Two challenges we occasionally hear from cannabis operators when we talk about commercial credit.
Both feel logical. Both fall apart at scale. Both expose you to unnecessary risk.
Pushback 1: “We don’t have a collections problem. People need our product, so they pay us first.”
Today, maybe. That’s not a strategy. That’s scarcity.
You get paid first because you’re hard to replace right now. The day a counterparty finds a better selling product, feels price pressure, or hits their own cash crunch, your priority status is gone. “Pay first” is a snapshot, not a structural truth.
Your last shipment is always at risk and you will very likely will get burned at some point.
It also tells you nothing about who you should sell to next. Your current book is self-selected. The real risk lives in the expansion orders, the bigger deals, new states, the net-new logos where you have no priority relationship at all. That’s exactly where blind credit extension burns people. Your clients want to be in more stores, but how do you judge them?
Collections problems are a lagging indicator. They show up at scale, in downturns, and when you stretch terms to win bigger deals. A company that says “we get paid first” is describing a tight book. The problem arrives with the growth they say they want because the risk compounds.
Pushback 2: “We’re naturally hedged. We buy from the same counterparty, so we just net what we owe against what they owe us.”
This is arguably the more sophisticated objection. It’s also more dangerous, because it feels like protection while actually creating real exposure.
A net position is not a legal right of setoff. Owing them money and being owed money are two separate obligations unless you have an enforceable netting agreement in place.
Here’s the part nobody wants to hear. If you “self-help” by withholding payment to cover your receivable, and that counterparty goes into receivership, the receiver can come back for the money you kept. They can attempt to claw it back or demand payment in full. Meanwhile your receivable sits in the unsecured pile collecting, maybe, pennies. They do NOT offset without a written agreement.
You pay them back in full. You collect almost nothing. You lose twice.
And the “hedge” only works if you keep buying from a counterparty you already flagged as risky. That’s not protection. That’s the tail wagging the dog.
Both pushbacks describe short term protections but, in reality, they are sold as a permanent defense.
Can either survive growth in state or in new states?
This is the entire reason we built Reklaim Credit Solutions. A purpose-built commercial credit rating and reporting agency for the legal cannabis B2B market.
A contributory network we’re all of the subscribers get the benefit of superior market intelligence. before they ship product.
Price the risk. Don’t pray on it.