If there are any legal issues that I have to worry about etc. 

Once you know what is legal (seeing other listings in a particular area does not count as people do it in illegal areas all the time). 

Do not rely on it for legal advice.

This is not tax or legal advice, just what I personally do, consult your professionals! 

Their algo isn't sophisticated enough, yet, to accommodate natural disasters and inventory shortages so it's most likely responding to the incredible demand (and unaware of the legal implications).

This is both a legal and tax question. 

On June 7th, we sent an itemized list of deductions via text; he responded on June 8th, disagreeing and threatening legal action.

A financial calculator and legal pad might work in the hands of someone who knows what they are doing, but that doesn't mean it's the best way to do it.

Give proper legal notice of non-renewal and get them both out.

Quote from @Stylianos Kalamaras: Yes they are, they cost me $800 knowing they would not close my deal and waste my time, if I had any possible legal recourse I would take it they shouldn’t be allowed to operate it’s really sad.