'The Biggest Challenge Is Cash Flow': Talarya Brands CEO Breaks Down The Struggles Of Non-Retail Cannabis Brands In California

At the recent Benzinga Cannabis Capital Conference, Dustin Milner, CEO of Talarya Brands, shared his thoughts on the complex challenges currently facing California's cannabis industry. As the head of one of the leading cannabis brand houses, Milner provided valuable insight into the obstacles businesses must navigate in one of the world's most competitive cannabis markets.

Tax Burdens and Regulatory Hurdles

Milner was candid about the regulatory environment in California, which he described as particularly challenging due to heavy taxation. "In Illinois last year, they collected $474 million in cannabis taxes, compared to $272 million in liquor taxes,” Milner pointed out. “And there are many more liquor stores and bars than dispensaries."

He emphasized that despite the legalization of cannabis, the taxation model remains disproportionately higher compared to other industries. This adds financial strain on businesses trying to survive and thrive in the state.

Payment Delays and Cash Flow Problems

Another pressing issue Milner discussed was the difficulty cannabis brands face when it comes to receiving timely payments. "The biggest challenge facing brands not vertically integrated into retail is accounts receivable," he explained. "It's very challenging for a brand to sell a product and not be paid for it for 60 to 90 days."

Milner highlighted that this delay in cash flow creates significant financial strain on cannabis companies, particularly in an already competitive market. He stressed that growth is about increasing revenue, improving margins, and ensuring payment reliability.

Impact of Hemp-Derived Cannabinoid Ban

Milner also touched on Governor Gavin Newsom's recent emergency rules restricting hemp-derived cannabinoid products in California. He suggested that this development could lead to an uptick in retail foot traffic, though it remains unclear how much it will offset competition from the illicit market. As the industry faces these regulatory changes, Milner noted that companies must remain adaptable to survive.

Overall, Milner's reflections at the conference provided a sobering look at the difficulties cannabis companies face, from taxation and regulation to payment cycles and market pressures. His focus on financial stability and adapting to changing policies offered a clear view of what's needed to succeed in California's cannabis market.

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Photo: Courtesy of NikolayFrolochkin and ganjaspliffstoreuk by Pixabay