The nation’s $35 billion legal cannabis industry has a $4 billion delinquent receivables problem, cannabis economic consultancy Whitney Economics found last year.
On Monday, cannabis industry lender FundCanna launched what it aims to be the antidote: business-to-business buy now, pay later tool ReadyPaid, which gives sellers instant payment for goods sold and gives buyers flexible repayment terms that align with their revenue cycle.
“Every industry relies on some kind of financial ecosystem. They're either factoring or they're getting terms or they're financing,” CEO Adam Stettner said in an interview.
Until recently, that ecosystem didn’t exist in the cannabis industry, Stettner explained, as payment between cannabis businesses has typically been made on delivery.
But because that “ties up money through the entire ecosystem,” buyers – manufacturers who were purchasing cannabis flower from growers, and dispensaries who were purchasing distillate or gummies from manufacturers – began demanding terms (often net 30) that allowed them to make at least some money before having to pay their bill.
The “wrinkle” there, though, according to Stettner, was that payment wasn’t coming at the 30-day mark. In fact, it at times wasn’t coming at all.
“The sellers of those goods are not financial people. I'm not saying that they're not smart and they're not excellent at running a business, but what they're not adept at is underwriting people,” Stettner said.
Through ReadyPaid, which is live in all legal domestic cannabis markets and being used by 180 sellers already, FundCanna pays sellers at the point of sale, with no recourse if buyers default. Buyers are allotted standard net 30 terms at no cost, with an optional additional six months to repay what they borrowed.
Approval for ReadyPaid takes minutes, and financing is available the same day as approval. Using an automated mapping engine, FundCanna determines within seven minutes how much a buyer is approved for; and then they’re able to use those funds at any seller that accepts ReadyPaid.
“The cannabis industry's unpaid receivables are an existential risk,” said Beau Whitney, chief economist at Whitney Economics, in a prepared statement. “When nearly 20% of revenue is tied up in overdue payments, operators lose the ability to plan, invest or even survive.”
“A solution like ReadyPaid makes planning more predictable and allows for improved cash flow management,” he said. “Better predictability and cash management will help businesses throughout the value chain, both in the short run and in the long run.”
Cannabis is a historically cash-heavy industry, in large part due to financing challenges based on its federal illegality.
According to the Financial Crimes Enforcement Network, 831 banks and credit unions actively served cannabis companies in the second quarter of 2024. Most, though, serve in just a depository nature. Stettner estimates only 5% to 8% of those institutions lend money to cannabis businesses, and that 90% of those firms will only lend for real estate – not for other purposes, like staffing or purchasing products.
While FundCanna’s flagship product functions similarly to a line of credit – something they can use to fund staffing, purchases, and more – ReadyPaid’s BNPL nature fills a different function.
Buyers who’ve applied for ReadyPaid have been “like an extension of our internal biz dev and sales teams,” Stettner said, in that they're asking their sellers to sign up to use ReadyPaid as a form of payment.
“If there's an option for flexibility and that frees up their cash flow and unlocks their ability to grow, they want it,” he said.
