“While this matter is not unique to Mass, delinquent payments may be a threat to the licensed cannabis industry according to many businesses and stakeholders across the country.”
As we’ve noted several times, few issues get more burn among cannabis industry professionals than who owes who money and how much.
Since overdue invoices are a common concern that is clearly causing operators pain, Cannabis Control Commission members have been looking into potential solutions to the persistent problem. As Commissioner Kimberly Roy, who took up the task of researching the issue, explained at a May CCC meeting …
“Delinquent payments are becoming a threat to the licensed cannabis industry according to many businesses and stakeholders across the country. Preliminary findings from a comprehensive study conducted by Whitney Economics shed light on the $3.8 billion dollar issue plaguing cannabis operators and ancillary businesses nationwide.
“Challenges such as delayed payments and bad debt jeopardize financial stability, creating a ripple effect throughout the supply chain in Massachusetts. This phenomenon has been called a ‘self-fulfilling negative shockwave.’”
At that same meeting, regarding “next steps and options,” the CCC noted that it “needs to gain a better understanding and breadth of the issue and its impact here in Massachusetts before deciding on any changes to current policy and regulations.” To that end, members moved to “Direct the Commission to formulate a general comment question and have it posted for a two-week response.”
And now that comment period has arrived, with the agency officially announcing that it wants to “hear from stakeholders in response to the following questions:
- How does the issue of outstanding accounts receivable impact your operations?
- Please consider quantifying the outstanding accounts receivable currently owed to your business (e.g., the average, or total, amount of money that is still unpaid after the expiration of any agreed upon payment due dates, once all terms and conditions between you and your delinquent clients have been met).
- What proactive practices have you undertaken to minimize your financial risk to unpaid invoices?
- Should the Commission consider amending its regulations to establish a means for industry to identify delinquent clients? What would be your proposed regulatory solution?
- What additional steps should the Commission consider to assist licensees with this issue?”
The announcement continues:
The Cannabis Control Commission (Commission) is aware that some licensees are experiencing issues with delinquent or extended Accounts Receivable. Commissioners discussed this topic at the May 23 public meeting and voted unanimously to open a public comment period to obtain feedback.
Account Receivable refers to the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. An excessive balance of outstanding Accounts Receivable can create financial challenges for all participants within the supply chain.
While this matter is not unique to Massachusetts, delinquent payments may be a threat to the licensed cannabis industry according to many businesses and stakeholders across the country. Preliminary findings from a comprehensive study conducted by Whitney Economics shed light on the $3.8 billion dollar issue plaguing cannabis operators and ancillary businesses nationwide.
In response, the Commission is examining measures considered by other jurisdictions including California, New York, Colorado, New Jersey, Michigan, and others. Commissioners have also met with leadership from the Massachusetts Alcohol Beverage Control Commission (ABCC) to learn about actions they have taken to address the issue within the alcoholic beverages industry.
There’s still plenty of time to participate. “Responses may be submitted through a survey linked here or emailed to the Commission via Commission@CCCMass.com with the subject heading “Accounts Receivable” as soon as possible, and no later than July 11, 2024.”
