Not in my backyard! Odor-Based Nuisance Claims and the Cannabis Industry

Not in my backyard! Odor-Based Nuisance Claims and the Cannabis Industry

Author Christopher Strunk is a partner at Gordon Rees Scully Mansukhani LLP and a co-lead of its national cannabis practice group. He has defended cannabis companies in complex litigation and has provided counseling on ever-changing regulations. He also assists cannabis companies in business transactions.

Cannabis cultivation has had a significant and often transformative impact on the local economies and communities where it is grown. Cannabis has become a multibillion-dollar industry, which is projected to continue to expand as more jurisdictions fully legalize cannabis. By way of example, industrial hemp—which the 2018 Farm Bill removed from the Controlled Substances Act—was grown on approximately 511,442 acres in 2019, representing a 455 percent increase over 2018.(1). Cannabis workers were deemed “essential” during the pandemic.(2). And support for federal legalization is at an all time high.

Yet in spite of this progress, the industry remains dogged by anti-cannabis interests, as well as neighbors concerned by the “cannabis farm next door.” Some of these neighbors of hemp and cannabis operations have begun to push back—largely citing odor concerns—both in court and with local regulators. The result has been environmental enforcement actions brought by state regulators, state-level nuisance suits, and claims brought under the Racketeer Influenced and Corrupt Organizations Act (RICO).

State Regulators
Cases like Green Freedom, LLC v. Olympic Region Clean Air Agency illustrate the powers of state regulators to respond to and enforce citizen complaints. In Green Freedom, Washington’s Pollution Control Hearings Board (PCHB) the PCHB considered a violation and a civil penalty imposed by the Olympic Region Clean Air Agency (ORCAA) against cannabis business Green Freedom. (3). At issue was the odor regulation promulgated by ORCAA, a clean air agency serving six counties, which provided that “[n]o person shall cause or allow the emission or generation of any odor from any source, which unreasonably interferes with another person’s use, and enjoyment of their property.” One of Green Freedom’s neighbors, who operated a trucking business on a 10-acre parcel of land adjacent to the cannabis facility, submitted an online complaint on the date of the violation claiming that the odor was causing “nausea, watery eyes, and ‘feeling of not being able to go outside and enjoy my property.’” An ORCAA investigation revealed marijuana odors that were noticeable on the breeze and confirmed that the complainants’ property was affected. Ultimately, the regulators affirmed two $1,000 civil penalties against Green Freedom. Though the fines were relatively small, the key takeway is the reach that the regulators had – and the risk that future enforcement actions might also encompass injunctive relief. And these issues are not just confined to the Pacific Northwest. They have been identified as concerns in other states and jurisdictions where cannabis is heavily cultivated. For example, Santa Cruz County’s Planning Department recognized in its 2017 cannabis draft environmental impact report (EIR) that “[c]annabis cultivation, and to a lesser degree manufacturing, is often accompanied by strong odors. Odors vary by variety, including pepper, balsamic vinegar, pine, citrus, and skunk-like odors.” (4).

Nuisance Claims
Nuisance is a common tort claim and is divisible into two classes: public and private nuisance. The landmark case of Spur Industries, Inc. v. Del E. Webb Development Co. held that the difference between them is one of degree. (5). A private nuisance affects “a single individual or a definite small number of persons in the enjoyment of private rights not common to the public,” while a public nuisance affects “the rights enjoyed by citizens as a part of the public.” (6). The Spur court further noted that a public nuisance must affect a considerable number of people or an
entire community or neighborhood.

A key aspect of nuisance claims is that a plaintiff must demonstrate that an ordinary person would be reasonably annoyed or disturbed by the condition alleged to be a nuisance; the nuisance complained of must be “indecent or offensive to the senses.” (7). In states with legal cannabis, including California and Colorado, complaints have been made to state and local enforcement authorities during the growing season, including during flowering. Once the cannabis is harvested, new opportunities for odors arise. The cannabis must be dried, with the process typically taking 5–15 days to complete; this is usually done indoors in a temperature-controlled facility with proper air circulation and ventilation. Extraction of cannabidiol (CBD), tetrahydrocannabinol (THC), and other compounds from the cannabis plant can also release odors. Indeed, the Colorado DDPHE specifically recognized that both the growth of cannabis and the extraction processes emit VOCs; and while certain solutions exist for odor management—for example, carbon filtration—no available technology can completely prevent odor and VOC emissions. (8).

