Koski are hereinafter referred to as the
“State Defendants.”
(hereinafter “Pueblo County Commission”) was the local marijuana licensing authority at
the time Alternative Holistic Healing received its local license to cultivate marijuana at
6480 Pickney Road. Since that time, Pueblo County marijuana licensing responsibilities
have been transferred to Defendant Pueblo County Liquor and Marijuana Licensing
Board. Both licensing authorities operate at 215 W. 10th Street, Pueblo, CO 81003.
IV.
FACTUAL ALLEGATIONS
22. Congress passed the CSA in 1970 as Title II of the Comprehensive Drug
Abuse Prevention and Control Act. 84 Stat. 1236. Among the purposes of the CSA
was to reduce drug abuse and the illegitimate traffic in controlled substances in the
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controlled substances.
23. When it passed the CSA, Congress found that “[t]he illegal importation,
have a substantial and detrimental effect on the health and general welfare of the
American people,” 21 U.S.C. § 801(2), and that “[a] major portion of the traffic in
controlled substances flows through interstate and foreign commerce,” id. § 801(3).
The CSA seeks to address the social and economic ills caused by drug abuse and drug
24. The CSA categorizes drugs according to a series of schedules, with the
most dangerous drugs falling under Schedule I. See id. § 812(b). Schedule I drugs
have “a high potential for abuse.” Id. § 812(b)(1). In enacting the CSA, Congress
marijuana to have a high potential for abuse. Id. § 812(b)(1). By classifying marijuana
exception being use of the drug as part of a Food and Drug Administration preapproved
felony under the CSA. A first-time offender convicted of producing or distributing 1,000
§ 841(b)(1)(A). Growing 100 or more marijuana plants subjects the first-time offender to
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long as 20 years. See id. § 841(b)(1)(C), (D). The CSA also criminalizes the
§ 844(a).
marijuana, the CSA also forbids a wide range of other activities connected with the
id. § 843(a)(6), or to distribute any such material with the knowledge that it will be used
to manufacture marijuana, id. § 843(a)(7). The CSA bars the use a telephone, email,
marijuana, id. § 843(b), and it is a federal crime to use the Internet to advertise the sale
funds derived from manufacturing and selling marijuana, 18 U.S.C. §§ 1956, 1957,
1960. It is also a crime to knowingly lease, rent, maintain, manage, or control a place
especially serious offense. Id. § 848. And attempting or conspiring to commit most of
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those crimes is also a criminal offense. See id. § 846; 18 U.S.C. §§ 1956(a)(1),
1956(h), 1957(a).
business make the federal policy embodied in the CSA unmistakably clear: marijuana is
a dangerous drug that is banned throughout the United States. And because RICO
recreational marijuana is a criminal enterprise for purposes of federal law. Those who
conduct or conspire to assist such enterprises are subject to the severe criminal
sanctions and civil liability that RICO imposes. See id. § 1962(c), (d).
28. Despite the strict federal prohibitions on virtually every aspect of the
commercial marijuana business, Colorado and many of its local jurisdictions have
erected a marijuana regulatory regime that purports to authorize and seeks to regulate,
state constitution that legalizes recreational (sometimes called “retail”) marijuana under
purchase, transport, grow, or process marijuana for personal use in compliance with the
State’s recreational marijuana regulatory regime. COLO. CONST. art. XVIII, § 16(3). It
also says that it is “not unlawful” for a business to manufacture, possess, purchase,
cultivate, harvest, process, package, transport, display, or possess marijuana for sale
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so long as the business complies with state and local recreational marijuana statutes
30. To give effect to and further the goals of Amendment 64, the Colorado
General Assembly passed the Colorado Retail Marijuana Code. COLO. REV. STAT.
§ 12-43.4-101 et seq. The Retail Marijuana Code purports to expressly authorize the
marijuana and retail marijuana products,” id. § 12-43.4-103(4), says that “[a] retail
marijuana store may cultivate its own retail marijuana if it obtains a retail marijuana
under which “[a] licensed retail marijuana store may . . . sell retail marijuana, retail
31. Numerous other provisions of the Retail Marijuana Code contain similar
statements purporting to authorize violations of the CSA. See, e.g., id. § 12-43.4-304(1)
(“A license applicant is prohibited from operating a licensed retail marijuana business
without state and local jurisdiction approval.”); id. § 12-43.4-402(1)(c)(II) (“A retail
marijuana store or another retail marijuana cultivation facility may sell no more than
thirty percent of its total on-hand inventory to another Colorado licensed retail marijuana
licensee may transact with a retail marijuana products manufacturing licensee for the
dispensing machine that contains retail marijuana or retail marijuana products may be
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located”); id. § 12-43.4-901(5)(a) (“[N]o person shall form a business . . . with the
marijuana or marijuana products without prior approval of the state licensing authority
and the local jurisdiction.”). See also id. § 13-22-601 (referring to “lawful activities
Marijuana Enforcement Division (“MED”) with issuing state licenses “for the cultivation,
In implementing the state’s marijuana licensing regime and other marijuana regulations,
MED has described its mission to include creating “collaborative partnerships with
stakeholders that establish public trust and value in the agency.” A 2014 MED-
commissioned report says that the agency seeks “proper control and regulation of state-
control and pricing measures necessary to maintain an orderly market.” The agency’s
33. Under the Retail Marijuana Code, businesses may only cultivate and
distribute marijuana if they obtain both state and local licenses authorizing them to do
MED issues five types of state recreational marijuana licenses: (1) retail marijuana store
licenses, which authorize the licensee to sell marijuana at a particular location, id.
