A large group of California cannabis companies have formed a coalition to raise awareness and provide solutions to mitigate a credit crisis that has threatened to upend the local marijuana industry.
Dozens of cannabis brands, wholesalers and producers Tuesday launched Financial Stability for California Cannabis (FSCC) as part of an ongoing effort to confront the complex debt problems facing the world’s largest regulated marijuana market.
“Collections and outstanding debt related to unpaid invoices are key challenges facing cannabis operators of all types across the state, from cultivators to manufacturers, vertical brands to wholesalers, and everyone in between,” Vince Ning, founder and co-CEO of California cannabis distributor Nabis, said in a press release.
FSCC aims to create a more holistic and collective plan to address the debt crisis across the supply chain, rather than individual, operator-led initiatives that have tried to reign in one of the industry’s biggest challenges – unpaid invoices, which affect many California cannabis businesses.
As part of its awareness campaign, the group sent a letter to Chris Holden, who chairs the Assembly Committee on Appropriations at the California State Assembly, supporting a new bill that could become the nation’s first credit law for marijuana sales.
“This culture of nonpayment that has emerged in California’s cannabis market leaves businesses across the entire industry and supply chain – as well as ancillary businesses that support legal cannabis operators – with outstanding balances and unpaid invoices sometimes totaling hundreds of thousands of dollars,” the letter reads.
“This ballooning debt bubble in the cannabis industry will only continue to grow without proper oversight, putting the entirety of the state’s supply chain at risk of collapse and impacting state revenue decline even further.”
Assembly Bill 766, dubbed the “Cannabis Credit Protection Act,” was introduced by California assembly member Philip Ting and is supported by the Cannabis Distribution Association, the California Cannabis Industry Association and the California Cannabis Manufacturers Association, among other stakeholders.
Other FSCC members include: Kiva Sales & Services, the distribution arm of Kiva Confections; CannaCraft; Calyx Peak; Glass House Group; and The Parent Co.
Several members also are part of a new California group of distributors and brands that recently hired a credit association to rate retailers in the hopes of reducing hundreds of thousands of dollars in unpaid invoices – and reining in repeat offenders.