Some local authorities have imposed stringent bans on cultivation as a result of odor concerns. For example, even after the 2018 Farm Bill legalized industrial hemp, Sonoma County, California, supervisors voted in April 2019 to ban its cultivation. Other odor complaints are made by private businesses that share the agricultural space. Wineries are a prime example of such businesses, which have brought multiple actions against the industry in the past. These concerns and issues were recently highlighted in a June 2020 report of the Santa Barbara County Grand Jury, which provides oversight of county governance. The grand jury concluded that the Santa Barbara County Board of Supervisors erred in permitting cannabis operations near wineries, focusing on disruption of the tasting experience due to odors, as well as “terpene drift” and the impact on grape growing. (9). Other outdoor-based businesses, such as equestrian facilities, have also reported impacts.

Civil RICO Suits
RICO authorizes treble damages, attorney fees, and potential injunctive relief in a private cause of action. Because marijuana remains illegal at the federal level, civil RICO claims are available as a weapon by anti-cannabis interests. Initially, a series of RICO suits against the cannabis industry prompted settlements, due to concern that these cases could decimate the industry. In one such case, Safe Streets Alliance v. Hickenlooper, the Tenth Circuit Court of Appeals held that landowners in Colorado could move forward with a civil suit under RICO against a licensed marijuana cultivation enterprise located on an adjacent property. 10 The plaintiffs owned a parcel of land in Pueblo, Colorado, with two agricultural buildings. The plaintiffs used their land for hiking, riding horses, and visiting with friends. A newly constructed marijuana grow soon began operating on an adjacent plot of land. The plaintiffs alleged that the operation of the business, together with the “noxious odors” released from that business, injured the value of their property, and brought suit against multiple entities operating that business or affiliated with it. However, rather than allege common-law nuisance claims, the plaintiffs brought suit under RICO’s citizen suit provision, alleging that the cannabis businesses were co-conspirators. Because cannabis is illegal at the Federal level, cannabis growth will be found to constitute illegal racketeering activities. Thus, there is always a danger that a plaintiff in a civil RICO suit may be able to persuade a federal court and jury to impose civil damages against a cannabis business.

Key Takeaways
Cannabis businesses should pay attention to the impacts that their odors may cause. Importantly, even if a business is operating legally under state and federal law (for example, an industrial hemp facility), they may still face nuisance claims from NIBMY neighbors. This will survive broad legality of the industry for years to come. In order to navigate this reality, cannabis cultivators must take steps recommended by regulators to minimize odor and other impacts that might prompt a nuisance suit or regulatory violation.


Footnotes

  1. Tom Angell, Hemp Farming Quadrupled in the U.S. This Year, New Report Shows, FORBES
    (Sept. 5, 2019), https://www.forbes.com/sites/tomangell/2019/09/05/hemp-farming-quadrupled-in-the-u-
    s-this-year-new-report-shows.
  2. Dana Hull, Cannabis Is Deemed Essential Business in Bay Area Virus Shutdown, BLOOMBERG
    (Mar. 17, 2020), https://www.bloomberg.com/news/articles/2020-03-18/cannabis-is-deemed-essential-
    business-in-bay-area-virus-shutdown; Dan Levin, Is Marijuana an “Essential” Like Milk or Bread? Some
    States Say Yes, N.Y. TIMES (Apr. 10, 2020), https://www.nytimes.com/article/coronavirus-weed-
    marijuana.html.
  3. No. 16-048, 2016 WL 7233503 (Wash. P.C.H.B. Dec. 2, 2016).
  4. CTY. OF SANTA CRUZ PLANNING DEP’T, SCH NO. 2017022052, DRAFT ENVIRONMENTAL IMPACT REPORT (EIR)
    FOR THE COMMERCIAL CANNABIS CULTIVATION AND MANUFACTURING REGULATIONS AND LICENSING PROGRAM 3.3-
    6 (2017),
    http://www.sccoplanning.com/Portals/2/County/Planning/env/Cannabis_EIR/Santa%20Cruz%20Co%20
    Cannabis%20Draft%20EIR.pdf.
  5. 108 Ariz. 178 (1972).
  6. Id. at 183.
  7. See Venuto v. Owens-Corning Fiberglas Corp., 22 Cal. App. 3d 116, 124 (1971).
  8. See DDPHE CANNABIS BEST PRACTICES GUIDE, supra note 9.
  9. SANTA BARBARA CTY. GRAND JURY, CANNABIS (2020), http://www.sbcgj.org/2020/Cannabis.pdf.
  10. 859 F.3d 865 (10th Cir. 2017).