§ 12-43.4-402(1); (2) retail marijuana cultivation facility licenses, which authorize the
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§ 12-43.4-404(1); (4) retail marijuana testing facility licenses, which authorize licensees
(5) occupational licenses for owners, managers, operators, employees, contractors, and
other support staff associated with licensed marijuana businesses, see id.
§ 12-43.4-401(1)(e).
the business with a physical certificate that includes in large font the following text:
Marijuana Conditional License.” Under the Retail Marijuana Code, licensees must
“conspicuously place the license at all times on the licensed premises.” Id.
§ 12-43.4-309(8). The prominent display of these licenses lends the State’s name and
marijuana is grown, cultivated, stored, weighed, packaged, sold, or processed for sale.
Id. § 12-43.4-901(3)(a); see id. § 12-43.4-105 (defining “limited access area”). These
state-issued badges are at all times the property of state licensing authorities. 1 COLO.
CODE REGS. 212-R233(C). Like the physical licenses marijuana businesses must
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display, the occupational licensee badges encourage potential marijuana investors and
must pass criminal history background checks, COLO. REV. STAT. § 12-43.4-
202(3)(a)(III), and MED can deny licenses to applicants deemed to lack “good moral
those associated with licensed marijuana businesses do not have extensive criminal
records. For similar reasons, the mandated background checks encourage the
37. The State’s recreational marijuana licensing regime also encourages the
Like the state background checks, these regulatory requirements assure customers of
the safety of the premises and products sold by licensees. The result of this state
oversight is a larger volume of sales for the recreational marijuana industry and easier
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that “legalization and commercial sale of marijuana” could increase consumption of the
drug in part by “provid[ing] a more reliable and safer product than the black market.”
38. The Retail Marijuana Code also promotes the cultivation, distribution, and
market competition, thus reducing the price and increasing the quantity and quality of
products sold. The purpose and effect of extending these laws to the marijuana
industry is to increase the total amount of marijuana cultivated, sold, and consumed.
39. Other provisions of the Retail Marijuana Code allow MED to limit
production and the number of licenses it issues but require it to consider “the total
current anticipated demand for retail marijuana and retail marijuana products in
that the overall aim of the state’s licensing regime is to facilitate and promote the
40. MED also oversees a “responsible vendor” program under which licensed
treatment from state and local regulators. Id. § 12-43.3-1101(3); see 1 COLO. CODE
REGS. 212-2-R407. Colorado lends its name and credibility to the marijuana businesses
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it designates as “responsible,” thus promoting investment and sales for the businesses
41. Further confirming that its overarching marijuana policy is to promote and
facilitate violations of the CSA, the state is reinvesting a portion of its recreational
destigmatize marijuana and promote its use by out-of-state visitors. In one radio ad
paid for by the Colorado Department of Public Health and Environment, the announcer
says that “now that marijuana’s legal here, we’ve all got a few things to know. But
instead of telling you what you can’t do, we’re going to tell you what you can do too.”
The announcer then rhythmically recites a poorly constructed poem over banjo and
tambourine music: “If you choose to use, don’t drive high,/ Instead, just walk, or skip, or
catch a ride./ . . . And whatever you get here can’t leave our state,/ so stick around
awhile, you’ll find this place is pretty great.” These verses and the State’s other
marijuana industry.
occupational licenses, and each of these licenses authorizes and facilitates the
purpose of these licensing efforts by stating that her “goal is to look at the overall
market” and ensure that “the overall market ha[s] sufficient supply to meet the demand.”
experienced explosive growth in Colorado, and this growth would not have been
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possible without the State Defendants’ implementation of laws that authorize, facilitate,
and assist the industry. Department of Justice enforcement guidance makes clear that
non-enforcement of the CSA by the Executive Branch depends on the “states and local
Colorado’s marijuana laws and MED’s implementation of those laws are key
44. Among Amendment 64’s stated aims is to “enhanc[e] revenue for public
purposes.” COLO. CONST. art. XVIII, § 16(1)(a). To that end, recreational marijuana
sales are subject to a ten percent state recreational marijuana sales tax, COLO. REV.
STAT. § 39-28.8-202, a fifteen percent state excise tax, id. § 39-28.8-302(1)(a), as well
as the state’s ordinary 2.9% sales tax. Colorado also enriches itself from the
marijuana industry have yielded substantial revenues for the state. MED records
indicate that in October 2015 alone, Colorado received approximately $9.2 million in
sales and excise taxes from the recreational marijuana industry, along with an additional
$521,615 in license and application fees. The state is thus enriching itself by
support for the recreational marijuana industry, explaining that the state has
implemented “robust regulations that allow the industry to develop and prosper.”
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Through those regulations, the State has facilitated the emergence of a billion dollar
recreational marijuana at 6480 Pickney Road from the Pueblo County Commission,
which at the time was responsible for local marijuana licensing in Pueblo County,
Colorado. Like MED, the Pueblo County Commission’s practice was to regularly issue
licenses that purport to authorize businesses to cultivate, produce, and sell recreational
Defendant Pueblo County Liquor and Marijuana Licensing Board, but this does not
Pueblo County.
marijuana business license based on the results of an investigation into “the character
and background of the proposed licensee, its owners, officers, directors, agents,
servants and/or employees and the sources of its financial investment.” PUEBLO
Pueblo licensing authority thus encourage the marijuana industry’s potential investors
and customers by signaling that county officials have investigated the backgrounds of
those associated with the licensee and that the County licensing authority endorses the
licensee’s activities.
