ENGLEWOOD — A mural of a caterpillar smoking shisha in a hookah and a white rabbit popping a pill can stay on the wall at a South Broadway head shop.

Saying the shop owner's constitutional right to free expression had been violated, the Colorado Court of Appeals on Thursday overturned a lower-court ruling that favored the city's position that the mural violated its sign code.

"I'm excited," said Mike Mahaney, who owns Headed West, a tobacco and smoking accessories shop. "It's been over two years. I'm ready to get over it."

Mahaney had the mural painted in 2007 to cover graffiti left by taggers who routinely targeted his shop.

But there were a few complaints that the mural, a scene from "Alice in Wonderland," was more about drug use than fantasyland.

At the time, Dave White, owner of Englewood Auto Repair & Body across the street, said it sent a bad message to kids.

City officials said the mural's large size violated its sign code and Mahaney had never acquired a permit for the project.

The case went to court, with the American Civil Liberties Union of Colorado backing Mahaney.

Then the state appeals court ruled that the code's special-review procedure was a "constitutionally impermissible prior restraint on free speech."

ACLU legal director Mark Silverstein said the ruling "is a valuable reminder that free expression is our most fundamental right and that government can never take lightly a decision to dictate what people may or may not say."

Mahaney said media coverage of the mural — which remained uncovered through the court cases — has spurred a business boon.

"I still have people come in every day, ask about it, ask who did it, take pictures of it," he said. "We had tremendous support on this."

Deputy City Manager Mike Flaherty had not heard of the ruling and was planning to consult with the city's legal counsel. The City Council will ultimately decide whether to appeal to the Colorado Supreme Court.

"When you go to court, there's going to be a winner and a loser," Flaherty said.

Mahaney isn't going to break out any shisha just yet. The city has 45 days to decide whether to appeal.

"My attorney said that's very unlikely," Mahaney said. "I think the city is pretty much over it. We've got to wait 45 days, but at the end of that, we will definitely be celebrating."

Carlos Illescas: 303-954-1175 or cillescas@denverpost.com