The question has become important to marijuana growers after the Colorado Supreme Court’s decision in Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. 2015), where the Court held that an activity is only “lawful” if it violates neither state nor federal law.
The issue has now arisen in the water context before Water Division 5. In Re High Valley Farms, LLC, 14CW3095. In that case, the Division Engineer has demanded that “[t]he applicant must explain how the claim for these conditional water rights [the water is to be used for an indoor marijuana grow facility] can be granted in light of the definition of beneficial use as defined in C.R.S. § 37-92-103(4). 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 Coats v. Dish Network, LLC, 303 P.3d 147 (Colo. 2015), the Colorado Supreme Court held that “lawful,” as used in an employment statute where it was not further defined, should be interpreted based on its ordinary meaning. Id. at 150. The “ordinary meaning of ‘lawful’ is that which is ‘permitted by law.’” Id. So, “for an activity to be ‘lawful in Colorado, it must be permitted by, and not contrary to, both state and federal law.” Id. at 151.
Like the statute in Coats, the statutes governing water rights in Colorado do not define “lawful.” Thus, Coats seemingly dictates that the ordinary meaning of “lawful,” as meaning lawful under both federal and state law, applies. That would mean that growing marijuana is not a beneficial use and therefore not an allowed use of water pursuant to Colorado water law. There are, however, at least three reasons to believe that growing marijuana can be considered a beneficial use despite the broad language in Coats: 1) there is a constitutional right to divert water that cannot be curtailed by statute, 2) the statutory definition of beneficial use does not necessarily prohibit using water for illegal purposes, and 3) policy considerations in the water context, unlike the employment context, weighs in favor of interpreting lawful to mean lawful under state law only.
First, although beneficial use is statutorily defined, the right to divert for beneficial use derives from the Colorado Constitution. Colo. Const., Art. XVI, §§ 5-6. The Colorado Supreme Court has interpreted this to mean that the legislature “cannot prohibit the appropriation or diversion of unappropriated water for useful purposes.” Fox v. Div. Engineer for Water Div. 5, 810 P.2d 644, 646 (Colo. 1991). The Colorado Constitution establishes that marijuana grow is a useful purpose. Colo. Const., Art. XVIII, § 16. It should therefore be possible to appropriate water to grow marijuana, regardless of the statutory definition of beneficial use, because the legislature cannot abrogate the constitutional right to divert water for a purpose that is protected by the constitution.
Second, it is not readily apparent that “lawfully” modifies “the purpose” in the statutory definition of “beneficial use.” Pursuant to the last-antecedent canon of construction, “lawfully” modifies “appropriation” – not “purpose.” Thus, the appropriation must be accomplished lawfully in accordance with Colorado water law, but the water does not necessarily have to be used for a lawful purpose to effect an actual appropriation. In fact, the prior appropriations doctrine arose in the west to administer water rights when miners were using water to illegally mine federal lands prior to the General Mining Act of 1872. Thus, the statutory definition of “beneficial use” does not preclude appropriation of water for an illegal purpose as long as it is diverted in accordance with the law.
Third, Coats involved employment discrimination, an area of extensive federal regulation where policy concerns weighed in favor of allowing employers to discharge employees for violations of federal law. Id. Unlike employment law, water law is uniquely controlled by state law. 43 U.S.C. § 666 (subjecting the U.S. to state law in water rights cases); See also Bureau of Reclamation, Reclamation Manual (Temporary Release): Use of Reclamation Water or Facilities for Activities Prohibited by the Controlled Substances Act of 1970, PEC TRMR-63 (May 16, 2014) (prohibiting the use of BOR water for marijuana grow facilities, while not prohibiting the use of other water passing through BOR facilities for marijuana grow facilities). Further, policy arguments favor interpreting beneficial use as encompassing marijuana grow because the objective of Colorado water law is “the optimum use of water consistent with preservation of the priority system of water rights” C.R.S. § 37-92-501(2)(e). There is no doubt that marijuana grow is optimal in the sense that it can lead to greater revenues both per acre planted and per acre-foot of water used than most other crops grown in this state. Lawful should therefore, for the purpose of water law, be interpreted to relate only to state law.
While marijuana growers in Colorado should prevail against a challenge that their use is not beneficial, the safer course of action may still be to apply for indoor irrigation, commercial, and industrial use, without specifying the type of crop to be grown. That may also allow greater flexibility for future changes in the type of crop grown.