An efficient Rh(III)-catalysed C-H functionalization, tandem annulation of cis-stilbene acids using 2-diazo-1,3-diketones was devised. This protocol solely afforded 6,7-dihydrobenzofuran-4(5H)-ones using alicyclic diazocarbonyls via decarbonylation and α-pyrones with aliphatic diazo compounds. The chameleonic nature of cis-stilbene acid was observed with various diazo compounds by altering the additives. This synthetic method furnished good atom-economy and wide functional group tolerance, and also explained the use of carboxylic acids as a directing group. In addition, a mechanistic investigation of the catalysed reaction using ESI-MS, and the fluorescence properties of α-pyrones were well explored.