Blog- Insights, Strategies, and Industry Updates | Verdant Strategies

Financial Clarity in Conflict: Cannabis Litigation & Mediation Support in California, New York and Beyond

Written by Team Verdant | Jul 9, 2025 7:17:15 PM

Navigating Legal and Financial Pressure in Cannabis

Running a cannabis business in California or New York comes with constant challenges — high taxes, banking limitations, evolving regulations, and the very real risk of legal disputes. These complexities intensify when audits, partnership disagreements, or regulatory reviews enter the picture.

At Verdant Strategies, we don’t just manage the books — we help cannabis operators and their legal teams bring structure and clarity to moments of financial uncertainty. Whether you're facing an audit, preparing for litigation, or entering mediation, we provide the strategic financial insight necessary to move forward confidently.

When Financial Disputes Turn Legal

Many cannabis-related legal disputes begin with disorganized financial records. In an industry driven by cash transactions and multi-entity structures, financial inconsistencies can quickly become legal vulnerabilities.

We support:

  • Operators preparing for tax audits or regulatory reviews
  • Attorneys seeking financial documentation and expert guidance
  • Businesses navigating buyouts, contract disputes, or compliance concerns

Forensic Accounting & Expert Witness Support

Financial Clarity That Holds Up Under Scrutiny

When litigation involves mismanagement, fraud claims, or disputed records, surface-level bookkeeping isn’t enough. Verdant delivers forensic accounting tailored to the cannabis industry, analyzing years of records to identify what’s missing, misclassified, or overstated.

Our services include:

  • Reconstructing revenue timelines
  • Verifying cost structures and inventory allocation (especially under IRC 471)
  • Tracing financial gaps or irregular cash handling
  • Identifying unreported income or deductions that won’t stand up in court

Expert Financial Testimony

Legal arguments often hinge on financial details that are hard to explain, especially in cannabis. We break down complex reporting structures, segment data by license or vertical, and translate raw numbers into testimony that supports your claims or defense.

Common use cases include:

  • Revenue sharing disputes between partners
  • Claims of improper tax classification under IRC 280E
  • Partnership dissolutions involving asset valuation
  • Misreported cash flow or inventory in sales agreements

Mediation Support & Dispute Resolution

Financial Neutrality to Avoid Escalation

Litigation is expensive. In many cannabis business disputes, mediation offers a faster path to resolution — if both sides can agree on the numbers. That’s where we step in.

As a third-party financial expert, Verdant provides:

  • Unbiased financial reviews of disputed reports
  • Settlement modeling based on historical performance
  • Strategic input on financial clauses in contracts or buyouts
  • Support for legal teams aiming to avoid drawn-out litigation

We help structure settlements around facts, not assumptions, so cannabis businesses can protect their licenses and keep moving forward.

Audit Defense & Tax Resolution

Strategic Response to IRS and State Cannabis Audits

Cannabis tax audits are complex and often unforgiving. Misclassified costs or inventory issues under IRC 471 or 280E can lead to steep penalties. In states like California and New York, enforcement has only become more aggressive.

Verdant helps cannabis businesses respond with a plan. We offer:

  • Audit readiness reviews and historical cleanup
  • Book reconstruction tied to operational realities
  • Support for cost allocations, entity separation, and expense documentation
  • Negotiation support when resolving past liabilities with tax authorities

Why Cannabis Operators and Attorneys Choose Verdant

Deep Sector Expertise

We work exclusively in cannabis, bringing a nuanced understanding of license structures, tax codes, and regulatory frameworks that traditional accounting firms often miss.

Legal Collaboration That Adds Value

Verdant doesn’t operate in a silo. We collaborate with attorneys on everything from early-stage discovery to expert witness prep. When the financial strategy supports the legal strategy, both sides win.

Long-Term System Improvements

Our clients don’t just resolve one issue — they leave better prepared for what’s next. From cleaner books to stronger reporting systems, we turn reactive situations into proactive structures.

