As tweeted by SI’s Peter King, the monetary reason for cutting Larry Johnson is that the Chiefs would owe him nearly $500,000 in roster bonus if they kept him the rest of the season. This is also one of the reasons why it seems unlikely to ESPN’s Adam Schefter than any team will put a claim in on Johnson:
Any team claiming LJ would have to pay him $2.1 million in base salary and another 500k roster bonus. More likely, each team passes there.
If on team claims him, LJ becomes a free agent, at which point a team could potentially take a chance on him for a discounted price.