Water court referee finds it ‘lawful’ to issue a water right to grow pot

The High Valley Farms marijuana cultivation facility near Basalt.

By Brent Gardner-Smith, Aspen Journalism

GLENWOOD SPRINGS – The water referee in Division 5 Water Court in Glenwood Springs, in a case involving a major marijuana grow operation in the midvalley, has found that Colorado courts can lawfully issue a new water right specifically to grow the plant, even though it’s still illegal to grow pot under federal law.

“The fact that the Controlled Substances Act [CSA] prohibits marijuana use does not make an otherwise lawful appropriation of water under Colorado law illegal,” wrote Susan Ryan, the water referee, in Friday’s order on High Valley Farms, the grow site for Aspen’s Silverpeak Apothecary. “Instead, the validity of the appropriation is governed by Colorado water laws.”

Ryan’s 12-page order found that the actual legal process of the state issuing a water right to grow pot does not conflict with federal law, even though the watering itself of cannabis plants still may be in conflict.

“Establishing a valid appropriation does not require an analysis of the legality of the subsequent use of the water right,” Ryan’s order says. “Because water-right appropriations are governed exclusively by Colorado law, there is no conflicting provision in the CSA.”

With the order, High Valley Farms LLC is able to continue to pursue its application for a new water right to irrigate marijuana, and a novel question under Colorado water law has been answered.

Ryan’s order is the most detailed articulation to date of the state’s position on the question of whether a new water right specifically to irrigate marijuana can be issued, although it applies only to Division 5.

And it’s possible that a water court referee or judge in another water court division could issue a differing opinion should the question arise in other ongoing cases. The Colorado Supreme Court might have to eventually sort out opposing views.

Rhonda Bazil, the Aspen-based water attorney for High Valley Farms, declined to comment on the order, as did Jordan Lewis, the owner of both High Valley Farms and the Silverpeak marijuana store in downtown Aspen.

A graphic from High Valley Farms showing the location of the facility and water sources.

Posing the question

Ryan, the water referee, recently took her position in the water court in Glenwood Springs after working as a water attorney in private practice at a law firm in Denver. She found herself having to rule on a question that had been posed in August 2015 by the preceding water referee, Holly Strablizky, who is also an attorney and now works for Eagle County, and state division engineer Alan Martellaro, who is based in Glenwood.

Strablizky and Matellaro jointly reviewed the 2014 water rights application from High Valley Farms, in which it openly told the water court it was seeking a water right to irrigate up to 3,000 marijuana plants in a facility near Basalt.

After amending its original application, High Valley Farms is now seeking the right to use 9.24 acre-feet of water a year from the Roaring Fork River and an existing well on the site.

After their joint review of the water rights application, the water referee and the division engineer issued a customary “summary of consultation.” In it, they posed a question to the court: Is it OK to issue a water right in Colorado specifically to grow pot, which is still an illegal act under federal law?

The question, however, was not stated in such plain terms.

“The application must explain how the claim for these conditional water rights can be granted in light of the definition of beneficial use as defined [under state law],” the summary of consultation says. “Specifically, beneficial use means the ‘use of that amount of water that is reasonable and appropriate under reasonably efficient practices to accomplish without waste the purpose for which the appropriation is lawfully made.’”

In the summary of consultation, the officials put the word “lawfully” in italics.

An underground water tank, poised to be buried, next to the High Valley Farms grow facility in Basalt in February 2016.

Answering the question

Ryan, in the Friday order, reframed the question from the summary of consultation in more direct terms.

“The issue before the court is whether High Valley can lawfully appropriate water to cultivate marijuana and for use in its greenhouse facilities in light of the federal Controlled Substances Act, which prohibits all marijuana use,” Ryan wrote. “Whether High Valley can seek to appropriate water for marijuana cultivation is a threshold issue in this case. To resolve this issue, the court must determine how ‘lawful’ is used in the water law statutes and if there is a conflict between those statutes and the CSA.”

