Green Earth Wellness Center, LLC v. Atain Specialty Insurance Co.

163 F. Supp. 3d 821 (2016)

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Green Earth Wellness Center, LLC v. Atain Specialty Insurance Co.

United States District Court for the District of Colorado
163 F. Supp. 3d 821 (2016)

Facts

Green Earth Wellness Center (Green Earth) (plaintiff) operated a facility for growing and selling medical marijuana in Colorado, which had enacted a medical-marijuana law allowing such activities. Green Earth insured the facility against damage by purchasing an insurance policy from Atain Specialty Insurance Company (Atain) (defendant). Atain knew Green Earth’s line of business, and the policy specifically excluded coverage for damage to contraband at the facility. After smoke from a nearby wildfire caused damage to some of the marijuana at Green Earth’s facility, Green Earth sought compensation for the damage by making a claim under the policy. Atain denied the claim, and Green Earth sued Atain for breach of contract, claiming that Atain’s denial of the claim breached the insurance policy. Before trial, Atain argued that denial of the claim was proper due to the contraband exclusion in the policy and that, even if that were not the case, the policy was unenforceable as against public policy. In particular, Atain claimed that the federal Controlled Substances Act (CSA) prohibited possession and distribution of marijuana, even though Green Earth’s activities were legal under Colorado’s state medical-marijuana law, and the federal government had indicated an intention not to enforce the CSA when marijuana-related activities were lawful under state law.

Rule of Law

Issue

Holding and Reasoning (Krieger, C.J.)

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