Business
California cannabis companies hire credit group to monitor retailers over unpaid invoices
A group of California distributors and brands representing more than half the state’s wholesale B2B cannabis market has hired a credit association to rate retailers in the hopes of reducing the hundreds of thousands of dollars in unpaid invoices – and reining in repeat offenders.
The Credit Management Association (CMA), a nonprofit based in suburban Los Angeles, is analyzing accounts receivables and other documents from more than a dozen distributors and brands.
The CMA plans to email each of the distributors and brands a “do not sell list” of 25 California retailers that don’t pay their bills on time – a seismic problem in the world’s largest cannabis market and across the United States.
The “red” list, according to group members, highlights retailers and delivery providers that owe at least $25,000 for products and are 90 days late or more on payments, often categorized as delinquent.
(In California, consumers pay delivery providers directly for products delivered, and in turn, delivery providers pay suppliers.)
Together, the companies on the “do not sell” list owe at least an estimated $625,000 – likely indicating that retailers and delivery providers statewide (including those not on the list) collectively owe more than $1 million in unpaid invoices.
The issue, like most in the cannabis industry, isn’t as clear cut as it seems.
Retailers and delivery operators have been struggling for years to turn a profit, burdened by high taxes, regulation and competition from the illicit market.
Most retailers don’t set out to become bad actors. They fall behind on payments and struggle to claw out of debt, according to industry sources.
The credit association is onboarding new members, facilitating group meetings and aggregating data sets to create business credit reports.
The first report is expected to be released to members in a few weeks, according to members who spoke with MJBizDaily.
“The goal of this group is to create a bit more stability and financial structure in the supply chain of cannabis,” said Vince Ning, founder and co-CEO of California cannabis distributor Nabis, the San Francisco company spearheading the accountability effort.
Nabis distributes about $400 million worth of products annually, more than 20% of the entire wholesale market, according to Ning.
It also handles collections for brand customers, with Nabis pocketing some of the money owed by retailers to cover its own costs for spearheading the collection effort.
“So when a retailer doesn’t pay, we bite the bullet, too,” Ning said.
Brands in a bind
Nearly every brand, distributor and manufacturer in California is dealing with unpaid invoices, a problem that has rippled through the market for years but really ramped in mid-2022 as industry stocks began reeling and capital dried up, industry sources told MJBizDaily.
Social equity licensees and brands, including Black- and Latino-owned businesses, have been particularly hit hard since most lack capital reserves and resources.
Presidential Cannabis, a member of the credit association and one of the top-selling blunt and pre-roll brands in California, has a client in the Inland Empire that stopped answering calls after racking up $180,000 in unpaid invoices.
Another client ordered $120,000 worth of product right before going out of business.
The setbacks caused Presidential – a Black-owned Los Angeles brand – to change policy to demand payment or close its doors.
It’s a predicament facing countless brands that rely on retailers and delivery providers to sell their products.
The hard line has hurt sales at Presidential, which had doubled and tripled revenue annually before last year.
“A lot of our bigger clients we had to stop selling to because they weren’t paying,” said Everett Smith, co-founder and CEO.
“Some of us brands have bent over backwards to have our product in the stores, do whatever the stores asked us to do. And then to just string us along just doesn’t seem right or fair,” he added.
“We don’t have any investors. Every dollar counts.”
Credit check
Sunderstorm, which manufactures the gummy brand Kanha and self-distributes its products, has utilized collection agencies as a last resort, with varying success.
Since most firms take a 20% cut, any debt resolution typically translates into a business loss.
The San Francisco Bay Area company did have success suing one delivery operator, recouping $15,000 of back pay, minus collection fees.
A small claims filing is typically not an option for cannabis businesses because outstanding bills often exceed the $5,000 court maximum.
Sunderstorm allocates $30,000 a month toward bad-debt reserves to cover the cost of uncollected receivables.
“That’s a meaningful number for my business,” said co-founder and president Keith Cich, who highlights this trickle-down effect on the industry when invoices are unpaid.
If retailers and distributors can’t pay brands, brands can’t pay extractors or packaging companies, extraction operators can’t pay cultivators – and the cycle continues.
“It becomes this self-fulfilling negative shockwave through the entire ecosystem,” Cich said.
“One of the main reasons we got together as an industry consortium was that the entire supply chain gets threatened when one part of the supply chain can’t pay their bills.”
Before California regulators shifted the 15% excise tax collection last year from distributors to retailers, distributors such as Nabis were losing significant amounts of money prepaying the state on excise taxes without collecting on it from customers.
