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Understanding Accounts Payable in a NY Cannabis Dispensary: The 30-Day Rule, C.O.D. List, and How to Avoid a Credit Freeze
Money, Taxes & Banking Delinquent Payment Reporting: Cash on Delivery (C.O.D.) System New York’s Cash on Delivery (C.O.D.) system is an enforcement mechanism used by the Office of Cannabis Management (OCM) to address unpaid supplier invoices. When a retailer fails to pay a licensed supplier, the supplier may report the delinquency to OCM. Once reported, the retailer is placed on the C.O.D. List and faces immediate purchasing restrictions until the issue is formally resolved. What This Covers What the C.O.D. system is and why it exists How the C.O.D. List works How delinquent payments are reported How retailers are removed from the list How suppliers use the list to manage risk The C.O.D. List The C.O.D. List is maintained by OCM as an active enforcement tool. When a retailer is placed on the list: They cannot receive cannabis products on credit All future purchases must be paid upfront They remain on the list until the reporting supplier submits a resolution Retailers are not removed automatically. Only the supplier who filed the delinquency can clear the listing. Reporting a Delinquent Payment Licensed suppliers may report a retailer when an invoice is not paid according to agreed terms. Reports typically include: Supplier license information Retailer name and license number Invoice date Amount owed Documentation showing nonpayment Accurate and complete documentation allows OCM to validate and process the report. Submitting a Resolution If the retailer pays the outstanding balance or resolves the dispute, the supplier must submit a resolution to OCM. Resolution filings generally include: The delinquency report identifier Confirmation of payment (date, amount, method) Supplier license details Until a resolution is submitted and accepted, the retailer remains on the C.O.D. List even if payment has occurred. Viewing the C.O.D. List Licensed suppliers may review the active C.O.D. List to: Verify a retailer’s status before extending credit Confirm whether a retailer has unresolved delinquencies Review the date and reason for a listing Assess credit risk before entering supply agreements Regular review helps suppliers avoid transactions with retailers who may not be able to pay. What Operators Usually Miss Retailers cannot remove themselves from the list Partial payment does not clear a listing unless documented as resolved C.O.D. status affects all suppliers, not just the reporting one Listings remain active until a formal resolution is filed Being on the list can disrupt inventory flow immediately When This Comes Up When retailers miss payment deadlines During supplier credit reviews Before approving new wholesale relationships During audits or compliance reviews When retailers experience cash flow issues What Happens If You Ignore This For retailers: Loss of access to credit purchasing Delayed or blocked inventory deliveries Operational disruptions and revenue loss Increased scrutiny from suppliers and regulators For suppliers: Unrecoverable receivables Increased financial risk Compliance issues if transactions proceed improperly Go Here Next Inventory Management and METRC Cannabis Banking Rules Taxes, Fees, and Regulatory Reporting OCM Guidance Source Material Adult- Use Licensing Delinquent Payment FAQ
What this page covers
• How the 30-day credit window affects cash flow
• Why accounts payable becomes unstable before C.O.D.
• Brand hold risk and supply disruption
• How vendor concentration increases exposure
• How to prioritize invoices strategically
• How to negotiate terms before delinquency
What Accounts Payable Actually Means for a Dispensary
Accounts payable is the total amount you owe suppliers for inventory already delivered.
In NY cannabis, this is usually your largest short-term liability.
It is not just a line item.
It is a timing risk.
If inventory sells slower than the payment window, your payables outpace your liquidity.
The 30-Day Credit Window and Why It Creates Pressure
When you purchase cannabis inventory on credit in NY:
• You receive product
• You start selling it
• You owe the full invoice within 30 days
If your average sell-through cycle is 45–60 days, you will owe money before the product has fully converted to cash.
That timing mismatch is where payables instability begins.
This happens long before any regulatory reporting.
Accounts Payable Becomes Dangerous Before C.O.D.
The C.O.D. list is the enforcement layer.
But most damage happens earlier.
Before formal reporting:
• Vendors impose brand holds
• Reorders are delayed
• Allocations shrink
• Payment calls increase
By the time C.O.D. becomes a concern, the liquidity problem already exists.
The issue is not compliance first.
It is purchasing discipline.
Brand Concentration Risk
If 40% of your revenue depends on two brands and one goes on hold:
Your sales drop immediately.
High vendor concentration increases A/P pressure because:
• You cannot afford to delay that vendor
• You have limited substitute inventory
• Cash prioritization becomes narrow
Diversification without SKU bloat matters.
Why Inventory Purchasing Drives Payables Stress
Most A/P stress starts with:
• Overbuying slow SKUs
• Expanding menu depth without velocity
• Buying based on rep pressure
• Discounting too aggressively
If you buy $700,000 in inventory expecting growth and revenue stays flat, you create an artificial liability spike.
That spike shows up in accounts payable first.
The Cash Prioritization Framework
When liquidity tightens, decision-making must become structured.
Step 1: Protect payroll and payroll taxes
Step 2: Protect rent and insurance
Step 3: Protect top-velocity inventory vendors
Step 4: Delay low-velocity vendors strategically
Never spread small payments across everyone “to be fair.”
That destroys leverage everywhere.
Stabilize core vendors first.
Weekly A/P Discipline Rule
Do not review payables monthly.
Review weekly:
• Total outstanding invoices
• Days outstanding per vendor
• Concentration exposure
• Sell-through rate vs payment due date
If days-to-sell exceeds days-to-pay, you are funding the gap with working capital.
That must be modeled intentionally.
Realistic Example
Monthly revenue: $1,100,000
COGS: $660,000
You expand your menu and purchase $800,000 in product on credit.
30 days later:
You owe $800,000.
Sell-through has only converted $500,000 to cash.
Shortfall: $300,000.
That is accounts payable stress.
Not regulatory failure.
Cash modeling failure.
How to Negotiate Terms Before There Is a Problem
Negotiation works only when you are current.
Approach vendors with:
• Data on sell-through
• Purchase history
• A realistic reorder plan
• Clear proposed payment schedule
Options may include:
• Smaller, more frequent orders
• Temporary split payments
• Reduced SKU depth
• Temporary prepaid purchasing until stabilized
Vendors respond to structure, not emotion.
Warning Signs Accounts Payable Is Becoming a Problem
• Invoices exceed 45 days regularly
• You depend on daily deposits to clear bills
• Vendor concentration exceeds 30–40% exposure
• You discount to generate short-term invoice cash
• You stop modeling inventory velocity
These are early stress signals.
FAQ
Is 30-day payment inherently risky?
Not if your inventory turns within 30 days. It becomes risky when sell-through exceeds the payment window.
Can accounts payable affect banking?
Yes. Chronic instability, vendor disputes, or erratic deposits can affect how banks assess operational risk.
Source Material
• Delinquent Payment Reporting: Cash on Delivery (C.O.D.) System
• What is IRS 280E?
• 9 NYCRR § 124.2
• OCM Delinquent Payment Reporting Guidance (30-day payment rule)
• OCM Delinquent Payments FAQ (retailer payment obligation)
