How The NY Dispensary Cash Cycle Works: Inventory Purchasing, the 30-Day Payment Rule, and Cash Flow Risk

What This Page Covers

• How the 30-day payment clock starts and what “delivery date” means operationally
• The full sales cycle: buy → receive → sell → deposit/settle → allocate → pay vendors
• Why revenue is not the same as spendable cash
• How delinquent payment reporting and the C.O.D. list change your purchasing power
• Concrete examples of cash getting trapped in inventory
• The specific weekly controls that prevent delinquency in NYS

Legal and Regulatory Context

New York dispensaries operate inside a regulated supply chain. Two rules drive the cash cycle more than anything else:

The 30-Day Credit Payment Requirement

If you buy product on credit, NY rules require the balance to be paid in full within 30 days of delivery (unless otherwise approved).

This matters because the clock starts when the product is delivered—not when you sell it.

Delinquent Payment Reporting and the C.O.D. List

If payment is not made on time, suppliers can report delinquency to OCM. If validated, the retailer can be placed on the cash-on-delivery (C.O.D.) list, which restricts suppliers from extending further credit to that retailer until the delinquency is resolved.

Operationally, the C.O.D. list turns your supply chain into “pay up front” mode—which increases the cash you need just to keep shelves stocked.

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The New York Dispensary Cash Cycle

A dispensary’s cash cycle begins before the first customer transaction.

This is the full sequence, step-by-step, using the way it actually plays out in operations.

Step 1: You Buy Inventory (Cash Leaves First)

You place an order. Product is delivered. An invoice is issued.

Even if you did not pay cash at delivery, you have created an obligation (accounts payable). If the sale was on credit, the 30-day countdown starts now.

What’s true on Day 1:

• You owe the supplier.
• Your cash has not increased.
• Your next 30 days are now a race between sell-through and your payment deadline.

Example

You receive $45,000 of inventory on March 1.
Payment is due by March 31.

If you only sell $20,000 of that inventory by March 31, you still owe $45,000 because payment is not tied to sell-through.

Step 2: You Receive and Stock (Cash Is Trapped in Boxes)

Product is checked in, entered into POS, priced, shelved.

At this stage, your inventory is an “asset” on paper, but functionally it is cash trapped inside SKUs.

This is the moment most operators underestimate.

Why this matters in NY:
If your inventory does not turn fast enough, you will reach Day 30 with a payable and no liquid cash to clear it.

Step 3: You Start Selling (Revenue Shows Up Before Cash Discipline Does)

Sales happen and the POS starts showing daily revenue.

But POS revenue includes money that is not truly “free”:

• sales tax collected (not yours)
• funds you will need for payroll and payroll taxes
• money required to keep the store operating
• reserves you need for federal and state tax exposure

If you treat gross sales as spendable, you will eventually miss a vendor payment.

The Most Common Retailer Mistake

Operators see “$8,000/day” and assume they can keep ordering.

But the real question is:
How much of that $8,000/day remains after payroll, rent, security, taxes, and the cost of the next reorder?

Step 4: Your Cash Arrives in the Wrong Shape (and Gets Claimed Immediately)

Even when sales are strong, the cash you can actually use gets hit from multiple directions:

A. Timing and settlement friction

Depending on payment method, cash may settle later and come net of fees. Meanwhile, your 30-day deadline does not pause.

B. Mandatory operating claims

Cash gets pulled for:

• payroll (and payroll tax deposits)
• rent
• security costs
• insurance
• utilities
• basic operating vendors

If you do not reserve vendor payables weekly, these expenses quietly consume the cash that should have been used to pay suppliers.

Step 5: The 30-Day Deadline Arrives (This Is the Make-or-Break Point)

By the due date, you must pay the supplier in full if it was a credit purchase.

If you cannot:

• you delay payment
• you partially pay
• you start “juggling vendors”

In NYS, this is where delinquent reporting risk begins.

Example: “Good Month” That Still Fails

• You did $120,000 in gross sales
• Payroll, rent, security, and operating costs consumed most liquid cash
• You kept buying because the POS looked strong
• Day 30 hits and you owe $70,000 across multiple suppliers
• You can only pay $25,000

That gap is what triggers delinquency exposure.

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What Happens When You Go Delinquent in NYS

Step 6: Suppliers Report Delinquent Payments

If you miss payment beyond the allowed window, suppliers can report delinquency to OCM.

Step 7: You Can Be Placed on the C.O.D. List

Once on the list:

• suppliers cannot extend you credit
• you must pay cash on delivery to restock

Step 8: Supply Chain Tightens (and It Becomes a Spiral)

Being forced into C.O.D. purchasing does two things immediately:

• increases your cash needs
• reduces your ability to carry breadth/depth

Then:

• your menu shrinks
• sales drop
• cash tightens further
• getting current becomes harder

This is how a payment miss becomes a revenue crisis.

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Why Revenue Does Not Equal Spendable Cash

Operators often ask:
“If I bought it for $20 and sold it for $40, didn’t I make $20?”

Not in real life.

Because that $20 “gross margin” still has to fund:

• payroll
• rent
• security
• payment costs
• shrink/damage
• tax exposure (including 280E effects)

Simple Illustration

You sell $40 retail.

Before you call anything “profit,” you still have to cover:

• cost of goods
• operating costs tied to the sale (labor, security, compliance overhead)
• tax set-asides

This is why “keystone pricing” can still lead to delinquency.

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Inventory Velocity Is the Compliance Variable

In NYS, delinquency risk is often an inventory velocity problem, not a sales problem.

Inventory that does not turn inside the payment window:

• traps working capital
• forces late payments
• increases C.O.D. list risk
• reduces reorder power

Slow inventory is not neutral.
It is restricted cash with a deadline attached.

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The Controls That Prevent Delinquency

These controls are what disciplined operators use to survive NY’s payment structure.

Weekly Controls

1. Weekly Payables Calendar

Every week, know:

• who is due this month
• how much is due
• what cash is reserved for each vendor

2. Open-to-Buy Limits

Do not place orders based on “what you want on the menu.”
Place orders based on what can sell and convert to cash before the due date.

3. SKU Velocity Tracking

Track sell-through by SKU weekly.

• cut slow movers early
• discount intentionally (before it becomes dead inventory)
• reorder only proven movers

4. Payables Reserve

Reserve vendor payables weekly, not at month-end.
Month-end thinking is how you end up delinquent.

5. Tax and Payroll Set-Asides

If you do not reserve for payroll and tax exposure, you will borrow from vendor money without realizing it.

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Source Material

• 9 NYCRR §124.2, Terms of Sale (30-day credit payment requirement)
• OCM Delinquent Payment Reporting (C.O.D. list process and consequences)
• OCM Delinquent Payment FAQs
• MRTA (Cannabis Law Article 4)
• What is §280E?