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The #1 Reason Marijuana Companies Fail Is… A. High Taxes B. 280E Rules C. Nonpayment D. No Banking

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non payment cannabis companies

Michigan isn’t just competing with California in the regulated recreational marijuana market; it’s also matching California in unpaid invoices.

 

Brett Gelfand, managing partner at Cannabiz Collects in St. Petersburg, Florida, and founder of the Cannabiz Credit Association noted that Michigan’s regulated adult-use market is now one of the worst for unpaid debts.

 

Turns out one way to make money in competitive cannabis markets is not pay your bills.

 

“Oregon and Colorado used to be major states for us in terms of collection activity,” Gelfand said. “But many of those companies have been weeded out, and now, we don’t see much volume from Colorado and Oregon anymore. In newer markets like Michigan, however, it’s becoming a growing issue.”

 

Just how big is the problem? Delinquent payments in the regulated U.S. cannabis industry are projected to exceed $4 billion in 2024, according to Whitney Economics, an Oregon-based cannabis data and research firm.

 

Gelfand discussed how plant-touching companies can adopt best practices for managing accounts receivable and breaking the cycle of debt in a recent interview, where he answered the following questions.

 

What is the main factor leading cannabis companies to delay invoice payments?

 

The primary issue is banking and capital access.

 

Without access to credit cards or regular capital, as non-cannabis businesses have, cannabis companies often rely on trade credit instead of operating capital. This forces many cannabis businesses, without the formal training that banks have, to function like banks themselves.

 

When a company offers net-15 or net-30-day payment terms, they’re essentially acting as a bank. But unlike banks, which would assess a credit profile, secure a lien, or demand a personal guarantee to safeguard against non-payment, cannabis companies often lack such recourse. In the cannabis industry, it’s almost a free-for-all.

 

Cannabis businesses feel pressured to extend credit to make sales, fearing that customers will go elsewhere if they don’t. As a result, they end up giving credit terms, even without the proper safeguards, due to the lack of transparency and guardrails in the industry, leaving them vulnerable to non-payment.

 

Are certain sectors of the cannabis industry more affected by non-payment issues?

 

Retailers are particularly notorious for non-payment, which triggers a cycle of financial strain across the industry. When retailers fail to pay, it impacts producers and brands, who, in turn, delay payments to their testing-lab vendors.

 

On the other hand, some larger ancillary companies, such as grow-supply and lighting companies, are more stringent. They’ve been in business longer and are less likely to extend credit without proper precautions.

 

What best practices do you recommend for managing accounts receivable, aside from cash on delivery?

 

Firstly, appoint someone responsible for cash collection and establish a clear policy and procedure for this process.

 

It’s crucial to have a method for evaluating a company’s creditworthiness before extending credit. Ensure you have an onboarding agreement reviewed by a lawyer that includes default language for non-payment. If you’re offering substantial credit, securing a personal guarantee is the best way to protect yourself.

 

With many retail chains facing financial difficulties, vendors are often fortunate to recover anything at all, making these practices even more vital.

 

Why aren’t cannabis operators reporting default accounts to collections?

 

Many of my clients hesitate to submit outstanding accounts to collections because they’re concerned about their reputation. They don’t want to be perceived as aggressive or difficult within the industry. However, this mindset needs to change.

 

If a company isn’t honoring their payment agreement, they are the ones at fault, not you. Non-payment can lead to serious consequences, including business closures and personal financial losses.

 

What do you wish cannabis operators knew?

 

There’s a significant risk in using Facebook or WhatsApp groups to expose delinquent companies. While the intent may be to protect the community, these groups can inadvertently violate antitrust laws. If a sophisticated debtor on such a list sees posts advising others not to sell to them, it could lead to serious legal trouble.

 

The industry must recognize that while it’s important to share information, it must be done in a regulated and lawful manner.

 

The Impact of Financial Strain on the Broader Cannabis Supply Chain

 

The financial burden resulting from nonpayment impacts not only specific businesses but also the whole cannabis supply chain. Payment delays or defaults by retailers have a knock-on effect on manufacturers, brands, and service providers, resulting in a vicious circle of unstable economic conditions.

