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Hemp and Marijuana Cultivation

July 10, 2018

 

Can water be appropriated and used for the cultivation of marijuana, or hemp-related products, in Colorado? The answer to this question has become especially confounding given a slew of recent decisions, including one from Colorado’s highest court.

 

It is important to note that the Controlled Substances Act (“CSA”) still classifies marijuana as an illegal drug and prohibits the use of marijuana for any purpose. Moreover, the same controls applied to THC-related cannabinoids (the substance that causes the user’s “high”) under the CSA, also extend to cover all other substances and products derived from the cannabis plant, including hemp.

 

Despite the illegality of marijuana and related substances under federal law, several states have independently voted to legalize marijuana. This has caused a stir in federal enforcement. In 2012, Colorado voters approved Amendment 64, authorizing the personal and commercial use of marijuana, as well as the operation of marijuana-related facilities. Regarding the obvious discord between state and federal laws, the Colorado Supreme Court announced in Coats v. Dish Network LLC that where the individual use of legal marijuana in Colorado is seen as directly impeding upon federal laws outlawing the same, federal law is seen as preempting the laws of the State.[1]

 

Shortly after Amendment 64, the Colorado legislature formally adopted the Colorado Retail Marijuana Code (the “Code”), which envisioned an adequate supply of water to help facilitate the operation of marijuana grow facilities. In Colorado, an appropriation of water is lawful if there is a diversion of a certain amount of water for a specific and “beneficial” use that can be captured, possessed and controlled in priority. There is no definition of “beneficial use” under Colorado law, and what is considered to be “beneficial” is therefore left to Colorado’s water courts to decide. In 2017, Division 5’s Water Referee Susan Ryan held that it is proper for Colorado’s water courts to issue new water rights to marijuana cultivators.[2] In High Valley, Referee Ryan emphasized that the legitimacy of an appropriation of water in Colorado is governed solely by Colorado’s water law. Further, there is no explicit or proximate federal law prohibiting the appropriation of unappropriated water if the appropriation is carried out according to state law. Because of Amendment 64, the Colorado Constitution recognizes marijuana cultivation as a useful—and legal—purpose. Referee Ryan concluded that a citizen of Colorado should be able to divert water to grow marijuana, and the courts cannot abrogate the constitutional right to divert water for a purpose that is protected by the Colorado Constitution.

 

Notwithstanding the importance of the High Valley order for marijuana cultivation, the situation is dramatically different where federal contract water or federal facilities are involved. For example, Bureau of Reclamation policy unambiguously prohibits the use of Reclamation facilities and water for the cultivation of marijuana, hemp, and the like as they are defined under the CSA. Thus, in Colorado, as elsewhere, it is illegal under federal law to use Reclamation water to cultivate marijuana and hemp.

 

The situation remains unclear for water districts using Reclamation water and facilities. Can these irrigation districts deliver Reclamation water to their marijuana/hemp growing clients? Do districts have an affirmative duty to investigate and report any use of Reclamation water for these purposes? A concrete answer remains elusive. For its part, the federal government has refused to actively seek enforcement of the CSA. However, the use of federal assets—such as Reclamation-owned water—presents a different problem: using federally-owned resources in overt disregard of federal law. Nevertheless, despite the lack of governmental regulations regarding this question, water districts are strongly encouraged to police the use of any federally-owned water they supply, and to refuse to deliver the water if it is clear that it will be ultimately used for marijuana cultivation. Recent Colorado case law only provides protection for the use of state-owned water.

 

 

 

 

[1] See Coats v. Dish Network LLC, 350 P.3d 849, 852 (Colo. 2015).

 

[2] Order Concerning the Application for Water Rights of High Valley Farms, LLC (14CW3095) (“High Valley”).

 

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