ebook: How to Select an HR and Cannabis Payroll Partner: Best Practices and Questions to Ask When Exploring Your Options

The annual return on investment from using a Professional Employer Organization (PEO) = 27.2%
(This is based on calculating cost savings for PEO clients in the areas of: HR personnel costs, health benefits, workers’ compensation, unemployment insurance, and other related expenses. – NAPEO Sept 2019)


Ensuring your business thrives in a competitive industry, while also adhering to strict compliance regulations often leaves little to no room for managing human resources. The cannabis businesses that do have an internal HR function, however, must work to keep their staff trained and current in the ever changing industry. An HR department must also dedicate a significant amount of time and resources to find affordable banking and payroll providers that will support the business for the long-term. It’s not unheard of, and actually becoming more common than ever, to work with a big-name provider only to be abruptly dropped, causing tremendous business disruption and making the business unconfident in their search for a new provider.

Because human resources is an ongoing challenge for the cannabis industry, many businesses turn to companies that specialize in managing payroll, human resources functions, benefits, and other employer-related administrative functions necessary to running a business. These providers of necessary HR and payroll services, often called PEOs, serve and support cannabis businesses, but finding the right partner isn’t easy nor should it be. Just like researching any provider, you need to be assured you are working with a reputable organization that works in your business’ best interest.

But, how do you know if a third-party provider is the right fit before you start work with them?

There are many companies that will say they can help offload your HR, but you need to be assured that they will be a true partner before signing a contract. This ebook provides you with the information you need to know and the questions you need to ask before you select a HR solutions and cannabis payroll provider.

Before We Begin, Self-Assess Your Business’ Needs and Challenges

Before exploring options, you want to first understand your exact business’ needs and challenges. This can help you narrow your search for the right provider. If you have already identified them, then feel free to skip to the next page, but if you don’t know them or need further confirmation about what they are, proceed forward.

First, ask yourself the following questions:

  • Is it difficult to find and hire good employees that stay long-term?
  • Are my employees asking for more training or professional development?
  • Is my business always falling behind on new hire paperwork and onboarding?
  • Have we been fined or penalized for failing to comply with government regulations?
  • Is it burdensome to stay current on cannabis laws?
  • (For grow sites) Have my employees had any work-related injuries or sicknesses?
  • In the event of an employee audit, are my records organized and easily accessible?
  • (For dispensaries) Am I cash-only business that desires offering other methods of payment?

If you answered yes, to any of the above, you are not alone in the industry. These are common pain points and obstacles many cannabis businesses need help overcoming. Fortunately, the right PEO can not only assist in addressing these hurdles, but can also help you with the following:

  • Recruiting and retaining employees
  • Offering a comprehensive employee benefits package
  • Providing a structured onboarding process and ongoing training plans
  • Overcoming administrative burdens like payroll processing and completing employee paperwork
  • Ensuring compliance is maintained in every function of the business
  • Connecting your business with the banking relationships it needs to operate optimally

You may find that your business needs help with one or all the areas above. But, before you explore options that offer the services you have in mind, you have to assess the entire company. Learn how to find the right partner by asking yourself and the company the questions bellow.

Questions to Ask

An HR services and payroll solutions provider can help cannabis businesses operate as intended without worrying about managing human resources and maintaining compliance. But just like selecting any other service provider, you must do your research. You’ll want to assess their expertise, service, support, and cost.


Ask yourself: What’s the company’s history?

When first doing your research, you may start at the services page, which makes sense. However, you should also take a look at the “About Us” page and review the company’s background, story, mission, and values. You want to look for a partner and not just another provider or vendor. The company overview and story is a good place to look for alignment with your own business’ mission and culture.

Review the following pieces of information to learn more about the vendor:

  • Years in operation
  • The company’s mission and vision
  • The company’s values
  • Number and locations of offices
  • Number of clients and employees

Can’t find this information readily available? Inquire during your preliminary discussions.

