Delinquent Payments Topped $3.8 Billion in 2023

PORTLAND, Ore. – Cash-starved cannabis operators left more than $3.8 billion worth of bills unpaid in 2023, according to a report from economic research consultancy Whitney Economics. Worse, according to its U.S. Cannabis Delinquent Payments Report, the firm expects delinquent bills to top $4.2 billion this year unless regulators step in to stem the rising tide of debt.

In 2023’s fourth quarter, Whitney Economics deployed a survey asking cannabis operators and ancillary businesses about the impact of delinquent payments. In addition, the Whitney Economics team conducted interviews with survey respondents and validated the data they obtained against other sources, including regulatory records. The survey revealed:

• The total delinquent debt at the end of 2023 equaled 1.6 months of legal U.S. retail revenues.
• Balances past-due by more than forty-five days accounted for 56.3 percent of total delinquencies.
• Retail carried the lowest delinquent accounts receivable (AR) balances but the highest delinquent accounts payable balances.
• Cultivators carried the highest delinquent AR balances.
• Delinquent payables from large corporations and multistate operators accounted for $1.4 billion, or 36.4 percent, of total delinquencies.
• 44 percent of respondents indicated delinquent AR impacted their ability to service debt.
• 34 percent of respondents indicated delinquent AR impacted their ability to pay taxes.
• 57.3 percent of respondents indicated delinquent receivables have a greater impact on their business than Section 280E of the Internal Revenue Code.

According to Whitney Economics founder Beau Whitney, past-due receivables are an existential threat to the U.S. industry, and creating a sustainable economic model will require change at the regulatory level.

“The pressures created by current macroeconomic factors and regulatory policies have incentivized operators to stop paying their suppliers,” he said. “Regulators have played a key role in creating this issue. The current regulatory and economic environment incentivizes delinquent payments. For there to be accountability in the system, delinquent payments can only be addressed at the regulatory level. Policy changes can level the playing field, or they can further exacerbate the issue.”