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49. Like the Colorado Retail Marijuana Code, the Pueblo County Code
sell marijuana.” Id. § 5.12.040(7); see also id. § 5.12.040(21) (referring to facilities
where “the licensee is authorized to grow and cultivate marijuana”); id. § 5.12.140(D) (“It
is unlawful and a violation of this Chapter for a Marijuana Establishment to operate until
it has been licensed under this Chapter by the Local Licensing Authority and also
licensed by the State Licensing Authority pursuant to the Colorado Marijuana Code.”);
id. § 5.12.180 (“Any person twenty-one years of age or older is hereby authorized to
conformance with Section 16 of Article XVIII of the Colorado Constitution, provided they
50. Pueblo County has enjoyed substantial tax revenue thanks to its efforts to
authorize and facilitate the operations of the commercial marijuana industry. In 2014,
the county received approximately $548,000 in tax revenue from its 3.5% sales tax on
marijuana license fees. The county has thus enriched itself by promoting and facilitating
violations of the CSA. Pueblo County Commissioner Terry Hart explained the impact of
these revenues on the county’s budget, telling a reporter that “marijuana money may
actually help us pay off a portion of our debt for the new judicial building.”
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decisions, has described the rise of the marijuana industry in the county as “a huge
economic boon,” and a report states that the marijuana industry employed 1,500 people
in Pueblo County in 2014. Pueblo County Commissioner Sal Pace has expressed his
hope and ambition that Pueblo County will eventually have the “lion’s share of the
state’s grow facilities,” and on another occasion said that he expects the marijuana
industry to “bring a lot of wealth and income and outside dollars into Pueblo.” Such
statements underscore that, like Colorado, Pueblo County has sought to enrich itself
and bolster the local economy by purporting to authorize and seeking to assist the
52. Pueblo County’s tourism website further demonstrates that the Pueblo
Defendants’ policy is to promote and profit from federal drug crimes. That website says
that “[t]he cannabis industry in Pueblo County is just like the gaming industry in Las
Vegas” and that tourists are “more than welcome” to visit Pueblo County “for a tour of
the ‘Rocky Mountain High.’ ” The same website also includes a map showing the
Pueblo Defendants purport to authorize conduct that the CSA prohibits. In addition to
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54. On July 1, 2014, Defendant Walton paid $44,900 for the 40.72-acre parcel
located at 6480 Pickney Road, Rye, CO. Within two months, Walton had formed
Defendant 6480 Pickney, LLC, and transferred title to the land to that entity. 6480
Pickney then leased the land to Defendant Camp Feel Good, LLC, another entity that
Walton formed and that, on information and belief, Walton still owns and controls.
55. Walton is the owner and sole member and manager of 6480 Pickney,
LLC, and Camp Feel Good, LLC, and in those capacities he leased the land to
Alternative Holistic Healing, LLC, which grows and sells recreational marijuana under
the name Rocky Mountain Organics at 5412 Highway 119, Black Hawk, CO. Alternative
Holistic Healing is jointly owned and controlled by Defendants Joseph Licata and Jason
56. In leasing the land, Alternative Holistic Healing, Joseph Licata, Jason
Licata, Walton, 6480 Pickney, and Camp Feel Good all understood and agreed that the
property would be used to grow recreational marijuana for sale at Alternative Holistic
Healing’s Black Hawk store, among other places. Leasing or maintaining property for
the cultivation of marijuana is a crime under 21 U.S.C. § 856 and is racketeering activity
57. Alternative Holistic Healing, Joseph Licata, Jason Licata, Walton, 6480
Pickney, and Camp Feel Good also conspired and agreed to work together to develop
the property at 6480 Pickney Road for marijuana cultivation and to contribute to the
ongoing violations of the CSA inherent in those operations. Entering into such an
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U.S.C. § 1961(1)(D).
Walton and 6480 Pickney agreed to construct and have constructed facilities specially
designed for marijuana cultivation. They agreed to construct a building with lighting,
water, and security systems custom built for growing marijuana. On information and
belief, the building also accommodates the processing and drying of marijuana. The
building at 6480 Pickney Road is 3,670 square feet, and Joseph Licata told the Pueblo
County Commission that it would house as many as 600 marijuana plants at one time.
Possessing or constructing these facilities, equipment, products, and materials for the
operational, a fact that is evident from the offensive marijuana smell that the facility has
repeatedly released onto the Reillys’ land. Alternative Holistic Healing’s manufacture of
marijuana and possession of marijuana with the intent to distribute it violates 21 U.S.C.
and Walton hired John Doe 1. In light of the many specialized features that are
necessary to make a building suitable for growing marijuana, John Doe 1 is clearly
aware of the purpose of this building. In nevertheless associating himself with 6480
Pickney and agreeing to assist it with the construction, John Doe 1 conspired with the
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other Individual Defendants and the Pueblo Defendants to violate the CSA. Such
§ 1961(1)(D).
Jason Licata, Walton, 6480 Pickney, and Camp Feel Good used the telephone, email,
lease the 6480 Pickney Road property and develop it. Such uses of communication
facilities violate 21 U.S.C. § 843(b) and are racketeering activity under 18 U.S.C.
§ 1961(1)(D).
