Every cannabis company extending trade credit is acting like a bank.
The problem?
Almost none of them are doing what a bank would do.
No credit checks.
No underwriting.
No standardized reporting.
Just handshakes, invoices, and hope.
The numbers tell a devastating story. Beau Whitney at Whitney Economics reported that delinquent accounts receivable across U.S. cannabis operators exceeded $3.8 billion back in 2023 – equivalent to 1.6 months of total U.S. legal cannabis revenue, and projected that figure would surpass $4.2 billion in 2024.
Anyone reading this think it got better?
Look at the public filings of the largest MSOs and you’ll see it in black and white.
Across the top 15-20 publicly traded U.S. cannabis operators, aggregate accounts receivable likely exceeds $400 million, with bad debt reserves ranging from 3% to over 20% depending on the business model.
Wholesale heavy operators carry the most risk. Retail dominant companies carry less AR but still face the same structural problem: there is no standardized commercial credit infrastructure in cannabis.
The downstream effects are crippling.
In traditional B2B markets, collection agencies recover 35-40% of placed accounts.
In cannabis? Recovery rates are estimated to drop to 15-20%, and the average account isn’t placed for collection until 285 days past due, by which point the debtor is often out of business entirely.
A company operating at a 25% margin that writes off $50,000 in bad debt must generate $200,000 in new revenue just to break even!
In an industry where it is estimated that less than a quarter of operators are profitable, that math is a death sentence.
Meanwhile, 57% of operators surveyed by Whitney Economics said delinquent AR impacts their business more than Section 280E.
More than 43% said it impairs their ability to service debt. The collision between the AR crisis and the capital structure crisis is about to become acute.
This is exactly why we built Reklaim Credit Solutions!
Reklaim Credit Solutions Credit Solutions is the first purpose-built commercial credit rating agency for the legal cannabis B2B market.
With top experts in the field of predictive metrics, we’re building what Dun & Bradstreet and Experian built for mainstream commerce, but designed from the ground up for an industry that has been locked out of traditional credit infrastructure since day one.
Our neural network ensemble models are trained on real accounts receivable aging data contributed by leading cannabis operators.
We’re creating the industry’s first standardized commercial credit scores, giving every wholesaler, distributor, cultivator, and lender the ability to evaluate counterparty risk BEFORE extending a dollar of credit.
The cannabis industry doesn’t have a sales problem.
It has an AR collections problem.
And the root cause is a credit visibility problem.
We’re fixing that.