The balance is now a manageable few hundred thousand dollars, according to Ning.
“At one point, it was several million. Through these measures and tightening our credit controls, we’ve whittled down the balance significantly.”
Another industry evolution
While credit reports have been common for decades in mainstream industries such as banking, lending and government, they represent an emerging practice in the cannabis space.
Fitch Ratings, one of three New York-based global credit-rating agencies, started covering Canopy Growth Corp. only in the past few years.
Along with Moody’s and Standard & Poor’s, the other two dominant players in the global credit scene, the agencies assign letter grades to conglomerates, securities, government agencies and even entire countries based on their ability to meet financial obligations.
The California cannabis group represents CMA’s first foray into the marijuana sector.
“We commend leaders in that industry who see the necessity of protecting their accounts receivable and managing credit risk,” CMA Chief Executive Richard Adams told MJBizDaily via email.
“CMA has welcomed many emerging industries in our 140-year history, and we look forward to a mutually beneficial business relationship here as well.
“I’m not aware of any other business credit associations that are active in this market sector.”
Precedent for action
Federal and state credit laws regarding alcohol sales have been on the books since the end of the Prohibition Era.
Under federal law, suppliers can grant credit to retailers only for a maximum of 30 days.
California, like most states, also has credit laws regarding alcohol sales, with fines levied against suppliers or retailers – and potential license suspension – for failing to comply with 30-day credit plans.
New York might be among the first states to authorize these types of laws in the cannabis industry.
The proposed rules in the state’s recently established adult-use market require operators to pay for purchases on credit within 90 days.
Distributors are required to report delinquencies to New York’s Office of Cannabis Management, which has the authority to invalidate agreements.
In New York, like California, licensed cannabis companies are required to buy products from distributors.
California state assembly member Philip Ting hopes to ease the state’s cannabis credit crises with one of the nation’s first credit laws for marijuana sales.
The San Francisco Democrat is the lead sponsor of Assembly Bill 766, which levies stiff penalties against operators skirting credit agreements.
“Quite often, businesses don’t get paid after they supply services, so there’s no real recourse,” Ting said.
His bill requires licensees accepting goods and services worth at least $5,000 to pay invoices no later than 15 days after the due date.
If the invoice is not paid by that time, it would trigger a warning notice from state regulators, who can also issue citations and other disciplinary actions.
The bill also prohibits:
- Licensees from purchasing goods and services from other operators on credit until the invoice is paid in full.
- The invoice due date being no later than 30 days from the time goods or services are sold.
“What we want to do with AB 766 is provide credit protection to all cannabis licensees to ensure they receive payments,” Ting said.
“This will ensure a stable flow of goods and payments across the supply chain.”
Business
Jio’s 1,600-Satellite LEO Constellation Gets Technical Green Light
Reliance Jio has crossed a significant milestone in its space connectivity ambitions after its proposal to deploy a Low Earth Orbit (LEO) satellite constellation of around 1,600 satellites received a positive technical assessment from the Indian National Space Promotion and Authorisation Centre (IN-SPACe).
The evaluation, conducted jointly by IN-SPACe, the Indian Space Research Organisation (ISRO), and the Wireless Planning and Coordination (WPC) wing of the Department of Telecommunications, reportedly concluded that Jio’s proposed system meets the required technical standards and is comparable to leading global satellite broadband networks.
India’s Indigenous LEO Satellite Vision
Under the proposal, Reliance Jio plans to deploy between 1,600 and 1,650 satellites in Low Earth Orbit at an altitude of around 650 kilometres.
The planned constellation is expected to provide high-speed satellite connectivity across India, with approximately 32 satellites visible from any location at a given time. The company aims to roll out the network within the next two to three years, subject to regulatory approvals.
According to industry estimates, the satellite system could deliver 4.5 to 5 terabits per second (Tbps) of total data capacity, making it one of the largest satellite broadband projects proposed in India.
The project is expected to require an investment of $10–15 billion (approximately ₹95,000 crore to ₹1.42 lakh crore), reflecting the scale of infrastructure needed for satellite manufacturing, launches, ground stations, and user terminals.
Regulatory Process Moves Forward
Following the successful technical review, the proposal is expected to move into the next phase of regulatory approvals.
The government may now assist Jio in securing orbital slots, coordinating spectrum usage, and filing applications with the International Telecommunication Union (ITU), the global body responsible for managing satellite orbit and frequency allocations.
Obtaining orbital rights remains a critical step, as Low Earth Orbit has become increasingly competitive due to the growing number of satellite broadband projects being planned worldwide.