62. Alternative Holistic Healing applied for both state and local licenses to
license.
grant Alternative Holistic Healing a local license. In voting to deny Alternative Holistic
Healing’s local license application, Pueblo County Commissioner Terry Hart said that he
believed that a marijuana grow at 6480 Pickney Road would interfere with the use and
64. When it issued a license to Alternative Holistic Healing, the Pueblo County
Commission found that Alternative Holistic Healing had paid all “necessary fees.”
recreational marijuana indoors must pay the county $5,000 plus $0.50 per square foot
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marijuana cultivation at 6480 Pickney Road, Alternative Holistic Healing paid the county
Alternative Holistic Healing will be required to pay Pueblo County an annual license
renewal fee of $2,500 plus $0.50 per square foot of space occupied by marijuana
recreational marijuana cultivation at 6480 Pickney Road, Alternative Holistic Healing will
66. In exchange for the ongoing payment of licensing fees, Alternative Holistic
Healing and the other Individual Defendants receive critical benefits from the Pueblo
Defendants. First, the Pueblo license effectively shields the Individual Defendants from
state and federal prosecution. As described above, Colorado law authorizes the
cultivation of recreational marijuana if and only if local officials give their blessing.
COLO. REV. STAT. § 12-43.4-309(2). Similarly, the Justice Department has adopted a
policy of not bringing criminal charges against those who commit marijuana-related drug
crimes in a manner that is consistent with state and local law. Thus, Alternative Holistic
Healing’s licensing fees function as a payment to the county for official protection for
their illegal drug business. This protection is essential to the Individual Defendants’
ability to openly violate the federal drug laws through large-scale cultivation and
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67. The Individual Defendants also benefit from the license the Pueblo
Defendants issued to Alternative Holistic Healing because it gives their illegal drug
endorsement, and support for the Individual Defendants’ criminal operations, and this
themselves commit federal drug crimes when they do marijuana-related business with
68. If the license left any doubt about the Pueblo Defendants’ support for
Alternative Holistic Healing, the public statements of Pueblo County officials identified
above make clear that the Pueblo Defendants’ official policy is to join with and facilitate
commercial marijuana conspiracies that operate within their jurisdiction. Indeed, the
county has even gone so far as to promote the recreational marijuana industry on its
website. Such public statements help the Individual Defendants attract investors by
giving assurance that Alternative Holistic Healing has the support of the local
crimes in exchange for licensing fees and in expectation that those crimes will generate
economic development and tax revenues, the Pueblo Defendants conspired with the
Individual Defendants to violate the federal drug laws. This constitutes conspiracy
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70. Furthermore, during the licensing process, Pueblo County officials used
email to communicate with Walton. On information and belief, they also used other
license to cultivate marijuana and thus facilitated the commission of felonies under the
CSA. Such uses of communications facilities violate 21 U.S.C. § 843(b) and are
cultivation facilities at 6480 Pickney Road, Walton, 6480 Pickney, Camp Feel Good, and
the Pueblo Defendants became part of a larger drug conspiracy. Through Alternative
Holistic Healing, Joseph Licata and Jason Licata operate a store in Black Hawk,
Colorado, that grows and sells recreational marijuana. The Black Hawk operations
violate numerous provisions of the CSA: maintaining the premises violates 21 U.S.C.
§ 856, growing, processing, and selling marijuana there violates 21 U.S.C. § 841(a),
and maintaining the necessary chemicals, equipment, and materials violates 21 U.S.C.
§ 843(a)(6). On information and belief, Alternative Holistic Healing, Joseph Licata, and
Jason Licata have used the telephone, email and other communications facilities in
furtherance of their drug conspiracy, thus violating 21 U.S.C. § 843(b). Each of those
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72. Alternative Holistic Healing’s Black Hawk store is located at 5412 Highway
119, and this property is owned by Defendant Blackhawk Development Corp., which is
Joseph Licata, Jason Licata, Blackhawk Development Corp., and Guzman entered into
a lease under which it was expressly agreed that Alternative Holistic Healing would use
the property to sell marijuana. Blackhawk Development Corp. and Guzman thus
violated 21 U.S.C. § 856 and conspired to violate the CSA with Alternative Holistic
73. Alternative Holistic Healing advertises marijuana for sale over the Internet
the name Rocky Mountain Organics, announced a sale during which customers who
mentioned the marijuana strain “Jack Flash” would receive five dollars off their next
buds under what is presumably the name of the pictured marijuana strain: “Lemon
posted the following comment: “Been there and great prices and really great product.”
