A San Francisco dispensary owner has been exposed for bragging about how he has made “hundreds of thousands of dollars” ripping off cannabis farmers – as the state’s $600 million “debt bubble” grows.
Norman Yousif, founder and CEO of pharmacy chain Off the Charts, was caught on camera bragging about deliberately not paying mom-and-pop salespeople.
The video sparked outrage because it highlighted a recurring problem in California’s legal cannabis market involving farmers being shortchanged.
Small family businesses are particularly vulnerable and have even gone bankrupt as a result of the practice.
“Do you know how much money we’ve saved by not paying the sellers because they went bankrupt or never collected even though they’ve done it so many times before?” Yousaf said.
Norman Yousif, founder and CEO of pharmacy chain Off the Charts, was caught on camera bragging about not paying his cannabis suppliers
Yousif specifically bragged about not paying ‘mom and pop’ salespeople, sparking outrage in the industry
“I’m not talking about the thirty basic brands that are here to play, I’m talking about these damn mom and pop stores 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 and viewers were outraged that his comments were an example of “everything that is wrong” in California’s cannabis industry.
Growers Big Red’s Cannabis Co. was among those who condemned Yousif’s comments.
“We mom and pop brands are the whole damn reason,” the company wrote on Instagram.
“We are the ones putting ourselves at risk for medical and recreational purposes. I’m calling for a boycott of all Off The Charts stores that no retailer sells to them and no customer should buy from them, support the mom and pop brand and support the little guy.”
Yousif apologized in a statement SF portbut claimed his recorded statement was taken out of context and referred to a situation five years ago, when a number of brands went bankrupt 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.
Unpaid bills are a major problem within the state, which has created a debt bubble of more than $600 million, according to a 2022 report. Pictured: A cannabis farmer in Honeydew, California
California’s largest cannabis distributor, HERBL, went bankrupt in 2023 due to unpaid bills
Similar allegations were made against pharmacy 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 suppliers to adjust payment terms, including in some cases equity considerations,” MedMen Chief Financial Officer Zeeshan Hyder said in an emailed statement to CNN Business.
“Like other retailers, the company is in constant contact with its suppliers and is working to find solutions that are in the best interests of both parties.”
Many of the victims are multi-generational farmers in Northern California’s Emerald Triangle, who have struggled since recreational pot was legalized in the Golden State in 2016.
“We’re seeing the individual collapse of the traditional farmers – the moms and dads 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 hit after hit after hit for these poor people.”
Unpaid bills are a major problem within the state, which has created a “debt bubble” of more than $600 million, according to a 2022 report.
Last year, California’s largest cannabis distributor, HERBL, went bankrupt after stores failed to pay their bills.
Marijuana growers have been struggling since the drug was legalized for recreational use in 2016 and the wholesale price of weed fell
Unpaid bills are a major problem within the state, which has created a “debt bubble” of more than $600 million, according to a 2022 report
A change in tax law in January 2023, which shifted responsibility for collecting and paying cannabis taxes 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 huge fines after failing to pay state taxes last year, prompting warnings of an “extinction event” in the business community.
About 265 cannabis retailers have failed to pay by the May 1 deadline, meaning they will have to pay a 50 percent penalty on taxes owed.
State Assembly Member Phil Ting, a Democrat from San Francisco, has since introduced a bill that would require distributors to pay their suppliers within 15 days for transactions worth more than $5,000 or face fines.
Unlike other forms of agriculture, struggling cannabis growers are not entitled to federal loans and subsidies due to differing positions on legalization.
Across the U.S., the legalized marijuana industry is buckling under the pressure of falling prices, patchwork state regulations and heavy taxes, analysts and industry groups say.
“All of these issues are affecting the health of the industry to the point where I would describe the industry as a 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 sales of medical and recreational pot nationwide totaled $26 billion, Vangst said.
