Forensics, Disputes, and Litigation in Cannabis

By: Eli Neal

Oregon dispensaries began selling cannabis legally to recreational users on October 1, 2015. Since then, 2,030 Oregon marijuana business licenses have been approved.[1]

Now that three years have passed since legalization, cannabis businesses are starting to find themselves struggling to stay afloat or in the midst of business disputes. This is a natural part of the cannabis industry cycle.

Similar to any industry, cannabis business disputes can arise out of any of the following situations:

  • Breach of contract
  • Shareholder disagreements
  • Breach of fiduciary duty
  • Trade secret disputes or
  • Many other circumstances

Cogence Group recently served as the expert witness in dispensary litigation regarding breach of fiduciary duty and breach of contract. Specifically, our testimony required:

  1. Tracing original invested funds,
  2. Opining on the fair market value of the dispensary at the time of the disputed transaction, and
  3. Opining on the current fair market value of the dispensary.

We have served as an expert witness in this type of litigation case numerous times and are currently in the initial stages of other cannabis litigation cases involving farms, concentrate manufacturers, and dispensaries.

Cannabis Litigation

As CPAs who are accredited in business valuation and certified in financial forensics, we are perfectly suited to calculate lost profits and lost business value arising from business disputes.

As an attorney engaging our services, you can help us better understand the case at hand by providing us with a general overview of the facts, identifying the parties, and providing the pleadings and relevant financial documents.

Next, we will work with you to determine the best course of action and perform a preliminary analysis of the expected damages. Following further review and discussions with you, we can strengthen our analysis and the assumptions therein. Finally, we can serve as an expert witness in trial, mediation, or arbitration if the case progresses to that point.

It is important to involve a damages expert early in your dispute to get an idea of the magnitude of the damages. Far too often, high legal costs are incurred before obtaining an economic damages estimate which can lead to a very upset client and a surprised attorney. That is never good.

In the cannabis space, the business environment is constantly changing. Our network of attorneys, brokers, CPAs, venture capitalists, and business owners is leveraged for each and every case to obtain accurate and up-to-date information that will be critical for your client.

If you’d like to know more about how Cogence Group can assist with your cannabis business dispute, give us a call at 503-467-7903 and we’d be happy to have a conversation with you.

[1] According to the OLCC website, as of August 20, 2018.