Case Study: Financial Litigation Support for a Cannabis Business

Case Study: Financial Litigation Support for a Cannabis Business

cannabis business, verdant

The cannabis industry is one of the most highly regulated and complex markets in the world. Numbers don’t just matter here; they tell the whole story. But what happens when that story is wrong? For one leading cannabis operator, the consequences were massive and almost catastrophic.

Facing a lawsuit built on inaccurate financial records, they turned to Rachel Wright and the team at Verdant Strategies for a lifeline. Here’s how the right financial partner changed the game.

The Challenge

A prominent cannabis business was hit with a significant financial lawsuit. The claims? Multi-millions in damages. At the heart of the case was a set of financial records painting a deceptive picture of solvency and growth.

The data, prepared by a previous CPA with limited cannabis industry experience, showed the company as profitable when, in reality, it was drowning in debt.

This misrepresentation didn’t just give the opposing party ammunition. It inflated their demands for damages and put the company in a seemingly unwinnable position.

Without immediate and expert financial litigation support, the business was staring down a bleak future.

Untangling the Financial Web

The team at Verdant Strategies, led by founder and CEO Rachel Wright, rolled up their sleeves to take on the case. Their first step? Diving deep into the company’s books to uncover and correct the financial misrepresentations.

This process involved:

  • Restating Financial Records: Thoroughly documenting all outstanding debts and liabilities to showcase the company’s true financial position.

  • Highlighting Secured Debts: The business had UCC filings indicating that creditors held first rights to its assets. This critical detail was overlooked in the initial lawsuit but became a key element in shifting the narrative.

  • Reframing the Case: Collaborating with the company’s legal team, Rachel simplified the complex financial issues into easily digestible facts for the court, attorneys, and involved parties.

By strategically recalibrating the financial data and communicating the reality of the company’s position, the team dismantled the opposing arguments and dramatically weakened their claims.

The Outcome

What started as a multi-million-dollar financial liability was reduced to a settlement in the low hundreds of thousands. This wasn’t a lucky break; it was a result of strategic financial consulting and crystal-clear communication.

The corrected numbers not only resolved the immediate legal dispute but also ensured that the company was better prepared for future challenges. Verdant Strategies didn’t just put out a fire; they gave their client the tools to prevent future ones.

Why It Matters for Cannabis Businesses

This case is a wake-up call for any cannabis operator underestimating the importance of accurate financial records. Here’s what it reminds us:

Accurate Reporting is Non-Negotiable

Misrepresentation—even unintentional—is a lawsuit waiting to happen in a sector as litigious as cannabis.

Industry Expertise is Essential

General CPAs may not understand the nuances of cannabis finance. Partnering with experts like Verdant Strategies can make all the difference.

The Right Financial Partner Adds Long-Term Value

Beyond resolving immediate crises, financial consultants help improve governance and strategic planning, setting businesses up for success.

Looking Ahead

Since resolving the lawsuit, the business has continued working with Verdant Strategies for ongoing financial and strategic support.

With accurate records and a trusted partner by their side, they can now tackle the challenges of a highly regulated industry more effectively.

This case study isn’t just about financial missteps or legal disputes. It’s about the importance of having the right team in your corner when the stakes couldn’t be higher.

Trust is built on transparency, and in cannabis, numbers that add up to the truth can be the difference between survival and failure.

If your cannabis business needs expert financial oversight, reach out to the professionals at Verdant Strategies who understand the industry inside and out.

For more insights on building a resilient cannabis business, explore our blog or contact us to learn how Verdant Strategies can be your trusted partner in success.

Read more from the Verdant Strategies team and Rachel Wright here at Beard Bros below!

Verdant Strategies: Transition Management Part I- Initial Stage

Verdant Strategies: Transition Management Series: Part Two – Navigating The First Three Months Post-Acquisition

Transition Management Series: Part Three – Staffing for Success 

Transition Management Series: Part Four – Post-Hiring Support and Ongoing Training

How We Helped Cannabis Businesses Save $45 Million—And How We Can Help Yours Too

About Author

Rachel Wright, MST, CPA, is the CEO of VERDANT Strategies, financial services firms with offices in Los Angeles, New York, and Nice, France. Rachel provides comprehensive accounting, tax, fractional CFO services, and consulting to cannabis companies globally, supporting them in launching, growing, and achieving financial sustainability through a holistic approach that ensures growth and scalability. With her CPA designation, a master’s degree in taxation, and a Graduate Degree in International Taxation, Rachel offers essential guidance on tax planning, entity formation, and regulatory compliance.

She also has experience as an audit committee chairperson for a publicly traded cannabis company, demonstrating her deep industry expertise. Rachel’s collaborative approach builds lasting partnerships with her clients, helping them navigate complex financial challenges with confidence. As a thought leader, she shares her insights at prestigious events such as Benzinga and the Cannabis Summit and contributes to publications like Bloomberg Tax, MJBiz Daily and the LA Daily Journal. She also serves on an international committee with the International Cannabis Bar Association and the advisory board of the Cannabis Summit, advancing the global cannabis sector and ensuring the financial success of the businesses she serves.

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