Licata or someone else affiliated with the entity then replied: “Thank you! We try to have
issued a $6,000 surety bond on behalf of Alternative Holistic Healing, guaranteeing its
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§ 12-43.4-303. The bond expressly states that Alternative Holistic Healing applied “for a
Washington International Insurance Co. knew and intended for Alternative Holistic
Healing to use this surety bond to obtain recreational marijuana licenses as part of its
efforts to operate a marijuana business in violation of the CSA. By issuing the surety
bond with the intent to further Alternative Holistic Healing’s federal drug crimes,
Joseph Licata, and Jason Licata to commit crimes under the CSA in violation of 21
Road and selling it at Alternative Holistic Healing’s Black Hawk store, among other
places. To that end, they pooled their resources, knowledge, skills, and labor to
76. All of the Individual Defendants and Pueblo Defendants have contractual
and other relationships with each other and are collaborating together to contribute to
Alternative Holistic Healing, Joseph Licata, Jason Licata, 6480 Pickney, Walton, and
Camp Feel Good all participated in the agreement as part of which Alternative Holistic
Healing leased the 6480 Pickney Road property for cultivating marijuana. The Pueblo
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Defendants issued and maintain a license for Alternative Holistic Healing on the
strength of a license application that identifies most of the other RICO defendants and
discloses the group’s plans to grow recreational marijuana at 6480 Pickney Road. And
Corp. and Guzman know the identities of all of their coconspirators, they are aware that
77. On information and belief, most decisions about how the property at 6480
Pickney Road is developed and used are made collectively by Alternative Holistic
Healing, Joseph Licata, Jason Licata, 6480 Pickney, and Walton, with each having an
78. Defendants Walton and 6480 Pickney play central roles in the
the enterprise, Walton secured a water supply for growing marijuana from the City of
Florence, Colorado and sent proof of that water supply to Pueblo County officials in
order to support Alternative Holistic Healing’s local license application. Walton also
wrote the following note, which was included with Alternative Holistic Healing’s county
license application: “I, Parker Walton, as the sole member and manager of 6480
Pickney LLC, allow the use of RMJ (Retail Marijuana) cultivation facility on my property
at 6480 Pickney Rd. /s/ Parker Walton on behalf of 6480 Pickney LLC.” The Pueblo
December 22, 2014 hearing. Walton spoke at the hearing in support of the application,
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describing himself as “the owner” of 6480 Pickney Road. Also at the hearing, Joseph
Licata referred to Walton as “the builder.” When the County Commission asked Joseph
Licata questions about the planned size of the cultivation facility and the number of
79. Alternative Holistic Healing, Joseph Licata, and Jason Licata also have
important roles managing the enterprise’s affairs. Alternative Holistic Healing applied
for and holds the state and local licenses that authorize cultivation of marijuana at 6480
Pickney Road. As equal owners in Alternative Holistic Healing, Joseph Licata and
Jason Licata completed and signed those applications and make decisions about
80. The Pueblo Defendants also have a role in directing the affairs of the
Road as the location for the group’s marijuana cultivation facility. Through their
licensing power, the Pueblo Defendants could have mandated that the marijuana grow
prevented the Individual Defendants from operating their drug conspiracy in Pueblo
County altogether. Instead, they authorized the cultivation to locate a few feet from the
Reillys’ property.
in Black Hawk, the 6480 Pickney Road marijuana grow produces a large volume of
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marijuana that moves in the interstate market for illegal drugs. Moreover, in
constructing the facility, the Individual Defendants procured products and services
82. All of the RICO defendants agreed to participate in and assist the
enterprise with full knowledge of its overall aim of growing and selling marijuana. As set
forth above, that goal could only be accomplished through numerous violations of the
CSA. Each such violation of the CSA is racketeering activity, and all of the RICO
defendants thus knew and intended that in agreeing to assist the enterprise they would
83. Plaintiffs Phillis Windy Hope Reilly and Michael P. Reilly own lots 1, 2, and
6 of the Meadows at Legacy Ranch, a development on the south side of Pickney Road.
The Reillys’ lots form a contiguous parcel of approximately 105 acres of beautiful rolling
pasture with sweeping mountain vistas that include views of Pike’s Peak. Although the
Reillys do not live on their land, they often visit on weekends with their children to ride
horses, hike, and visit with friends in the closely-knit neighborhood. The Reillys’
84. The 6480 Pickney Road marijuana grow is west and immediately adjacent
to the Reillys’ property. Although Defendant 6480 Pickney owns a 40-acre parcel, the
structure was built in the corner of the lot, just a few feet from the Reillys’ property line.
The building has marred the mountain views from the Reillys’ property, thus making it
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less suitable for hiking and horseback riding. The building’s purpose—the manufacture
of illegal drugs—exacerbates this injury, for when the Reillys and their children visit the
property they are reminded of the racketeering enterprise next door every time they look
to the west.
85. Construction of the marijuana cultivation facility at 6480 Pickney Road was
completed in the latter part of 2015, and the facility is currently being used to grow
smell that is particularly strong when the plant is harvested. Since construction of the
facility was completed, its operation has repeatedly caused a distinctive and unpleasant
marijuana smell to waft onto the Reillys’ property, with the smell strongest on the portion
of the Reillys’ property that is closest to Defendants’ marijuana cultivation facility. This
noxious odor makes the Reillys’ property less suitable for recreational and residential
purposes, interferes with the Reillys’ use and enjoyment of their property, and
divided into approximately 35-acre tracts on which residents commonly keep horses.
prohibit most commercial uses of the land. Covenants also require that buildings be set
back at least fifty feet from any lot boundary, prohibit the keeping of pigs and other
87. The 6480 Pickney Road marijuana grow is situated just outside the
boundaries of the Meadows at Legacy Ranch, and if it were within those boundaries it
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would violate numerous covenants. The 6480 Pickney Road marijuana grow is a large
commercial structure situated less than fifty feet from the Reillys’ property.
by virtually any definition because marijuana plants are highly odorous, and their
offensive smell travels long distances. The Meadows at Legacy Ranch adopted its
covenants to protect property values and owners’ enjoyment of their land. The fact that
the Individual Defendants are using the land west of the Reillys’ property to do things
that the Reillys and their other neighbors have covenanted not to do shows that these
88. Terry Hart, one of the three members of the Pueblo County Commission,
agreed that the 6480 Pickney Road marijuana grow would interfere with surrounding
land uses and explained that he was voting against granting Alternative Holistic Healing
89. The Individual and Pueblo Defendants’ publicly disclosed drug conspiracy
has also injured the value of the Reillys’ property. People buy lots at the Meadows at
Legacy Ranch because they want to keep horses or build homes in a pleasant
residential area, and the Reillys’ land is less suitable for those uses due to the 6480
Pickney Road marijuana grow. Furthermore, the large quantity of drugs at marijuana
grows makes them targets for theft, and a prospective buyer of the Reillys’ land would
reasonably worry that the 6480 Pickney Road marijuana grow increases crime in the
area. Prospective buyers would also object to the 6480 Pickney Road marijuana grow
because it emits pungent odors, thus further interfering with the use and enjoyment of
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the Reillys’ land. As a result, the 6480 Pickney Road marijuana grow has directly and
proximately caused a decline in the market value of the Reillys’ land and made it more
90. The Individual Defendants could not have located their marijuana grow
operation at 6480 Pickney Road if they had not received authorization from the State
and Pueblo Defendants to do so. Indeed, they did not begin construction on the
facilities at 6480 Pickney Road until the State and Pueblo Defendants authorized them
to grow marijuana at that location. Thus, the State and Pueblo Defendants have also
91. In addition to the injuries suffered by the Reillys, other Safe Streets
members have also been injured by the State and Pueblo Defendants’ efforts to license
92. Safe Streets members live near the MED-licensed marijuana businesses
criminal element into the neighborhood and caused traffic congestion. By causing those
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RICO COUNTS
COUNT I
Violation of 18 U.S.C. § 1962(c)
Against Alternative Holistic Healing, Joseph Licata, Jason Licata,
6480 Pickney, Walton, and the Pueblo Defendants
paragraphs.
