The Financial Habits of Strong Cannabis Businesses

For most of the legal industry's history, a cannabis company could grow or sell its way out of a lot of problems. Rising sales covered thin margins, slow collections and aging inventory, and the top line kept moving up. If a really stubborn challenge appeared, there might be buyers that would help the operator out of trouble.

But now that cover is gone. Wholesale prices have compressed for years, and in 2025 the U.S. legal market contracted for the first time on record.

In a market that no longer expands on its own, financial strength has to come from how a company is run. This article lays out a few of the habits behind that strength — the day-to-day routines that let a cannabis operator, wherever it sits on the value chain, build a financial position that holds up over time.

Revenue growth and financial strength are not the same thing. A company can report record months while its cash tightens, its inventory ages, and its receivables stretch past the point of collection. None of that shows up in a sales report. What tends to separate the operators who stay steady, and can adjust to a moving environment with some ease, is rarely a single good decision — it is a set of routines that surface problems early.

Below are six practices that keep operators on top.

1. Start with the top line

One workable place to begin is with revenue. Setting goals deliberately — by market, by product line, by channel — gives the rest of the numbers something to answer to.

“The easiest thing is having targeted revenues and goals and aligning your sales teams around them, with geographical markers as well as product or service offerings,” said Rachel Wright, CPA and CEO of Verdant Strategies, on the YouTube show Cannabis Tech Talks at the ICCB Berlin.

“If you don't have that top line revenue forecast and targeting, how are you going to align your sales force around it?”

Setting revenue and sales goals will help an operator fix the internal discipline. Once a revenue target exists, cost of goods, labor, marketing, and overhead can be measured against it rather than looked at in isolation. It also helps to treat the forecast as something living. In a market where prices keep changing, last year's assumptions expire quickly, so it's worth updating the forecast through the year rather than setting it once during the annual budget and leaving it alone.

2. Watch cash, not just the bank balance

Revenue, accounting profit and available cash are three different things, and the gap between them is where a lot of cannabis companies run into trouble. Cash can shrink even as sales rise — when the business is collecting slowly, buying inventory faster than it sells, or paying taxes tied to an earlier period.

A short-horizon cash forecast, updated weekly and backed by a longer rolling view of several months, can make that gap visible before it turns into a problem. It helps to account for expected collections, payroll, vendor payments, debt service, taxes and any planned capital spending — and to test more than one scenario rather than assume a single outcome.

Taxes are worth treating as money already spoken for. Moving estimated obligations into a reserve as they accrue, rather than reading the bank balance as spendable, is a small habit that matters more in 2026. Since April 28, 2026, qualifying medical licensees are no longer subject to Section 280E. But adult-use marijuana remains in Schedule I and fully exposed to 280E. Treasury has indicated relief will apply from the start of the 2026 tax year for calendar-year filers, but guidance on how mixed medical and adult-use operators should allocate expenses between the two regimes is still pending. Until it arrives, a dual-license operator's bank balance is a particularly unreliable measure of what's actually available.

3. Treat inventory and receivables as working capital

Inventory and receivables are the same problem wearing two costumes: cash parked somewhere other than the bank.

Every unit on a shelf is cash that can't cover payroll, taxes or the next purchase order, and it carries quieter costs through storage, expiration, discounting and compliance. It helps to look past total inventory value to velocity, days of supply, aging and sell-through — and to check that data before approving a purchase order, not after. Where the numbers allow, purchasing can follow demonstrated demand and margin rather than vendor enthusiasm. Regular counts reconciled against the point-of-sale and state track-and-trace systems keep the financial statements and the compliance record aligned.

Receivables are the mirror image, and for cultivators, manufacturers and distributors selling wholesale, they are often the more acute risk. Industry data from the CannaBiz Credit Association shows more than half of cannabis invoices past due and nearly a quarter more than 90 days overdue. Once an invoice passes 90 days, the odds of collecting it fall sharply. An unpaid invoice is an interest-free loan the seller never agreed to make, and in a wholesale market where late payment has become routine, the burden of enforcing payments falls on the seller. It can help to set credit terms before an invoice goes overdue — limits, deposits, cash on delivery where warranted — review aging weekly, and give every overdue balance an owner and an expected collection date.

4. Understand unit economics before scaling them

A healthy gross-margin percentage can hide products, stores or channels that lose money once discounts, freight, testing, packaging and channel costs are subtracted. The number that tends to matter is closer to contribution margin —which is the revenue left after subtracting costs tied to the making and selling of a product—, measured by SKU, store, and channel where the data allows — so a promotion can be judged on the contribution dollars it produces, not the units it moves.

Cost accounting sits underneath all of it, and the methodology needs to be rigorous and supportable. There’s still a valuable lesson on the landmark and historical ruling for the state-legal cannabis industry known as the Ninth Circuit's 2021 Harborside decision, which upheld a narrow inventory-cost treatment for a cannabis reseller and rejected an attempt to move broad operating expenses into cost of goods sold — a reminder that aggressive allocations get tested. Even where 280E relief now applies to qualifying medical activity, a company that can't say which products, stores or channels actually cover their costs will struggle to make sound decisions about any of them.

That clarity matters most at the moment of expansion.

“If you have one store that's not profitable, what makes you think you're going to open up nine more and be more profitable? You're just going to exacerbate the problem by nine. You've got to fix it right where it is. It doesn't solve it by adding gross top-line revenue — that actually exacerbates the problem.”, said Wright.

Before a new store, facility or acquisition competes for capital, it helps to hold it to a defined threshold — cash required, ramp-up time, break-even volume, effect on company liquidity.

5. Plan around current law, not expected law

The industry has spent years pricing in reform that hasn't quite arrived yet. It's worth separating the operating plan from the regulatory-upside case: the base plan works under the taxes, prices and financing conditions that apply today, and reform sits in a separate upside scenario until it's effective and confirmed to apply to the company.

2026 has made the cost of skipping that distinction concrete. Several public operators booked 280E relief in anticipation of rescheduling; the Department of Justice is now suing one of them, TerrAscend, to claw back an $8.3 million refund it calls erroneous — a case tax observers read as a signal on the roughly $1.6 billion in similar positions across the industry. Treasury's initial guidance did not commit to relief for prior years. And the broader picture remains unsettled: the DEA's hearing on rescheduling all marijuana concluded in July 2026 and now awaits an administrative law judge's recommendation, while the April medical order itself faces a pending challenge in the D.C. Circuit. Anticipated relief isn't cash until counsel confirms it applies.

6. Try to keep a steady cadence

The following financial practices are not one-time projects. What makes them habits is frequency and ownership — how often the information is reviewed, and who is responsible for acting on it. One rhythm that tends to work:

Daily — Reconcile cash; resolve point-of-sale and track-and-trace discrepancies.

Weekly — Update the cash forecast, review receivables and payables, approve purchasing against inventory velocity, and move funds into tax reserves.

Monthly — Close the books, reconcile the balance sheet, compare results to plan, and review profitability by location, category and channel.

Quarterly — Reforecast the year, test a downside scenario, review debt and tax exposure, and decide whether an underperforming product or location needs attention.

Remember that each practice needs someone to own the review and act on what it shows. That consistency is what financial strength in cannabis tends to rest on.

Verdant Strategies works with cultivators, manufacturers and retailers to build these routines into how decisions get made. To talk through your own numbers, contact the team at verdantstrategies.com.