 

Due to their often narrow profit margins, producers and brands mostly depend on prompt payments to meet their running expenditures, which include debt repayment, salaries, and manufacturing costs. These companies are compelled to postpone paying upstream vendors, such as testing laboratories and packaging suppliers when they don’t get payments from retailers on schedule. Due to the cascading effect of this delay, even companies with sound financial processes may find it difficult to fulfill their commitments, which might cause more supply chain disruptions.

 

Financial volatility is especially harmful to small enterprises, which may lack the reserves to absorb late payments. For them, a few missing payments from a large store might be the difference between survival and failure. This pressure frequently results in a tightening of loan conditions across the board, with suppliers being less willing to issue credit without severe protections.

 

Consequently, a contraction in financing may hinder the industry’s ability to innovate and thrive. Uncertainty about their financial situation may make companies less inclined to invest in new items or take risks. Additional obstacles to growing a business in the cannabis sector include the general lack of market liquidity, which can make it hard for companies to expand.

 

Nonpayment problems thus represent more than isolated occurrences; rather, they point to more widespread financial weaknesses in the cannabis industry. To overcome these obstacles, the industry as a whole must adapt structurally to improve the availability of credit and capital as well as improve corporate financial management procedures.

 

Bottom Line

Nonpayment is a significant challenge that threatens the sustainability of cannabis companies, particularly in newer markets like Michigan. The ripple effect of financial strain extends beyond individual businesses, impacting the entire supply chain and stifling growth and innovation in the industry. To mitigate these risks, cannabis companies must adopt stringent financial management practices and the industry must advocate for systemic changes that improve access to credit and capital. Only by addressing these underlying financial vulnerabilities can the cannabis industry build a more stable and resilient future.

 

NOT PAYING BILLS IN THE WEED GAME IS COMMON, READ ON…

DISPENSARY OWNER NOT PAYING BILLS BRAGGING ONLINE

DISPENSARY OWNER BRAGGING ONLINE ABOUT NOT PAYING HIS BILLS!



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Wet Marijuana – How Do You Dry Out Your Wet Stash?

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marijuana gets wet what can you do

Whether you bought your cannabis or dried it yourself, there’s a good chance it got wet accidently. This might have happened by mistake or because the cannabis was washed purposely to eliminate contaminants and enhance its flavor. Regardless, it’s disheartening to devote time, money, or effort just to wind up with a useless product. But do not worry—there are solutions.

 

There is a narrow line between slightly moist buds and perfect stickiness, which some people prefer.

 

If your cannabis squishes when lightly squeezed, it’s likely overly damp. Buds should feel somewhat sticky because to the resin (which contains the cannabinoids), but they should bounce back slightly when squeezed rather than crush.

 

Wet cannabis may seem sticky, but it will not adhere to your fingertips. You’re seeking for buds with a honey-coated texture, comparable to baklava. If they feel wet or spongy, you have a problem.

 

Common Issues With Wet Cannabis

 

Difficult to Light 

It’s no surprise that wet cannabis is hard to ignite. If you can’t light it, you can’t smoke it.

 

Mold Risk 

Excess moisture, as explained in *How to Dry and Cure Cannabis*, complicates pot storage and can lead to mold. Smoking moldy cannabis is risky because it contains germs and fungus that can harm your respiratory system and increase your risk of pneumonia.

 

Bad Taste

If you somehow manage to smoke damp weed, it won’t taste great. It’s like smoking uncured cannabis—definitely not pleasant.

 

The Risks Of  Wet Weed

 

While smoking wet pot is not always harmful to your health, the length of time the bud remains wet can make a significant effect. A damp atmosphere is ideal for mould, fungus, and bacteria. So, if you keep your cannabis wet for too long, you may get more than you bargained for. Smoking mouldy cannabis can cause headaches, lung issues, and even pneumonia. As a result, if your weed became wet, it is safer to dry it straight away.

