Pot-Growing Grandma Loses Racketeering Case Over Alleged Con Job

A California grandmother who tried to turn her farming expertise into a multimillion-dollar cannabis business lacks standing to pursue racketeering litigation over the collapse of her partnership with an alleged con man.

The US Court of Appeals for the Ninth Circuit on Wednesday rejected Francine Shulman’s claims under the Racketeer Influenced and Corrupt Organizations Act. Her lawsuit targeted Todd Kaplan, allegedly a convicted tax felon with a history of trying to seize control of small businesses by threatening, intimidating, and defrauding his partners.

Judge Milan D. Smith Jr., writing for the court, said damage to a marijuana business can’t confer standing to sue under the RICO Act. Though the cannabis trade is legal in California, it’s clear the statute wasn’t meant to cover federally illegal businesses, Smith said. He noted that Congress outlawed pot and adopted the racketeering law at around the same time.

“Congress enacted RICO as part of a comprehensive legislative package aimed at combating the influence of organized crime,” Smith wrote. “Considering the laws in tandem, it is evident that Congress would have considered a cannabis business to be a form of organized crime.”

Judges Ryan D. Nelson and Gershwin A. Drain, the latter sitting by designation from the Eastern District of Michigan, joined the opinion. The decision affirmed a ruling by Judge André Birotte Jr., who dismissed Shulman’s claims in 2020 from the US District Court for the Central District of California.

Kaplan is represented by Uplift Law PC; Medical Investor Holdings LLC; Charles T. Houghton of Colorado Springs, Colo.; and Elyse S. Kaplan of Camarillo, Calif. Shulman is represented by O’Melveny & Myers LLP and Baker Botts LLP.

The case is Shulman v. Kaplan, 9th Cir., No. 20-56265, 1/18/23.