Don't Make a Federal Case Out of It
Crimson Galeria Limited Partnership et al (the Plaintiffs) vs. Healthy Pharms, Inc. et al (the Defendants), in Civil Action No. 1:17-cv-11696-ADB (the Complaint), which is currently pending in the United States District Court for the District of Massachusetts, is an interesting case to watch, as it could have far-reaching implications for the cannabis industry. In it, Plaintiffs allege that all Defendants are criminally conspiring to grow and sell cannabis and cannabis products, in violation of the Controlled Substances Act and the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. This is a stretch, as one of the defendants, Century Bank and Trust Company, only provides banking services to Healthy Pharms, Inc., a Massachusetts-licensed registered marijuana dispensary located in Harvard Square. Not to put too fine a point on the dispute, but by invoking the RICO statute, Plaintiffs are attempting to make a federal case out of what amounts to a Harvard Square landlord dispute, because the landlord does not approve of Healthy Pharms, Inc.’s operation and is concerned about the potentially negative ramifications it may have on its own business and real estate value.
On December 15, 2017, Century Bank filed a brief in support of its motion to dismiss the Complaint, which is quite persuasive and compelling. In it, Century Bank argues that Plaintiffs do not show that Defendants violated the RICO statute, as they fail to sufficiently allege that two key criteria had been met: namely, that (i) Century Bank participated in the conduct of the affairs of the (alleged criminal) enterprise, and that (ii) Century Bank knowingly joined the conspiracy to participate in the affairs of the enterprise. All Plaintiffs have alleged is that Century Bank provided normal banking services, which, by itself, is not enough to support a RICO claim.
Further, Century Bank asserts Plaintiffs have