After digging into the issue, Ryan determined that the “lawfully” in question does not pertain to the end use of the water, but to the legal framework and process that allows the water right itself to be granted.

In explaining her conclusion, she focused on two words, “lawfully made,” and not just on the word “lawfully” that had been emphasized in the summary of consultation.

“In this provision ‘lawfully made’ is closer to the word ‘appropriation’ than the word ‘use,’” Ryan wrote, turning to the “principles of statutory construction,” or the actual words used in a given law, for guidance.

The term “lawfully made,” she concluded, “modifies appropriation, not use.”

“The water court must determine whether the claimed appropriation is lawful, not whether the claimed beneficial use is lawful,” Ryan concluded. “A lawful appropriation of water does not require an analysis of the lawfulness of the subsequent use of that water.”

A view of the High Valley Farms marijuana-growing facility near Basalt. High Valley Farms LLC has applied for a water right specifically to grow marijuana.

No conflict with federal law

Ryan also found there was no conflict between state and federal laws in creating the High Valley Farms water right, which was a key concern in the case.

“There is no federal law that prohibits the appropriation of unappropriated water, if that appropriation is done in compliance with state law or lawfully,” she wrote.

As part of her finding, Ryan cited two other recent decisions by the Colorado Supreme Court that centered on conflicts between Colorado and federal law relating to marijuana, Coats v. Dish Network, LLC, which concerned an employee using medical marijuana, and People v. Crouse, which dealt with law enforcement officers having to return confiscated marijuana.

In both cases, there was a direct conflict between federal and state laws, and federal law prevailed.

“In contrast to the facts in those cases, there is no federal water law that governs the appropriation of water from intrastate water sources,” Ryan wrote. “The regulation and allocation of a state’s internal water resources has been expressly delegated to the states by the federal government. There is no way to determine whether an appropriation is lawful under federal law. Thus, lawful appropriation means lawful under Colorado water law.”

Ryan did recognize the federal government’s ability to overrule Colorado’s pot laws via the federal Supremacy Clause, but said applying federal law to marijuana would pertain to possessing and using marijuana, not to the “lawful appropriation” of water.

“If the federal government decides to enforce the CSA’s provisions, the Supremacy Clause would apply, and federal law trumps Colorado state law allowing the possession and use of marijuana,” Ryan wrote. “However, this does not change the analysis of whether a lawful appropriation is made under Colorado water law.”

A sign, and a statue, outside of the SIlverpeak marijuana store in downtown Aspen.

Will it stand?

Ryan’s order could be challenged and referred to the Division 5 water court judge, James Boyd, by one of the three other parties in the case, each of whom owns property near the High Valley Farm facility: the Roaring Fork Club; WCAT Properties, LLC; and the Spencer D. Armour III 2012 Trust.

But Jason Groves, a water attorney at Patrick, Miller and Noto of Aspen and Basalt, who represents all three opposing parties in the case along with his colleague at the firm, Scott Miller, said their clients are focused on the amount of water proposed by High Valley Farms, and not the marijuana question. As such, they do not plan on challenging the order.

“The current objectors in the case, which we represent, have no concerns about the beneficial use question raised in the summary of consultation,” Groves said. “Our concerns are on the amount of water they propose to use, which is nearly a four-fold increase in use from the existing well on the property.”

It is also possible that another party could file a motion to intervene in the case and contest the referee’s order, but so far no other person or entity has indicated they are inclined to take such action.

Please see related stories:

Sept. 7, 2016
Hazy legal question lingers over rights for Basalt marijuana facility

Feb. 8, 2016
Basalt water case could affect states pot industry

Jan. 2, 2015
Can Colorado approve a water right to grow pot?

Oct. 14, 2014
Silverpeak owner applies for water rights for pot greenhouse near Basalt

Editor’s note: Aspen Journalism, the Aspen Daily News and Coyote Gulch are collaborating on the coverage of rivers and water. The Daily News published this story on Tuesday, Feb. 21, 2017.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s