Federal appeals court judges on Tuesday reviewed the reach of racketeering laws in a case that potentially could have catastrophic effect on the cannabis industry. At issue is whether the 10th Circuit Court of Appeals will allow private parties to sue state-licensed cultivations and dispensaries under RICO for what are, essentially, nuisance issues. Safe Streets, a Washington, D.C.-based anti-drug and anti-crime organization, filed the lawsuit and claimed that Colorado horse ranch farmers are entitled to property damage under the rarely used private right of action for individuals to sue “racketeers” because of the marijuana smell that allegedly permeates their property.

While it has been widely assumed by the cannabis industry that these were difficult arguments to win, the general scene of the oral arguments, as reported by the Cannabist, was that the judges appeared to be favoring Safe Streets’ arguments.

What does this mean?

The three-judge panel for the 10th Circuit Court of Appeals will not issue an opinion for several months. Until then, it is a wait and see. If the 10th Circuit shoots down the appeal, it will be a resounding win for the cannabis industry and the US Supreme Court is unlikely to hear an appeal. If the plaintiff wins, the floodgate to additional lawsuits against the industry might be status quo.