The U.S. Supreme Court of the United States clarified the reach of the civil Racketeer Influenced and Corrupt Organizations Act (RICO) in Medical Marijuana, Inc. v. Horn on April 2, 2025.
In a 5-4 ruling, the Court resolved a circuit split and extended the statute to include suits where personal injuries resulted in losses to business or property. The Court nevertheless emphasized other ways that RICO limits liability and left potentially controlling questions for the lower courts to decide.
Background
A commercial truck driver injured in an accident purchased "Dixie X," a tincture infused with cannabidiol or CBD—an ingredient derived from cannabis. The tincture was marketed as containing "0%" Delta-9 tetrahydrocannabinol (Delta-9 THC)—a psychoactive component of cannabis that is illegal in many jurisdictions. The trucker, whose job required regular drug testing, called customer service to confirm Dixie X contained no Delta-9 THC and consumed the tincture. His next drug test found Delta-9 THC in his system, and his employer fired him. The trucker sued the producers and sellers of the tincture, including Medical Marijuana, Inc., under the civil RICO statute.
Civil RICO creates a cause of action for treble damages and attorneys' fees for "[a]ny person injured in his business or property by reason of a violation of [RICO]." 18 U.S.C. § 1964(c). A RICO violation occurs when an enterprise partakes in a pattern of racketeering activity. Id. §§ 1961-1962. Claims for personal injuries caused by RICO violations are, however, implicitly barred. See RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 350 (2016). Prior to the Supreme Court's decision, the U.S. Courts of Appeal for the Sixth, Seventh, and Eleventh Circuits barred civil RICO claims where the injury to business or property flowed from an "antecedent personal injury." By contrast, the U.S. Courts of Appeal for the Second and Ninth Circuits allowed for such relief.
The trucker alleged that Medical Marijuana, Inc., was an enterprise engaged in a pattern of racketeering: specifically, that the false or misleading Delta-9 THC advertising amounted to mail and wire fraud. He alleged that the RICO violation led to his unknowingly ingesting Delta-9 THC, caused his job loss, and injured his business (employment as a trucker). Medical Marijuana, Inc., argued that a personal injury—THC ingestion—was the antecedent cause of the job loss and thus precluded relief under RICO.
The Supreme Court resolved the issue by holding that civil RICO extends to losses to business and property even where those losses flowed from a personal injury.
Holding
The Supreme Court, in a 5-4 opinion penned by Justice Amy Coney Barrett, held that civil RICO allows plaintiffs to seek damages for losses to business or property where the loss resulted from personal injury. The majority held that the phrase "[a]ny person injured in his business or property" in the civil RICO statute requires only that a person's business or property be harmed or damaged. If a RICO violation causes personal injury that leads to business or property harm, the plaintiff may sue under the statute. For example, one cannot recover under RICO for personal injuries from a robbery, but if the injuries force a business to close, it may be possible to recover for the harm to the business.
The majority cautioned that the direct relationship required between the alleged RICO violation and the asserted loss limits the expansion of liability under civil RICO. A sufficiently direct relationship might be lacking in cases like with multiple actors and steps, like Medical Marijuana. Additionally, civil RICO still requires a pattern of racketeering activity, which might limit the reach of Medical Marijuana's holding.
The Court left critical questions unanswered. It did not define "business" or "property" injury, although it stated that not every monetary harm, like lost wages or medical expenses, implicates RICO. Further, the majority did not decide if there was a sufficiently direct relationship between the RICO violation and the alleged injury in this case. Lastly, the Court assumed without deciding that Delta-9 THC consumption constitutes a personal injury.
What's Next
The Sixth, Seventh, and Eleventh Circuits will likely see more civil RICO lawsuits. And lower courts will have to opine on Medical Marijuana's unanswered questions, such as further clarification of what qualifies as "business or property" injury.
Perkins Coie's lawyers are closely tracking the evolving civil RICO landscape and developments affecting the cannabis industry. If you have any questions concerning the developments discussed in this Article, please contact members of Perkins Coie's White Collar, Consumer Products & Services Litigation, or Cannabis team.
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