 

Regardless of whatsoever drying method you use, it is critical to examine your marijuana for mold before and after drying. If it has a nasty odor—like leftovers from last week—or if you notice something clearly growing on it, it’s better to toss it away. Now let’s look at what you can do if your marijuana becomes moist.

 

How to Dry Out Wet Cannabis

 

To save your damp weed, dry it out with moisture-absorbing ways. Whether you’re a grower who didn’t properly cure it, it got caught in the rain, you inadvertently spilled something on it, or it’s just unusually humid outdoors, there are several reasons why your cannabis may be storing too much moisture. Fortunately, there are several solutions to the problem.

 

Rice Drying Method

If you’ve ever spilled a drink on your phone, you’re probably familiar with this trick. It turns out uncooked rice isn’t just for saving electronics—it can help with wet weed, too. Place your wet buds in a bowl or bag, then cover them completely with dry rice.

 

The rice will draw out the excess moisture, helping your buds return to their ideal state. Depending on how wet your weed is, leave it in the rice for at least 24 hours. If it’s still damp when you check, give it another day. Just make sure to seal the container, and let the rice do the work!

 

Put a Paper Over the Problem

If your marijuana became wet, don’t worry—you can easily repair it with a paper bag. Simply place your moist buds in a closed paper bag and store them somewhere cool and dry. If you have a dehumidifier, now is an excellent time to utilize it. The paper bag circulates air while protecting your blooms from trichome-damaging light.

 

To increase moisture absorption, wrap your cannabis with paper towels before placing it in the bag. The paper towels will help absorb the extra wetness. Replace the towels and rotate your weed every several hours, checking for mold. This also helps to remove any trapped dampness from the bag.

 

Revive Your Damp Weed

If you’re a grower, you’re no stranger to the challenges of battling moisture and mold. After a successful harvest, properly curing your buds is essential. The same curing tools can also help remove moisture from buds that have become too damp. If your weed is fully soaked, start with the rice method. But if it’s just a bit moist, try placing a humidipak in your airtight container.

 

Avoid Cutting Corners

It’s tempting to use heat to hasten the drying process of damp weed. Ultimately, you most likely want to smoke it as soon as possible. It’s important to avoid shortcuts that utilize heat or light, though.

 

Your weed’s quality can be diminished by using a blow dryer, an oven, or leaving it outside in the sun. Terpenes and cannabinoids are broken down by light and heat, which lessens their taste and efficacy. You might lose strength in the process of gaining time. Furthermore, you run the danger of over-drying your buds, which makes for a harsher, less pleasurable smoke.

 

Moisture Prevention: Proper Weed Storage

 

Wet weed can be unpleasant at best, and downright destructive at worst (hello, mold!). While accidents happen, there are steps you can take to prevent excess moisture from ruining your stash. The key is to keep it in the Goldilocks zone—not too wet, not too dry. Freshness starts with proper storage. Keep your cannabis in an airtight container, stored in a cool, dry, and dark place. Simple, right?

 

Mason jars are a solid option, but for optimal care, consider investing in a specialized container like the CVault. It’s airtight, blocks light, and comes with a humidipak to keep your weed fresh longer. Just avoid plastic baggies—you’re a cannabis enthusiast, and dime bags are a thing of the past.

 

Bottom Line

 

If your cannabis gets wet, it’s crucial to act quickly to dry it out to avoid mold and maintain quality. Use methods like the rice drying technique or paper bag with paper towels to absorb moisture. Avoid using heat sources as they can degrade the weed’s quality. Proper storage in airtight containers and maintaining a cool, dry environment will help prevent future moisture issues. Always check for mold and other contaminants before consuming. By following these steps, you can preserve your cannabis’s flavor and potency.

 

GOT SOME WEED WEED, READ ON…

WET CANNABIS IDEAS

TIPS TO GET YOUR MARIJUANA STASH DRY, WHAT TO DO FIRST!