Local Insight Where It Matters Most

California: Litigation & Financial Strategy for Cannabis Operators

Beverly Hills Office
8383 Wilshire Blvd, Suite 800
Beverly Hills, CA 90211

We serve cannabis businesses throughout California and beyond, where IRS scrutiny and aggressive local tax enforcement demand airtight financial controls. In California’s maturing market, success depends on compliance readiness and audit-proof systems.

New York: Structuring for the Newer Cannabis Market

New York Office
1325 Avenue of the Americas, 28th Floor
New York, NY 10019

New York’s cannabis program is still evolving — but financial disputes are already surfacing. From license partnerships to investor disputes, we help MSOs and new operators in New York and other recently legalized states prepare financial records that withstand legal review.

Europe: Cannabis Expansion & Regulatory Complexity

France Office
81 Rue de France
Nice, Alpes-Maritimes 06000

For cannabis investors and ancillary providers expanding in Europe, Verdant offers cross-border financial planning and regulatory support. 

Defend With Facts. Build With Clarity.

Whether you're a cannabis operator under audit, a lawyer preparing for court, or a business partner navigating a financial disagreement — clear, accurate financials can be the difference between exposure and resolution.

Verdant Strategies supports cannabis businesses in California, New York, and other key markets with expert forensic accounting, litigation support, and tax resolution.

Let’s bring clarity to conflict — and strategy to the table. Schedule a confidential consultation: (310) 807-0255 / info@verdantstrategies.com.

FAQs: Financial Support for Cannabis Litigation, Audits, and Disputes

What does a forensic accountant do in a cannabis legal case?

A forensic accountant examines financial records to uncover inconsistencies, errors, or signs of mismanagement that could impact a legal outcome. In cannabis cases, this might involve reviewing revenue recognition, identifying unreported cash transactions, or assessing how expenses were categorized under IRC 280E. At Verdant, we specialize in building clear financial narratives that hold up in court or mediation.

How is financial mediation different from traditional legal mediation?

Financial mediation focuses specifically on the numbers, not legal positioning. Our role in mediation is to provide objective, third-party analysis of financial statements, revenue distributions, or partnership agreements. This helps legal teams negotiate from facts rather than assumptions and prevents drawn-out litigation over misunderstood finances.

Do I need a financial expert witness in a cannabis dispute?

If your case involves disputed ownership percentages, revenue allocations, misreported tax filings, or the valuation of cannabis assets, a financial expert witness can be critical. We help clarify complex records, translate financial events into court-friendly terms, and provide testimony grounded in cannabis-sector expertise.

Can financial mismanagement trigger an audit or legal action?

Yes. Disorganized books, suspicious expense deductions, and irregular cash flow reporting are common audit triggers. In some cases, they also lead to partnership disputes or tax-related litigation. Verdant helps cannabis businesses address these issues before they escalate — and supports operators already under review with audit prep, cleanup, and strategic negotiation.

What are the common financial reasons cannabis partnerships break down?

Many cannabis partnership disputes arise from poor financial transparency. Misaligned compensation structures, unclear profit-sharing terms, or unequal access to financial data can erode trust fast. Verdant works with clients to establish investor-grade financial systems that create accountability and reduce the risk of internal disputes.

How can I prepare financially before a cannabis audit or investigation?

Start by organizing key documents: revenue reports, expense logs, inventory records, tax filings, and entity structures. Ensure your chart of accounts segments activity by license, entity, or vertical. If your financials aren’t audit-ready, Verdant offers diagnostic reviews and cleanup to help you step into any audit with confidence.

What tax codes matter most in cannabis audits?

The most commonly cited codes are IRC 280E, which limits cannabis businesses from deducting ordinary business expenses, and IRC 471, which governs inventory accounting. Mistakes in either area can increase tax liability or trigger audit penalties. Verdant’s team specializes in applying these codes accurately and defending those applications under review.

How do attorneys benefit from partnering with financial experts?

Attorneys rely on financial experts like Verdant to make complex accounting accessible in legal settings. We provide litigation support, expert witness reports, forensic analysis, and settlement modeling — all tailored to the cannabis industry. Our collaboration ensures every legal argument is grounded in verifiable financial evidence.

Let us help support your litigation and audit efforts.  Schedule a confidential consultation: (310) 807-0255 / info@verdantstrategies.com.