The Thirteen-Week Cash Forecast
We build a rolling thirteen-week forecast at the transaction level: expected collections by customer, payroll by cycle, vendor payments by term, tax and excise obligations by due date, debt service, and capital commitments.
The forecast is updated weekly and reforecast against actuals, so forecast error itself becomes a measured, improving metric rather than a permanent excuse.
- Weekly cash position with a thirteen-week forward view
- Collections modeled by customer and aging behavior, not by average terms
- Tax, excise and local obligations funded on a schedule
- Scenario overlays for price compression, delayed collections and expansion
Funding the Tax Obligation
Because 280E taxes gross profit, an operator can owe substantial federal tax in a year with a book loss. Excise tax collected from customers is likewise not the operator's money. Both need to be segregated and funded as they accrue.
We set a funding percentage from the tax model, sweep it on a defined cadence, and reconcile the reserve to the projected liability quarterly. This one practice prevents the most common cause of cannabis insolvency.
Working Capital and Receivables
Wholesale receivables in California are notoriously slow, and the collection difficulty falls hardest on cultivators and manufacturers selling into retail. Aging discipline, credit limits, deposit requirements and enforcement of terms are financial controls, not customer service issues.
On the payables side, we sequence vendor payments against the forecast, negotiate terms where leverage exists, and prevent the pattern of paying the loudest vendor rather than the most critical one.
Banking and Treasury Constraints
Cannabis-compliant banking exists but comes with elevated fees, extensive documentation and the ongoing risk of account closure. Operators should maintain a documented banking file, avoid single-institution dependence where possible, and keep cash-handling controls strong enough to satisfy an institution's compliance review.
We prepare the recurring documentation banks request and maintain the internal controls that keep the relationship viable.
Capital Structure and Debt Service
Cannabis debt is expensive, often secured by inventory or real estate, and frequently carries covenants that an operator without a forecast cannot manage. Before taking on debt, the forecast should demonstrate service capacity under a downside case, not only the plan case.
We model debt scenarios, evaluate sale-leaseback and equipment financing alternatives, and stress-test covenants before signature rather than after breach.