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What Product Created $8,700,000,000 in Tax Revenue for States in Just 36 Months?

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marijuana taxes in 36 months

The legalization of cannabis has transformed the economic landscape of many states across the United States. New federal data reveals that since 2021, states have collectively collected over $8.7 billion in marijuana taxes. This figure not only highlights the financial potential of legalized cannabis but also reflects changing public attitudes toward marijuana use and its regulation. As more states embrace legalization, understanding the implications of this revenue generation becomes crucial for policymakers, businesses, and communities alike.

 

The Landscape of Cannabis Legalization in the U.S.

The journey toward cannabis legalization in the United States has been long and complex. Cannabis was criminalized in the early 20th century, with the Marihuana Tax Act of 1937 effectively prohibiting its use and distribution. However, attitudes began to shift in the late 20th century, with California becoming the first state to legalize medical marijuana in 1996.

 

The momentum continued to build, culminating in Colorado and Washington becoming the first states to legalize recreational marijuana in 2012. Since then, a wave of legalization has swept across the nation, with 21 states and the District of Columbia now allowing recreational use.

 

Current Legal Status of cannabis legalization in the  U.S

 

As of September 2024, a total of 21 states have legalized recreational marijuana, while a dozen more permit medical use. The regulatory frameworks vary significantly from state to state, influencing tax structures, sales practices, and usage regulations. Some states have opted for high taxes on cannabis sales as a means to generate revenue, while others have focused on creating a more accessible market for consumers.

 

Tax Revenue Breakdown

 

 Overview of Revenue Generation

 

According to recent federal data, states have amassed over $8.7 billion in marijuana tax revenue since 2021. This revenue comes from various sources, including excise taxes, sales taxes, and licensing fees imposed on cannabis businesses. The breakdown of this revenue is essential for understanding how different states are capitalizing on legalization.

 

  • Excise Taxes: These are taxes imposed directly on the sale of cannabis products. States like California and Colorado have implemented excise taxes that can range from 15% to 30%, depending on local regulations.

 

 

  • Licensing Fees: States also collect significant revenue through licensing fees charged to cannabis growers, manufacturers, and retailers. These fees can be substantial and contribute to the overall financial picture.

 

State Contributions

 

California: The Leader

 

California remains at the forefront of marijuana tax revenue generation. Since legalizing recreational cannabis in January 2018, the state has collected over $3 billion in taxes alone. The state’s complex tax structure includes a 15% excise tax on retail sales and additional local taxes that can vary widely by municipality.

 

The revenue generated has been earmarked for various public services:

 

 

 

Colorado: A Model for Success

 

Colorado was one of the first states to legalize recreational marijuana and has since become a model for other states looking to implement similar legislation. Since legalization, Colorado has generated over $2 billion in tax revenue from cannabis sales.

 

The state’s tax structure includes a 15% excise tax on wholesale transactions and a 2.9% state sales tax that applies to all retail sales. Local jurisdictions can impose additional taxes as well.

 

Colorado has utilized its cannabis tax revenue for various purposes:

 

 

 

Illinois: Rapid Growth

 

Illinois is another state that has seen rapid growth in marijuana tax revenue since legalizing recreational use in January 2020. In just over three years, Illinois has collected more than $1 billion in cannabis taxes.

 

The state imposes a tiered excise tax based on THC content:

 

 

 

Illinois has directed its cannabis revenue toward social equity programs aimed at addressing historical injustices related to drug enforcement policies.

 

Economic Impact Beyond Tax Revenue

 

 

Legalizing marijuana has led to substantial job growth across various sectors. As of early 2024, nearly 15,000 cannabis dispensaries operate in the U.S., employing an estimated 93,000 workers. This includes roles in cultivation, processing, distribution, and retail. Additionally, the industry stimulates job creation in ancillary sectors like software development, accounting, and construction. The cannabis sector is projected to grow further, potentially increasing legal cannabis jobs by 250% over the next decade.

