US (CA): Cannabis grower can’t use RICO statute to sue for fraud

A California licensed cannabis grower can't avail herself of the federal racketeering statute to sue a group of former business partners because a panel of the Ninth Circuit Court of Appeals said, under that statute operating a cannabis business is considered a crime.

The three-judge panel on Wednesday unanimously affirmed a judge's ruling from over two years ago that Francine Shulman, an apple farmer turned cannabis cultivator, can't sue under the Racketeer Influenced and Corrupt Organizations Act because it would provide her a remedy for actions that are unequivocally illegal under federal law.

"Looking to RICO as a whole, it is clear that Congress did not intend 'business or property' to cover cannabis-related commerce," U.S. Circuit Judge Milan Smith Jr., a George W. Bush appointee, wrote. "When Congress enacted RICO, it expressly defined 'racketeering activity' to include the 'manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in' cannabis."

An attorney for Shulman didn't immediately respond to a request for comment on the ruling. California is one of 18 states that have legalized recreational cannabis, creating a multibillion-dollar industry. Shulman, a successful, elderly California farmer, was already growing medical cannabis on her 1,100-acre Iron Angel ranch, named after her motorbike, near Lompoc in Central California. She saw an opportunity when recreational cannabis was made legal in the state, her attorneys said in their opening brief with the court of appeals and acquired new land, expanded her farming operations, and began to cultivate cannabis in an operation licensed by California law.


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