12 Dec Top 3 HR Challenges in the Cannabis Industry
Access to financing, tax codes, and compliance are just a few of the obstacles cannabis businesses are facing in this period of growth in the industry. They also tend to be the top three HR challenges cannabis business face, and they often demand additional resources, attention and education.
Banking
With cannabis currently a Schedule I drug in the Controlled Substances Act, it is very difficult to secure a relationship with a cannabis-friendly financial institution. The industry has seen a slight increase in the number of state-chartered banks and credit unions providing bank accounts, but they are not growing nearly at the rate of demand.
One of the problems caused by the federal conflict with effective cannabis laws is that many financial institutions are hesitant to bank the legal cannabis industry due to fear of running afoul of federal money laundering laws. This has forced many legal, compliant, cannabis businesses to operate on an all-cash basis- a situation in which a good portion of the nation’s existing $10+ billion legal cannabis industry is forced to do.
Unlike the large providers of HR, payroll, and tax services, OROleafhr learns your cannabis business from the inside out and is completely transparent with financial partners regarding the industry we support.
IRS Tax Code 280E
Created nearly forty years ago, IRS Code 280E forbids businesses from deducting otherwise ordinary business expenses from gross income associated with the “trafficking” of Schedule I or II substances, as defined by the Controlled Substances Act.
280E continues to be a major financial burden for retail establishments, forcing cannabis operators to seek partnerships with legal and tax professionals that understand this challenge and have experience in the industry. Unfortunately, many of these legal and tax professionals may not be affordable or scalable for your business.
With OROleafhr, on day one you get a team of HR professionals, integrated HR technology, and proven processes to address 280E tax deductions and deductible expenses, types of 280E COGS, how to keep 280E records, and more.
Compliance
Cannabis is the most highly regulated industry in the world, and compliance measures are constantly evolving, forcing businesses to be “on top” of the law and adjust reporting, processes, etc. on a moments notice.
In addition to the regulations specific to the industry, HR leaders must adhere to the daunting list of compliance issues related to employees. From workplace harassment to diversity to the Affordable Care Act to FMLA, remaining compliant is a full time job- often many full time jobs.
As you can see, managing compliance is tricky. That’s why many cannabis businesses have turned to OROleafhr to stay current on proposed guideline changes, updates to existing regulations, and roll outs of new federal, state, and local legislation.