Cannabis: invoices: payment.
The bill impacts existing laws under the Medicinal and Adult-Use Cannabis Regulation and Safety Act by laying down strict timelines for financial transactions within the cannabis industry. It enhances accountability among licensees and aims to prevent financial disputes from escalating within the cannabis supply chain. Licensees reported for non-payment may face sanctions, including the inability to purchase goods from other licensees on credit until outstanding payments are settled.
AB766, introduced by Assembly Member Ting, aims to regulate the payment process between cannabis licensees in California. It mandates that a licensee must pay for goods and services valued at $5,000 or more by another licensee within 15 days after the invoice due date. If the payment is not made, the selling licensee is required to report the unpaid invoice to the Department of Cannabis Control. The department, upon notification, may issue warnings or initiate disciplinary actions against the non-compliant licensee after a specified period.
The sentiment around AB766 appears to be cautiously optimistic. Stakeholders in the cannabis industry recognize the need for clearer payment protocols to foster a more reliable business environment. Proponents believe that the measures will reduce disputes over unpaid invoices, while opponents are concerned about the enforcement mechanisms and the burden it may place on business operations, especially for smaller enterprises who might struggle with cash flow.
Points of contention include the potential for overreaching disciplinary measures by the department, which may perceive delayed payments without adequate communication as grounds for sanctions. Critics argue this could disproportionately affect smaller businesses that might face unforeseen financial challenges. Additionally, the bill stipulates that these invoicing rules will not apply to cannabis transactions made prior to January 1, 2024, which may lead to confusion among businesses transitioning into the new regulatory framework.