 

 

The burgeoning cannabis industry presents numerous business opportunities for entrepreneurs. The market has attracted significant investment, leading to the establishment of various businesses ranging from cultivation facilities to dispensaries and ancillary services. In 2022, consumers spent approximately $30 billion on legal marijuana products, surpassing expenditures on chocolate and craft beer. This consumer spending not only benefits cannabis businesses but also generates substantial tax revenue for states.

 

 

Cannabis tax revenue often supports local communities by funding essential services. For instance, Colorado has allocated millions from cannabis taxes toward education and homelessness services. This redistribution of wealth enhances community welfare and infrastructure.

 

 

Legalization also reduces the costs associated with enforcing drug laws. States can reallocate funds previously used for law enforcement to other community programs, further amplifying the positive economic impacts.

 

 Long-term Economic Growth

 

As the cannabis industry matures, it is expected to contribute significantly to overall economic growth. Projections indicate that the total economic impact of the cannabis industry could reach nearly $150 billion by 2026, underscoring its potential as a major economic driver in the U.S.

 

Community Benefits

 

Beyond economic metrics, communities are experiencing benefits from legalized marijuana:

 

 

 

 

Challenges Ahead

 

Despite the positive economic impacts associated with marijuana legalization, several challenges remain:

 

  1. Federal Regulations

One significant hurdle is the ongoing federal prohibition of marijuana. While many states have legalized its use, cannabis remains classified as a Schedule I substance under federal law. This creates complications for banking and taxation:

 

 

  1. Social Equity Concerns

 

As states continue to generate substantial revenues from legalized marijuana, there is growing concern about social equity:

 

 

 

 

  1. Market Saturation

 

As more states legalize marijuana and existing markets expand, there is potential for market saturation:

 

 

 

Prospective Developments

As more states legalize recreational marijuana, tax revenues are expected to continue rising. With 37 states and Washington, D.C., having legalized some form of cannabis by 2024, the potential for increased tax revenue is significant. Experts estimate that nationwide legalization could generate up to $8.5 billion annually for all states. This growth will likely be driven by expanding markets and consumer acceptance, as well as the introduction of new products and services within the cannabis industry.

 

States are experimenting with various tax structures to optimize revenue while ensuring competitiveness against the illicit market. The adoption of potency-based taxation—taxing products based on THC content—has emerged as a trend in states like New York, Illinois, and Connecticut. This approach aims to create a more equitable tax system that can adapt to market changes and consumer preferences. However, states must remain cautious about overtaxing, which can drive consumers back to illegal markets.

 

 

The allocation of marijuana tax revenue will continue to be a critical issue. Many states have earmarked funds for essential services such as education, public health initiatives, and infrastructure improvements. For instance, Colorado has directed substantial portions of its cannabis tax revenue toward school construction and behavioral health programs. As revenues grow, states may face pressure to diversify spending or address social equity issues related to past drug enforcement practices.

As the cannabis market matures, prices may stabilize or decline due to increased competition and efficiency in production. This maturation could result in fluctuating tax revenues as consumer behavior adjusts. States that have seen significant price drops—like Colorado, where prices fell by 60% from 2014 to 2023—may experience challenges in maintaining consistent revenue streams. Policymakers will need to adapt their strategies accordingly.

The ongoing conversation about federal legalization could dramatically impact state revenues. If cannabis were legalized at the federal level, it would open up interstate commerce opportunities and allow cannabis businesses access to traditional banking services. This change could lead to an influx of investment and further stimulate job creation within the industry.

 

As states continue to collect substantial tax revenues from marijuana sales, there is growing recognition of the need for social equity initiatives. Many advocates argue that a portion of tax revenue should be directed toward communities disproportionately affected by past drug policies. Future developments may include programs aimed at providing grants for minority-owned businesses within the cannabis sector or funding for substance abuse treatment programs.

 

.

 

 Conclusion

 

The collection of over $8.7 billion in marijuana taxes since 2021 demonstrates not only the financial viability of legalized cannabis but also its potential impact on public services and community development. As more states navigate their paths toward legalization and regulation, it will be crucial for policymakers to address challenges related to equity, access, and federal regulations.

