A cohort of cannabis industry operators on Tuesday announced a coalition that seeks to raise awareness and offer solutions to severe credit issues that threaten the industry’s stability. The Financial Stability for California Cannabis (FSCC) includes Kiva Sales & Service, Lowell Farms, Nabis Sunderstorm and other key players in California’s cannabis industry which they say comprise 45% of the state’s industry by sales volume.
In a statement, Vince Ning, co-founder and co-CEO of Nabis, said “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.”
“Advocacy for solutions is largely an issue siloed to individual operators or specific sectors of the supply chain, which is why we are proud to be an instrumental part of the mission of the FSCC to demonstrate a more holistic, collective representation of the severity of the debt crisis across all levels of the supply chain, and work toward a more financially stable cannabis market.” — Ning in a press release
The group said it supports AB 776, “The Cannabis Credit Protection Act,” a California bill that aims to establish regulatory oversight around credit terms across the cannabis supply chain.
In a May 15 letter to state Assemblymember Chris Holden, the chair of the Assembly Committee on Appropriations, the coalition said “California’s cannabis industry does not have the same oversight of sales made on terms that is afforded to other, similar consumer industries.”
“As a result, terms of sale are not honored by some cannabis businesses, with late payment of invoices being commonplace across the supply chain and limited pathways of legal recourse for operators that owed money,” the letter states. “In some rare instances, licensees refuse to pay invoices altogether. 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.”
In a statement, Assemblymember Phil Ting (D), author of AB 766, said federal restrictions have left California cannabis operators “with limited options for financing and capital” and “has led to a severe debt bubble across the supply chain from cultivators all the way through to the retailers.”
Ting added that the bill “aims to bring much needed financial stability to California’s industry, while also ensuring that operators receive payment for goods and services in a timely manner.”
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California Cannabis Companies Form Group to Address Industry’s ‘Culture of Nonpayment’