94. RICO creates a private right of action for “[a]ny person injured in his
associated with any enterprise engaged in, or the activities of which affect, interstate or
Healing, Joseph Licata, Jason Licata, 6480 Pickney, Walton, and the Pueblo
other relationships with each other, collaborating to develop the 6480 Pickney Road
property for recreational marijuana cultivation, and agreeing to sell that marijuana at
Alternative Holistic Healing’s Black Hawk store. This enterprise enables the Individual
96. Funding, goods, and services procured by the enterprise have moved in
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97. Alternative Holistic Healing, Joseph Licata, Jason Licata, 6480 Pickney,
Walton, and the Pueblo Defendants each has some part in directing the enterprise’s
affairs. Alternative Holistic Healing, by and through its owners Joseph Licata and Jason
Licata, applied for licenses to operate the recreational marijuana grow at 6480 Pickney
Road, and they collectively manage the Black Hawk shop where the resulting marijuana
is sold. 6480 Pickney owns the property on which the marijuana is grown, and through
Walton it makes decisions about the design and operation of the building and the
recreational marijuana at 6480 Pickney, both Joseph Licata and Walton spoke on behalf
operations at 6480 Pickney Road, yet they could impose conditions on those operations
98. Alternative Holistic Healing, Joseph Licata, Jason Licata, 6480 Pickney,
and Walton have each conducted or participated in the conduct of the affairs of the
lease under which 6480 Pickney Road has been used to commit numerous crimes
under the CSA, and that lease violates 21 U.S.C. § 856. They also conspired, in
violation of 21 U.S.C. § 846, to work together with the other members of the enterprise
enter into their lease and their drug conspiracy in violation of 21 U.S.C. § 843(b).
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Alternative Holistic Healing, Joseph Licata, and Jason Licata possess materials, goods,
and facilities for the manufacture of marijuana in violation of 21 U.S.C. § 843(a)(6). All
conduct of the affairs of the enterprise through a pattern of racketeering activity. They
conspired with the other members of the enterprise to violate the CSA through the
conspiracy and its numerous associated drug felonies, the Pueblo Defendants violated
local license the enterprise needed. The Pueblo Defendants’ racketeering activities in
Jason Licata, 6480 Pickney, Walton, and the Pueblo Defendants have directly and
proximately injured the Reillys’ property by causing noxious smells to travel onto that
property, interfering with its use and enjoyment, diminishing its market value, and
COUNT II
Violation of 18 U.S.C. § 1962(d)
Against All Individual and Pueblo Defendants
paragraphs.
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102. RICO creates a private right of action for “[a]ny person injured in his
violate any of the provisions of subsection (a), (b), or (c) of this section.”
103. The Individual and Pueblo Defendants, for their mutual and individual
fact enterprise for the purpose of cultivating recreational marijuana at 6480 Pickney
Road and selling it at Alternative Holistic Healing’s store in Black Hawk. The Individual
and Pueblo Defendants knew that this patently unlawful scheme could only be
which marijuana is cultivated and sold, cultivating and selling marijuana, and
possessing the goods and materials needed to cultivate and process marijuana are all
crimes under the CSA. See, e.g., 21 U.S.C. §§ 841(a), 843(a)(6), 856.
their association-in-fact enterprise for the purpose of cultivating and selling recreational
marijuana have moved in interstate commerce, and the enterprise sells marijuana
Individual and Pueblo Defendants violated 21 U.S.C. § 846 by agreeing and conspiring
to assist in the establishment of the 6480 Pickney Road marijuana grow or in the
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Alternative Holistic Healing, 6480 Pickney, LLC, and their agents entered into a real
U.S.C. § 856.
Pueblo Defendants’ conspiracy to violate 18 U.S.C. § 1962(c) have injured the Reillys’
property. Specifically, the lease, construction, and operation of the marijuana facility at
6480 Pickney Road in violation of 21 U.S.C. § 856 and the drug conspiracy of which
those actions are a part directly and proximately injured the Reillys’ property by causing
noxious smells to travel onto that property, interfering with its use and enjoyment,
COUNT III
Violation of 18 U.S.C. § 1962(c)
Against Joseph Licata, Jason Licata, and the Pueblo Defendants
paragraphs.
108. RICO creates a private right of action for “[a]ny person injured in his
associated with any enterprise engaged in, or the activities of which affect, interstate or
debt.”
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110. Joseph Licata and Jason Licata are equal owners and members of
Alternative Holistic Healing and have authority to speak and sign documents on its
111. The Pueblo Defendants also have a role in directing the affairs of
Alternative Holistic Healing because they authorized its operations at 6480 Pickney
Road and could impose conditions on those operations or force them to close or
relocate.
