A San Francisco dispensary owner has been caught bragging about how he’s made “hundreds of thousands of dollars” by scamming cannabis growers, as the state’s $600 million cannabis “debt bubble” grows.
Norman Yousif, founder and CEO of dispensary chain Off the Charts, was caught on camera bragging about deliberately not paying “mom-and-pop” suppliers.
The video sparked outrage as it highlighted a recurring problem in California’s legal cannabis market that defrauds farmers.
Small family businesses are particularly vulnerable and have even been put out of business due to this practice.
“Do you know how much money we’ve saved by not paying suppliers because they’ve gone out of business or never get paid when they’ve done a lot of this?” Yousaf said.
Norman Yousif, founder and CEO of dispensary chain Off the Charts, was caught on camera bragging about not paying his cannabis suppliers.
Yousif specifically boasted about not paying “mom and pop” sellers, sparking a furor in the industry.
‘I’m not talking about the 30 basic brands that are here to play, I’m talking about these bloody mom-and-pop shops that come and go.
‘You probably saved hundreds of thousands, you don’t have to pay. You don’t have to pay.’
The video quickly went viral, with viewers enraged that his comments exemplified “everything that is wrong” within California’s cannabis industry.
Growers Big Red’s Cannabis Co. was among those condemning Yousif’s comments.
“We family brands are the damn reason,” the company wrote on Instagram.
‘We are the ones who take risks for medical and recreational purposes. I’m calling for a boycott of all Off The Charts stores, no supplier sells to them and no customer should buy from them, support the family brand and support the little man.’
Yousif apologized in a statement SF Gatebut he claimed his recorded statement was taken out of context and referred to a situation five years ago when several brands went out of business before his company could pay them.
‘I’m not the most refined person in the world. This was a big lesson I learned from myself,” Yousif told the outlet.
Unpaid bills are a big problem within the state, where a “debt bubble of more than $600 million has emerged,” according to a 2022 report. Pictured: A cannabis farmer in Honeydew, California.
HERBL, California’s largest cannabis distributor, collapsed in 2023 due to unpaid bills
Similar allegations were leveled against dispensary operator MedMen Enterprises in 2020, cnn reported.
The outlet found that the industry player had fallen behind on payments to suppliers and was forced to abruptly close locations and lay off staff.
“As part of the restructuring, the company has been actively working with its supplier partners to modify payment terms, which in some cases include equity consideration,” MedMen Chief Financial Officer Zeeshan Hyder said in a statement sent by email to CNN Business.
“Like other retailers, the company is in constant communication with its suppliers and works to find solutions that benefit both parties.”
Many of those being harmed are multigenerational farmers from Northern California’s Emerald Triangle who have struggled since recreational marijuana was legalized in the Golden State in 2016.
“We are seeing the individual collapse of traditional farmers: the families who have been doing this for 15 or 20 years and who have a real interest in this game,” said Victor Pinho, who runs a cannabis farm tour company in the area told NBC News. “It’s just one blow after another against these poor people.”
Unpaid bills are a big problem within the state, where a “debt bubble” of more than $600 million has emerged, according to a 2022 report.
Last year, HERBL, California’s largest cannabis distributor, collapsed after stores failed to pay their bills.
Marijuana producers have been struggling since the drug was legalized for recreational use in 2016 and the wholesale price of marijuana declined.
Unpaid bills are a big problem within the state, where a “debt bubble” of more than $600 million has emerged, according to a 2022 report.
A change in tax laws in January 2023 that shifted responsibility for collecting and paying cannabis excise tax to the California Department of Tax and Fee Administration from distributors to cannabis retailers has only exacerbated the problem.
Hundreds of cannabis stores are also now facing massive penalties after failing to pay state taxes last year, prompting warnings of a “sunset event” for businesses.
About 265 cannabis retailers failed to make payment by the May 1 deadline, meaning they face a fine of 50 percent of the taxes owed.
Since then, state Assembly member Phil Ting, D-San Francisco, has proposed a bill requiring distributors to pay their suppliers for transactions worth more than $5,000 within 15 days or face to fines.
Unlike other forms of agriculture, struggling cannabis growers are ineligible for federal loans and grants due to differing stances on legalization.
Across the United States, the legalized marijuana industry is buckling under the pressure of falling prices, spotty state regulation and onerous taxes, analysts and industry groups say.
“All of these issues are undermining the health of the industry to the point that I would describe the industry as in crisis in the United States,” Beau Whitney, senior economist at the National Cannabis Industry Association, told DailyMail.com. “This is unsustainable from an economic perspective.”
Currently, recreational use of cannabis is legal in 23 states, and last year state-regulated medical and recreational marijuana sales exceeded $26 billion nationwide, according to Vangst.