Shulman v. Kaplan

RICO’s standing provision states that “any person injured in his business or property by reason of a violation” may bring a RICO claim in federal court to recover damages. 18 U.S.C. § 1964(c). The Controlled Substances Act provides that all "substances which have been manufactured, distributed, dispensed, or acquired in violation of [the CSA]" "shall be subject to forfeiture to the United States and no property right shall exist in them." 21 U.S.C. § 881(a)(1).

Plaintiffs appealed the grant of motion to dismiss claims under the Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C. § 1961. Plaintiffs assigned error to the trial court's holding that they lacked standing to bring their RICO claims. On appeal, Plaintiffs argued that they had standing under RICO because Defendants allegedly committed acts of fraud that injured them in their cannabis business. In response, Defendants contended that the Appellants’ alleged injuries were not redressable because they related to a cannabis business, which is illegal under federal law and RICO is a federal statute. RICO’s standing provision states that “any person injured in his business or property by reason of a violation” may bring a RICO claim in federal court to recover damages. Id. § 1964(c). The Controlled Substances Act provides that all "substances which have been manufactured, distributed, dispensed, or acquired in violation of [the CSA]" "shall be subject to forfeiture to the United States and no property right shall exist in them." 21 U.S.C. § 881(a)(1). The Court considered whether Plaintiff’s cannabis business constituted “business or property” under RICO. The Court examined the context of the statute as a whole and found that a cannabis business would not be considered a business under RICO because the CSA does not allow for any property rights in exchange for a controlled substance. Further Congress clearly did not intend the definition of "business or property" in RICO to include cannabis business or property because RICO and the CSA were enacted at the same time. The Court determined that it would be inconsistent to allow a cannabis business to recover damages under RICO. AFFIRMED.