Addressing HR Challenges in the Cannabis Industry…And How to Overcome Them

In the highly regulated cannabis industry, fulfilling human resources activities is often an uphill battle. Not only do the ever changing laws and standards impact an operation’s success, the continued stigma in the industry adds an extra obstacle for cannabis businesses. In order to stay focused on running a business, productivity, and remain competitive in the marketplace, cannabis businesses often don’t have time to work through HR’s complexities, and instead resort to workarounds and quick solutions to keep operations running. What most owners and operators don’t realize is that these shortcuts and temporary fixes in HR are often detrimental to the operation. In this post, we address common HR challenges facing the cannabis industry and discuss why having a dedicated HR function is critical to your business success.

Complex HR Challenges in the Cannabis Industry

Finding the right employees
In the emerging cannabis industry, the demand for hiring employees continues to increase. However, best practices in recruiting are often overlooked in an effort to get people hired faster. Quick and simple hiring solutions can often result in new hires that are unqualified, untrustworthy, or only stay for a short time. Fortunately, hiring a permanent HR function can help tighten each piece of the hiring process from recruiting to screening to interviewing potential employees.

Retaining your best employees
Imagine spending time and money on recruitment, interviewing, and training a new employee, and then the employee doesn’t stay for more than three months. Turnover is costly, but fortunately an HR professional can help. They are skilled in developing tools and programs that establish a healthy workforce, such as a complete onboarding and professional development program, an employee handbook, and setting a competitive employee salary or hourly rate.

Verifying and classifying employees
Cannabis businesses often overlook ensuring all new employees are verified and classified appropriately, and failing to fulfill both areas could land your business in legal trouble. Federal law requires that all new employees complete an I-9 Employment Eligibility Verification Form as authorization to work in the US. In addition, all employees must be classified correctly, from trimmers and budtenders to dispensary managers and master growers. Classifications include, a 1099 contractor, full-time employee, seasonal, and part-time employee.

Compensating employees fairly and legally
Many established banks and mainstream payroll providers avoid doing business with cannabis operations simply because cannabis is still considered a federal Schedule I listing. Many cannabis businesses are left to pay employees in cash or hunt down cannabis-specific bankers that may be limited in payroll options. While paying employees in cash is not unheard of, it is considered illegal if it’s “under-the-table” and not reported to the government. Your business could pay high tax fines or employee compensation penalties for doing so.

Offering affordable employee benefits
Similar to payroll challenges, offering affordable employee benefits continues to be a struggle for the cannabis industry. Many top providers will not work with the cannabis business, and those who do, have limited offerings and/or come with a heavy sticker price. This is often why many businesses avoid offering benefits and recruit contractors instead. What many business owners don’t realize is there are suitable, affordable options available that cater to small cannabis businesses.

Operating old technology to fulfill HR
While the cannabis industry is thriving, HR technology has yet to catch up. Many businesses operate a number of different systems when timekeeping, scheduling, and processing payroll. This can increase the risk for error, make it difficult to generate reports, and increase vulnerabilities to cyberattacks. An HR professional can not only help streamline administrative tasks, but can also provide all-in-one solutions that save time and reduce costs.

Complying with state laws
Cannabis is the most highly regulated industry in the world, causing immense pressure for operators to follow requirements and keep current on constantly evolving legislation. In addition to the regulations specific to the industry, there are also a variety of compliance issues related to employees – from anti-discrimination laws, to family and medical leave (FMLA), to benefits administration and safety laws.

The Need for Human Resources in the Cannabis Industry
Many small cannabis businesses do not have a full-time HR professional in place, and instead have an existing employee take on some of the responsibilities. The problem is that this employee is typically inexperienced, and because they’re still performing their regular job, may only fulfill the bare minimum in HR. A solution like this does not set up the business for long-term success.

Hiring a permanent human resources function is critical to overcome the current complexities and keep the business operating. Experienced professionals are often able to establish a positive culture, while keeping the business compliant with industry and employee regulations.

OROleafhr specializes in HR management and operations that support and grow your cannabis business. Let OROleafhr help you enjoy cost-effective, full-service HR solutions that streamline major functions like benefits administration, payroll, tax compliance, risk management, and safety. Save time, money, and get peace of mind that your HR function is in good hands.
Contact us today.