Judge orders buyer of South Broadway pot shop to pay $2.2M

The buyer of a dispensary along South Broadway’s cannabis-centric Green Mile stretch has been ordered to pay $2.2 million to the seller, whom it keeps accusing of fraud.

A Cut Above, at 1911 S. Broadway, was sold for $8 million in 2022. The buyer, Colorado Holdings, has been in a dispute with the seller, Hobby Farms, for years since.

The purchase of A Cut Above and its grow operation in Colorado Springs included a $5.8 million payment and a promissory note for the other $2.2 million, to be paid off in two years. But Colorado Holdings never paid off the note, prompting Hobby Farms to sue for payment.

When the case went to arbitration last year, Colorado Holdings owner Jordan Lipton revealed why his company had not paid: because he believed it had been defrauded. Before the sale, Hobby Farms co-owner Phil Gist had included figures from a second cultivation site in profit-and-loss statements and failed to mention that A Cut Above’s revenue was dropping, Lipton said.

“We finished at $14,347,000 for the year,” Gist texted Lipton in early 2022, a revenue number that included the grow that was not to be part of the sale, according to Lipton.

“That’s great, thanks for sharing Phil,” Lipton responded. “… Impressive numbers.”

A few months later, Gist texted, “Tell your board guy that said Colorado is dead that we crushed it today,” according to a copy of their text exchange that BusinessDen obtained.

“Good man that’s awesome. How much you boys do?”

$108,740.60,” Gist responded on April 20. Lipton gushed: “That’s unreal, super impressive.”

But that number, sent four months before their sale closed, included the second cultivation site and was an outlier, Lipton told the arbitrator. In reality, Gist was reducing inventory levels ahead of the sale and hiding A Cut Above’s falling sales numbers, Lipton alleged.

By early 2024, Lipton had not made payments on the promissory note and was texting Gist to arrange a meeting. The latter was annoyed at the request and payment delays.

“Off the record or whatever it’s called. Man to man etc. What’s the motive Jordan? I don’t understand what you would like achieved via phone conference,” Gist wrote.

“Between you and I, if the goal is to get any sort reduced agreed upon amount, that will not happen,” he added. “I would rather get zero then (sic) take a offer less than owed.”

In January of this year, Judge Elizabeth Starrs sided with Gist. The arbitrator found that Lipton knew what he was buying and, after conducting extensive due diligence, knew what revenue the Broadway store and one cultivation site in Colorado Springs generated.