112. Joseph Licata and Jason Licata have each conducted or participated in
racketeering activity. Together, they oversee the growing, processing, and sale of
21 U.S.C. § 841(a), 21 U.S.C. § 843(a)(6), and 21 U.S.C. § 856. They entered into a
lease under which marijuana is being cultivated at 6480 Pickney Road in violation of 21
U.S.C. § 856. They conspired with each other, 6480 Pickney, LLC, and Walton to
violate numerous provisions of the CSA by growing recreational marijuana and thus
violated 21 U.S.C. § 846. They advertise marijuana for sale over the Internet in
violation of 21 U.S.C. § 843(c)(2)(A). On information and belief, they have each violated
take steps in furtherance of the many violations of the CSA that occur at their Black
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Hawk store and the 6480 Pickney Road recreational marijuana grow facility. Each of
those crimes is racketeering activity under 18 U.S.C. § 1961(1)(D), and together they
represent an ongoing pattern that will continue unless this Court intervenes.
activity. They conspired with Joseph Licata and Jason Licata to violate the CSA
that conspiracy and its numerous associated drug felonies, the Pueblo Defendants
of the local license Alternative Holistic Healing needed. The Pueblo Defendants’
indefinitely, as they promote Alternative Holistic Healing’s marijuana business and use
114. Funding, goods, and services procured by Joseph Licata and Jason Licata
for Alternative Holistic Healing’s unlawful activities have moved in interstate commerce,
and Alternative Holistic Healing sells marijuana—including marijuana grown at the 6480
Pickney Road cultivation facility—in the interstate market for illegal drugs.
115. The racketeering activities of Joseph Licata and Jason Licata directly and
proximately injured the Reillys’ property by causing noxious smells to travel onto that
property, interfering with its use and enjoyment, diminishing its market value, and
COUNT IV
Violation of 18 U.S.C. § 1962(d)
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paragraphs.
117. RICO creates a private right of action for “[a]ny person injured in his
violate any of the provisions of subsection (a), (b), or (c) of this section.” Joseph Licata,
Insurance, and the Pueblo Defendants agreed and conspired to violate 18 U.S.C.
§ 1962(c).
Washington International Insurance, and the Pueblo Defendants are each associated
with Alternative Holistic Healing and agreed to help Alternative Holistic Healing establish
and operate a recreational marijuana grow facility at 6480 Pickney Road and a
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Washington International Insurance, and the Pueblo Defendants each understood that
their collective efforts to establish and operate the recreational marijuana operations at
6480 Pickney Road and in Black Hawk could only be accomplished through a pattern of
racketeering activity. Specifically, all understood and agreed that Joseph Licata and
Jason Licata would violate the CSA by cultivating recreational marijuana and selling it,
21 U.S.C. § 841(a), possessing the equipment and materials necessary for marijuana
cultivation, id. § 843(a)(6), and maintaining the premises at 6480 Pickney Road and in
Black Hawk for cultivating and selling recreational marijuana, id. §§ 849, 856. Each of
those crimes is racketeering activity, and together they form an ongoing pattern.
International Insurance, and the Pueblo Defendants to violate 18 U.S.C. § 1962(c) have
injured the Reillys’ property. Specifically, the construction at 6480 Pickney Road in
violation of 21 U.S.C. § 856 and the drug conspiracy of which that construction is a part
directly and proximately injured the Reillys’ property by causing noxious smells to travel
onto that property, interfering with its use and enjoyment, diminishing its market value,
COUNT V
Violation of 18 U.S.C. § 1962(c)
Against Walton and the Pueblo Defendants
paragraphs.
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124. RICO creates a private right of action for “[a]ny person injured in his
associated with any enterprise engaged in, or the activities of which affect, interstate or
debt.”
126. Walton is the owner and sole member of 6480 Pickney, LLC, and thus has
127. The Pueblo Defendants also have a role in directing the affairs of 6480
Pickney because they authorized its operations at 6480 Pickney Road and could
128. 6480 Pickney, LLC owns property where a specially designed building is
used to grow recreational marijuana for sale into the interstate market for illegal drugs,
and materials used to construct the building were acquired in interstate commerce.
129. Walton has conducted or participated in the conduct of the affairs of 6480
he leased the 6480 Pickney Road property for use as a recreational marijuana
cultivation facility. And in violation of 21 U.S.C. § 846, he agreed and conspired with
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Alternative Holistic Healing, Joseph Licata, and Jason Licata to assist them in their
ongoing violations of the CSA. On information and belief, Walton acquired materials for
the cultivation of marijuana in connection with the 6480 Pickney Road operations in
violation of 21 U.S.C. § 843(a)(6). On information and belief, Walton has used the
of the CSA, thus violating 21 U.S.C. § 843(b). Those crimes are racketeering activity
conduct of the affairs of 6480 Pickney through a pattern of racketeering activity. They
conspired with Walton to violate the CSA through the cultivation of marijuana, thus
associated drug felonies, the Pueblo Defendants violated 21 U.S.C. § 843(b) by using
as they promote 6480 Pickney’s marijuana business and use communications facilities
131. The racketeering activities of Walton and the Pueblo Defendants directly
and proximately injured the Reillys’ property by causing noxious smells to travel onto
that property, interfering with its use and enjoyment, diminishing its market value, and
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COUNT VI
Violation of 18 U.S.C. § 1962(d)
Against Walton, John Doe 1, and the Pueblo Defendants
paragraphs.
