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Delinquent payments hurting marijuana operators nationwide, survey shows

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11 months ago

December 22, 2023

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Delinquent payments are causing a cascade of problems for small and large marijuana operators nationwide, according to a new report by Oregon-based cannabis data and research company Whitney Economics.

Preliminary results from the survey of operators and ancillary businesses revealed:

43% of respondents said delinquent accounts receivables are impacting operators’ ability to service debt.
32% of respondents believe delinquent accounts receivables are impacting operators’ ability to pay state or federal taxes.
59% of respondents reported that delinquent payments are having a greater impact on their business than Section 280E, the federal tax policy that prohibits marijuana operators from taking traditional business deductions because of the plant’s Schedule 1 status under the Controlled Substances Act.

Some respondents indicated accounts receivable delinquencies totaled more than two months of revenue, eclipsing millions of dollars in some cases.

Cannabis brands, distributors and manufacturers have been dealing with unpaid invoices for years, but the problems really ramped in mid-2022 as industry stocks tumbled and capital dried up, sources have told MJBizDaily.

The issue has led industry operators and lawmakers to seek potential solutions.

In May, MJBizDaily reported that a group of California distributors and brands representing more than half the state’s wholesale B2B cannabis market 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.

In California, the world’s largest regulated market, social equity licensees and brands, including Black- and Latino-owned businesses, have been particularly hit hard since most lack capital reserves and resources.

California Assembly Member Philip Ting earlier this year sponsored Assembly Bill 766, which proposed stiff penalties against operators skirting credit agreements.

However, the bill was not included among several major changes lawmakers approved to the state’s cannabis regulatory system.

In New York, regulators earlier this year proposed rules requiring operators to pay for purchases on credit within 90 days.

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Cannabis MSO MedMen is exiting Arizona and Nevada

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11 months ago

December 22, 2023

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Marijuana multistate operator MedMen Enterprises is exiting Arizona and Nevada by selling its assets in those states to privately held MSO Mint Cannabis.

The sales are the result of a strategic review by MedMen, according to a news release, and consist of the Los Angeles-based company’s wholly owned operating subsidiary in Arizona and two operational stores in Clark County, Nevada.

The value of the transaction was not disclosed.

Mint Cannabis has operations in its home state of Arizona as well as Michigan and Missouri.

MedMen warned investors in February that the company was running out of cash and later in the month said it was evaluating divesting properties in Arizona, Illinois and Nevada.

In November, MedMen advised that its annual results for the 2023 fiscal year ended July 1 would be late.

“MedMen is pleased with the outcome of our strategic review and has made good progress in our restructuring efforts,” MedMen CEO Ellen Deutsch Harrison said in a statement.

“These transactions will bolster liquidity in the short term, reduce liabilities, and enable the Company to focus on operating efficiencies and executing our long-term asset-light growth strategy in our core markets.”

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New PA law could increase medical marijuana dispensary permits by 20%

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11 months ago

December 22, 2023

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(This story has been updated to clarify the changes in Pennsylvania law.)

Up to 30 new medical marijuana dispensaries could open in Pennsylvania under a bill signed into law by the state’s Democratic governor, a potential expansion of 20%.

Under Senate Bill 773 – which Gov. Josh Shapiro signed into law Dec. 14, as promised – as many as 10 independent MMJ growers now qualify to apply for a dispensary license.

Until now, Pennsylvania law capped the number of dispensary license holders at 50.

That arrangement led to a market controlled by out of state big cannabis company that resembled a near monopoly, according to critics.

The new law:

Could mean an expansion of up to 20% in the number of dispensaries allowed in the state if all 10 that receive approvals apply.
Also allows up to four dispensaries previously barred from cultivating cannabis to begin growing operations.

The changes could help expand product offerings available to MMJ patients in the state, some of whom might be lured to nearby Ohio once adult-use sales begin there as anticipated in 2024.

There’s also new language that would require MMJ license holders to report any change in ownership affecting a stake of 20% or more.

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