A San Francisco dispensary owner has been exposed boasting about how he has made ‘hundreds of thousands of dollars’ by ripping off cannabis farmers – as the state’s cannabis $600million ‘debt bubble’ grows.
Norman Yousif, founder and CEO of the dispensary chain Off the Charts, was caught on camera bragging about deliberately failing to pay ‘mom-and-pop’ vendors.
The video sparked outrage as it highlighted a recurring problem in California‘s legal cannabis market that sees farmers short-changed.
Small family-run operations are particularly vulnerable and have even been put out of business by the practice.
‘You know how much money we have saved by not paying the vendors because they have been out of business or they never collect it when they’ve done a lot of this?’ Yousaf said.
‘I ain’t talking about the 30 staple brands that are here to play, I’m talking about these f***** mom and pop shops that come and go.
‘Probably saved hundreds of thousands, you don’t have to pay. You don’t have to pay.’
The video quickly went viral with viewers fuming that his comments exemplified ‘everything that is wrong’ inside California’s cannabis industry.
Growers Big Red’s Cannabis Co. were among those to condemn Yousif’s remarks.
‘Us mom and pop brands are the whole f***** reason,’ the company wrote on Instagram.
‘We are the ones that put ourselves on the line for medical and recreational. I’m calling for a boycott of all Off The Charts stores no vendors sell to them and no customer should buy from them support the mom and pop brand support the small guy.’
Yousif apologized in a statement to SF Gate, but claimed his recorded statement was taken out of context and was in reference to a situation from five years ago when a number of brands went out of business before his company could pay them.
‘I’m not the most polished person in the world. This was a big lesson learned from me,’ Yousif told the outlet.
Similar accusations were leveled at dispensary operator MedMen Enterprises in 2020, CNN reported.
The outlet found the industry player had fallen behind on payments to vendors and been forced to abruptly shutter locations and lay off staff.
‘As part of the restructuring, the company has been actively working with its vendor partners on modifying payment terms, which in some cases include stock consideration,’ MedMen Chief Financial Officer Zeeshan Hyder, said in an emailed statement to CNN Business.
‘Like other retailers, the company is in constant communication with its vendors and is working towards solutions that are in the best interest of both parties.’
Many of those being shafted are multi-generational farmers in the Emerald Triangle in Northern California who have struggled since recreational weed was legalized in the Golden State in 2016.
‘We’re seeing the individual collapse of the legacy farmers — the mom and pops who have been doing this for 15 or 20 years and who have a real stake in this game,’ Victor Pinho, who operates a cannabis farm tour company in the area told NBC News. ‘It’s just hit after hit after hit on these poor people.’
Unpaid invoices are a huge problem within the state, were a ‘debt bubble’ of more than $600 million has emerged, per a 2022 report.
Last year California’s largest cannabis distributor HERBL collapsed after stores failed to pay their bills.
A change in tax laws in January 2023 that shifted the responsibility for collecting and paying the cannabis excise tax to the California Department of Tax and Fee Administration from distributors to cannabis retailers has only exacerbated the issue.
Hundreds of cannabis stores also now face massive penalties after failing to pay state taxes last year, prompting warnings of an ‘extinction event’ in business.
Around 265 cannabis retailers failed to make payment by the May 1 deadline, meaning they face a 50 percent penalty on taxes owed.
State Assembly member Phil Ting, a Democrat from San Francisco, has since proposed a bill requiring distributors to pay their suppliers for transactions worth more than $5,000 within 15 days or face fines.
Unlike other forms of agriculture, struggling cannabis growers are not entitled to access federal loans and grants due to the different stances on legalization.
Across the US, the legalized marijuana industry is buckling under the strain of plunging prices, patchwork state regulation, and burdensome taxes, analysts and industry groups say.
‘All of these issues are chipping away at the health of the industry to the point where I would describe the industry as in crisis in the United States,’ Beau Whitney, senior economist for the National Cannabis Industry Association, told DailyMail.com. ‘This is unsustainable from an economic perspective.’
Currently, the recreational use of cannabis is legal in 23 states, and last year state-regulated medical and recreational pot sales topped $26 billion nationwide, according to Vangst.