133. RICO creates a private right of action for “[a]ny person injured in his
violate any of the provisions of subsection (a), (b), or (c) of this section.” Walton, John
Doe 1, and the Pueblo Defendants agreed and conspired to violate 18 U.S.C. § 1962(c).
corporation, association, or other legal entity.” 18 U.S.C. § 1961(4). 6480 Pickney, LLC
135. 6480 Pickney, LLC owns property where a building is used to grow
recreational marijuana for sale into the interstate market for illegal drugs, and materials
136. Walton and John Doe 1 have engaged in a pattern of racketeering activity
in connection with 6480 Pickney, LLC. In violation of 21 U.S.C. § 856, Walton leased
the 6480 Pickney Road property for use as a recreational marijuana cultivation facility.
And in violation of 21 U.S.C. § 846, Walton and John Doe 1 agreed and conspired with
Alternative Holistic Healing, Joseph Licata, and Jason Licata to assist them in their
ongoing violations of the CSA by developing the 6480 Pickney Road property for
marijuana cultivation. On information and belief, Walton acquired materials for the
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violation of 21 U.S.C. § 843(a)(6). On information and belief, both Walton and John
Doe 1 have used the telephone, email, or other communication facilities in furtherance
of their drug conspiracy, thus violating 21 U.S.C. § 843(b). Those crimes are
activity in connection with 6480 Pickney, LLC. They conspired with Walton to violate
the CSA through the cultivation of marijuana, thus violating 21 U.S.C. § 846. In
furtherance of that conspiracy and its numerous associated drug felonies, the Pueblo
the issuance of the local license required to cultivate marijuana at 6480 Pickney Road.
138. The racketeering activities of Walton and John Doe 1 directly and
proximately injured the Reillys’ property by causing noxious smells to travel onto that
property, interfering with its use and enjoyment, diminishing its market value, and
PREEMPTION COUNTS
COUNT VII
Federal Preemption of State Marijuana Licensing
Against State Defendants
paragraphs.
140. The Supremacy Clause makes the United States Constitution and
constitutionally authorized federal statutes “the supreme law of the land . . . anything in
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the constitution or laws of any state to the contrary notwithstanding.” U.S. CONST. art.
VI, cl. 2. Thus, where federal and state law conflict, state law is preempted and must
yield. Federal courts sitting in equity have the power to set aside actions of state
141. Although the CSA does not occupy the field of marijuana regulation, it
says that state law is preempted where “there is a positive conflict” between the CSA
and state law “so that the two cannot consistently stand together.” 21 U.S.C. § 903.
142. The CSA imposes substantial criminal penalties on those who unlawfully
Schedule I drug because it has a high potential for abuse. See id. § 812(b)(1), (c). The
CSA thus embodies a strong federal policy that seeks to eliminate the commercial
143. Despite the federal criminal ban on the commercial cultivation and
distribution of recreational marijuana, MED raises revenue for the State of Colorado
through a regulatory regime that purports to authorize, regulate, and tax federal drug
144. MED’s licenses also affirmatively assist and promote the commercial
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with the CSA and poses an obstacle to the achievement of the CSA’s purposes.
“[T]here is a positive conflict” between the CSA and MED’s practice of issuing marijuana
licenses and “the two cannot consistently stand together.” 21 U.S.C. § 903. It follows
that MED’s licensing regime is preempted by federal law and cannot stand.
COUNT VIII
Federal Preemption of Local Marijuana Licensing
Against Pueblo Defendants
paragraphs.
147. The Supremacy Clause makes the United States Constitution and federal
statutes “the supreme law of the land . . . anything in the constitution or laws of any
state to the contrary notwithstanding.” U.S. CONST. art. VI, cl. 2. Thus, where federal
and local law conflict, local law is preempted and must yield. Federal courts sitting in
equity have the power to set aside actions of local governments that are preempted
148. Although the CSA does not occupy the field of marijuana regulation, it
says that local law is preempted where “there is a positive conflict” between the CSA
and local law “so that the two cannot consistently stand together.” 21 U.S.C. § 903.
149. The CSA imposes substantial criminal penalties on those who unlawfully
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Schedule I drug because it has a high potential for abuse. See id. § 812(b)(1), (c). The
CSA thus embodies a strong federal policy that seeks to reduce the cultivation and
150. Despite the federal criminal ban on the commercial cultivation and
distribution of recreational marijuana, the Pueblo Defendants raise revenue for the
County through a regulatory regime that purports to authorize, regulate, and tax federal
151. The Pueblo Defendants issue licenses that affirmatively assist and
assuring them that licensees have been investigated and approved by the Pueblo
Defendants.
conflicts with the CSA and poses an obstacle to the achievement of the CSA’s
purposes. For this reason, “there is a positive conflict” between the CSA and the
Pueblo Defendants’ practice of issuing marijuana licenses and “the two cannot
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a. Awarding the Reillys three times the damages to their property that
business licenses.
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l. Granting such other and further relief as this Court deems just and
proper.
s/David H. Thompson
David H. Thompson
Counsel of Record
COOPER & KIRK, PLLC
1523 New Hampshire Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
(202) 220-9601 (fax)
[email protected]
Of Counsel:
Charles J. Cooper
Michael W. Kirk
Howard C. Nielson, Jr.
Peter A. Patterson
Brian W. Barnes
COOPER & KIRK, PLLC
1523 New Hampshire Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
(202) 220-9601 (fax)
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CERTIFICATE OF SERVICE
I hereby certify that on February 1, 2016, I electronically filed the foregoing with
the Clerk of Court using the CM/ECF system, which will send notification of such filing to
s/ Brian W. Barnes
BRIAN W. BARNES
53