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In re: Way to Grow, Inc.

United States District Court for the District of Colorado

September 18, 2019, Decided; September 18, 2019, Filed

Civil Action No. 18-cv-3245-WJM; Bankruptcy Case Nos. 18-14330-MER; 18-14333-MER; 18-14334-MER

Opinion

 [*341]  ORDER AFFIRMING DECISION OF BANKRUPTCY COURT

Way to Grow, Inc. ("Way to Grow"), Pure Agrobusiness, Inc. ("Pure Agro"), and Green Door Agro, Inc. ("Green Door") (together, "Debtors"), appeal the bankruptcy court's decision to dismiss their Chapter 11 petitions "for cause" given that Debtors' business relies on selling equipment and supplies to persons and entities growing marijuana, and Debtors know that the equipment and supplies will be used to grow marijuana. Such conduct is legal under the laws of Colorado and California, where Debtors operate, but remains illegal under federal law.

For the reasons explained below, this Court affirms the bankruptcy court as to Way to Grow and Green Door for the reasons [**2]  explained by the bankruptcy court. As to Pure Agro, the Court also affirms, but for a slightly different reason evident in the record.

I. STANDARD OF REVIEW

In reviewing a bankruptcy court's decision, the district court normally functions as an appellate court, reviewing the bankruptcy court's legal conclusions de novo and its factual findings for clear error. 28 U.S.C. § 158(a); In re Warren, 512 F.3d 1241, 1248 (10th Cir. 2008).

II. BACKGROUND1

A. Origins of the Dispute

Appellee Corey Inniss ("Inniss") founded Way to Grow in Fort Collins in 2002 and eventually opened six more retail stores throughout Colorado. Way to Grow, 597 B.R. at 115. In Debtors' words, Way to Grow's business model was "to market its stores as garden centers and carry high-end soil, nutrients, lights, and equipment to grow plants in both an indoor and outdoor setting." (ECF No. 27 at 7.)

 [*342]  In 2014, a man named Richard Byrd (not a party here) founded and became CEO of Pure Agro, which operates as a holding company. (Id. at 8.) In 2015, Pure Agro "acquired [Green Door], a Los Angeles-based hydroponic and gardening retail store." (Id.)

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610 B.R. 338 *; 2019 U.S. Dist. LEXIS 207846 **; 2019 WL 6332541

In re: WAY TO GROW, INC. PURE AGROBUSINESS, INC. GREEN DOOR AGRO, INC., Debtors. WAY TO GROW, INC., et al., Appellants, v. COREY INNISS, Appellee.

Prior History: In re Way to Grow, Inc., 597 B.R. 111, 2018 Bankr. LEXIS 4142 (Bankr. D. Colo., Dec. 14, 2018)

CORE TERMS

marijuana, customers, manufacture, cannabis, reorganization, abetting, chemical, growers, hydroponic, confirmed, forbidden, gardening, plants, Crop, venture, absurd, shock, subsidiaries, shovel, cultivating, evidentiary, export, notice, vague, hemp