Cannabis operators’ delinquent payments total more than $3.8 billion, report says

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Total delinquent payments by U.S. cannabis operators have exceeded $3.8 billion and could balloon to $4.2 billion in 2024 without some intervention.

The problem stems, in part, from poor cash-flow management and the heavy tax burden of Section 280E, according to a report by Oregon-based Whitney Economics.

“The pressures created by current macroeconomic factors and regulatory policies have incentivized operators to stop paying their suppliers,” Whitney founder Beau Whitney said in a statement.

“This data further affirms the fact that the cannabis industry is struggling.

“Unless there is some form of federal and state regulatory intervention, the issues associated with the lack of payments will only get worse.”

A survey of an unspecified number of respondents found that:

  • Cannabis cultivators are the most impacted by delinquent payments, and retailers had the fewest complaints.
  • Delinquent payments are affecting the industry as a whole, but smaller and minority-owned businesses are the most impacted.
  • 44% of respondents said delinquent receivables were making it harder to service debt; 34% said it was impacting their ability to pay taxes.
  • 57.3% of survey respondents said delinquent accounts receivables have an even greater impact on their marijuana business than Section 280E of the Internal Revenue Code, which prevents cannabis operators from deducting business expenses because MJ is still federally illegal.

California operators have been especially vocal about the delinquent-payment problem.

A group of marijuana businesses in the state hired a credit association in May 2023 to try to recoup hundreds of thousands of dollars owed.