Officials also indicated that the proposed satellite architecture has been designed to coexist with future Indian LEO constellations, allowing multiple domestic operators to share orbital resources efficiently.
Broadband, Mobile Connectivity, and Strategic Applications
Jio plans to use the satellite network to provide a range of communication services, including satellite broadband, mobile backhaul, enterprise connectivity, and direct-to-device (D2D) satellite communication, particularly in remote and underserved regions where conventional telecom infrastructure is limited.
The company also intends to establish 20 to 22 ground stations across India to support network operations.
Apart from commercial telecommunications, officials have highlighted the project’s potential strategic importance. A domestically developed satellite constellation could strengthen India’s communication infrastructure, reduce dependence on foreign satellite operators, and support national security requirements.
Reports suggest preliminary discussions are underway regarding the possibility of integrating defence-related payloads into some satellites, enabling both civilian and strategic use.
Major Step for India’s Space and Telecom Sectors
Industry analysts view the technical clearance as an important milestone in India’s expanding private space ecosystem. If Jio secures the remaining regulatory approvals and international orbital clearances, the project could become the country’s first large-scale indigenous LEO satellite broadband network.
The initiative also aligns with India’s broader efforts to expand digital connectivity while strengthening its presence in the global satellite communications market.
Business
Alleged Crores Pharma Scam Mastermind Arrested from Surat
After evading law enforcement for nearly 13 years, an accused linked to a large-scale pharmaceutical fraud case has been arrested by Delhi Police from Surat, Gujarat. The suspect is alleged to have orchestrated a series of financial scams involving fake identities, forged documents, and dishonoured cheques used to procure high-value pharmaceutical raw materials.
Authorities say the accused, identified as Himmat Singh Lodha, is believed to have defrauded multiple pharmaceutical companies in Delhi of goods worth approximately ₹98 lakh before disappearing and remaining underground for years.
Fake Business Deals and Dishonoured Cheques Used in Fraud
Investigators claim the accused posed as a legitimate pharmaceutical trader and placed bulk orders for expensive drug ingredients, offering post-dated cheques as payment security.
In one documented case from 2013, he allegedly obtained around 550 kilograms of Gliclazide, a diabetes-related pharmaceutical ingredient, valued at over ₹26 lakh. When suppliers attempted to encash the cheques, they were reportedly returned with the remark “account closed.”
Following the transaction, the accused allegedly vacated his office and rented residence and disappeared without settling payments. He was later declared a proclaimed offender in 2016 after repeatedly failing to appear before court proceedings. Authorities had also issued a reward for information leading to his arrest.
Multiple Identities and Repeated Fraud Pattern
Police investigations further link the accused to another cheating case dating back to 2012, where he allegedly used a fake identity, “Kailash Jain,” to obtain a large consignment of Ambroxol HCL, a pharmaceutical compound used in cough medications. The value of that consignment was estimated at around ₹72 lakh.
Officials believe the accused followed a consistent modus operandi—posing as a credible businessman, securing high-value goods on deferred payment terms, and then disappearing after delivery while shutting down business operations.
Investigators suspect that forged business records, fake company credentials, and fabricated financial histories were used to build trust with suppliers and gain access to expensive raw materials.
Multi-State Surveillance Leads to Arrest in Surat
A special Crime Branch team tracked the accused through coordinated surveillance efforts across multiple cities, including Mumbai, Ahmedabad, and Surat. After nearly a month of technical monitoring and intelligence gathering, officials located and arrested him from a residential area in Surat.
Authorities also revealed that the accused had been involved in property-related activities while staying under the radar to avoid detection.
Growing Threat of Corporate Identity Fraud
The case highlights a rising trend of organised financial fraud targeting industries that rely heavily on trust-based transactions and deferred payments. Experts note that criminals increasingly exploit gaps in corporate verification systems by using fake GST registrations, temporary offices, and forged documentation to appear legitimate.
Cybercrime and financial fraud specialists warn that such schemes are becoming more complex with the widespread availability of digital business tools, making it easier to create convincing but fraudulent corporate identities.
Experts Urge Stronger Due Diligence in High-Value Transactions
Experts, including former IPS officer and cybercrime specialist Prof. Triveni Singh, emphasize the need for stricter verification procedures in commercial dealings. He noted that relying solely on paperwork or digital business profiles can expose companies to significant financial risk.
Authorities and industry experts recommend physical verification of business operations, bank account validation, and detailed background checks before engaging in high-value or deferred-payment transactions—particularly in sectors like pharmaceuticals, where single consignments can involve transactions worth crores.
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
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