 

With continued advocacy for reform at both state and federal levels, along with innovative approaches to taxation and regulation, the future looks promising for both consumers and businesses within this burgeoning industry. As society continues adapting its views on cannabis use, understanding these dynamics will be essential for maximizing benefits while minimizing challenges associated with this rapidly evolving sector.

 

MARIJAUNA TAXES HIT $20 MILLION IN ONE CITY BUDGET, READ ON…

WHAT DO MARIJUANA TAXES PAY FOR

WHAT CITY HIT $20 MILLION IN MARIJUANA TAXES COLLECTED?



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Federal Cannabis Roundup: Nixon, DEA, Tobacco-Hemp . . . and the DOOBIE Act (*sigh*)

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Last week, I wrote a round-up post on Oregon cannabis. This week, I thought I’d drop a line on the federal happenings. Which are quite a few.

The Nixon tapes

This was a fun piece of news, unearthed by Minnesota cannabis lobbyist Kurtis Hanna. Ernesto Londoño then broke the story on September 14th for the New York Times, which you can read here. In short, Nixon conceded that marijuana “is not particularly dangerous,” despite calling the plant “public enemy No. 1” only two years prior. And he opined that punishments ought not be so serious for possession of the plant.

I say this news is “fun” because it’s more interesting than surprising and I doubt it will have much impact. Nixon was a mean old liar, and one with an animus toward certain groups of people. I also don’t think this revelation will persuade the vocal, diminishing minority of prohibitionists to change their minds. I like it anyway, especially as cannabis history nerd. We were right!

DEA embraces two-step review for marijuana rescheduling

This one is important, in my opinion. It relates to the method of analysis DEA must undertake when determining whether a drug, including marijuana (and psilocybin, and any other verboten substance), has a “currently accepted medical use.” In April, the Department of Justice’s Office of Legal Counsel (OLC) put DEA in a box on this one, explaining that the old, five-part test was “impermissibly narrow.” OLC thus endorsed the two-part test. On September 17th, DEA assented to the test for Schedule I review.

The two-part test bodes well for DEA’s rulemaking, now underway, to move marijuana from Schedule I to Schedule III of the federal Controlled Substances Act. How do we know? Well, the Schedule I stans don’t like it, for starters. This is because, under two-part review, a drug can have currently accepted medical use: a) even if that drug hasn’t been approved by FDA, and b) even if the drug wouldn’t pass DEA’s scrapped five-part test. So, more runway.

DOOBIE Act on the way?

I’m embarrassed even having to type that. But yes, some Congressperson named a federal cannabis bill the “DOOBIE Act,” unfortunately. With a press release and everything.

This proposal would prohibit federal agencies from denying security clearance and employment to people simply because they have used marijuana. In my reading of the actual bill, these agencies could still ding an applicant for past marijuana use, but they couldn’t “base a suitability determination . . . solely on the past use of marijuana by the individual.” The word “solely” needs to go.

Because this bill applies only to “Executive agencies” under 5 U.S. Code § 105, it also wouldn’t have prohibited, say, Joe Biden from doing his “doobie” staffers dirty, which he definitely did.

FDA gets the nod on tobacco-hemp

I like the Congressional Research Service (CRS) and often send people thataway. On September 16th, CRS published a new report titled “Legal Effect of Marijuana Rescheduling on FDA’s Regulation of Cannabis.” Here are my extremely condensed takeaways:

  1. FDA can authorize tobacco products containing hemp-derived cannabinoids (although it hasn’t yet). This is because hemp is not a controlled substance.
  2. Marijuana, even at Schedule III, would still be banned as a tobacco additive (and probably always will be). This is because FDA would need to approve specific cannabis medicines first, and it never does that for botanical drugs.

Here we have one of those cognitively dissonant outcomes often seen with the cannabis plant. As a reading of law it makes sense, but as to policy it’s nonsense. You can thank Richard Nixon and other cannabis heels for that.



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