Ask yourself: What sort of expertise in the industry does the executive team have?

Start with reviewing the executive teams’ bios on their company site to learn their expertise. In addition to having education and experience in human resources, they should also have experience in the cannabis industry. They should understand the industry, its challenges, and your needs.

Can’t find their bios? Search for them on LinkedIN. And if you still can’t locate their bios, ask for them during your discussions. 

Ask yourself: Are they licensed and accredited?

Most states now have HR provider licensing and registration requirements, so you should verify that the company you’re considering is registered and licensed in good standing. You can check with the state department that handles licensing and regulation to see if they have an active license. Many states have an online verification tool to facilitate the process.

As an added layer of credibility, check if your PEO is a member of the National Association of Professional Employer Organizations (NAPEO) and if they are accredited by the Employer Services Assurance Corporation (ESAC). ESAC accreditation is the Gold Standard for PEO best practices and financial reliability. Accreditation is not required, but highly encouraged.  


Ask yourself: What services does the company offer?

Whether you’re looking for a partner to manage one area of HR or you need to outsource the entire function, ensure they offer a spectrum of services for your business. You may start off only needing help with payroll, but you will likely need to be open to expanding services if you start experiencing business growth.

Must-have PEO services:

Benefits plan Sponsorship

Employee Training
& Development
HR planning
& support


Assistance with
government compliance

Performance management

Payroll & employment administration Employer liability management

Technology and
virtual options 

Ask them: Are there a variety of flexible benefits packages available?

Very few HR providers offer benefits options for the cannabis industry. Even if an HR provider offers benefits, it often comes at a high cost for both your business and your employees. Working with a company that is experienced in the industry should facilitate the benefits process. They shouldn’t limit your business to one plan, and instead, offer packages that meet your business’ and employees’ needs for a reasonable cost. For health insurance, check if they offer both PPO and HMO network solutions as well as Referenced Based Pricing options. If you’re a small cannabis business inquiring about a 401(k) plan, ask if they have a Multiple Employer Plan (MEP), which is designed to encourage small businesses to offer employees a retirement savings plan with tax advantages.

Please note: A true HR partner that offers benefits sponsorship also manages the entire administration process, including communicating benefits enrollment to employees, issuing benefits packages, and serving as the point-of-contact for benefits support.

Ask them: How will you help me with maintaining compliance and avoiding legal trouble?

In a highly regulated industry like cannabis, your business is at risk every day. The right HR services and solutions provider will work to protect your business and its employees. In your conversations, make sure they talk about their expertise with cannabis compliance, how they stay current with regulation changes, and how they will help you mitigate risk.

In addition, the company needs to be savvy in employee law to protect you from lawsuits and litigation. If they will be providing services for hiring and onboarding, ensure they manage the entire process, which covers conducting background checks and processing new hire paperwork, including I-9 form completion. 

Ask them: Can you send me some client references or refer me to some case studies?

A true partner has undoubtedly delivered exceptional service to your peers in the industry, so they should have the accolades to provide it. Research testimonials and reviews online. In addition, leverage an association membership like the National Cannabis Industry Association or the National Association of Cannabis Businesses for reviews and recommendations.

Ask them for case studies and client references and get first-hand feedback. If you gather information from outside sources that the PEO is the best asset a cannabis business can have, then you will feel confident working with them.

Consider asking peer references the following questions:

  • How long have you been with the vendor?
  • Why did you chose them?
  • How has the company helped your business grow?
  • What are their strengths and weaknesses?



Ask them: I have multiple operations/sites in different locations. Will you serve all of them? Is it an extra cost to add a site to the agreement?

If you have operations or sites in different cities, states, or even countries, ensure they will able to support your entire organization. Each state in the U.S. has different compliance regulations regarding standard operating procedures and employee laws, so it’s important that business be well versed in compliance no matter where your business operations are located.

Ask them: What does client support look like?

You want to know that your selected vendor will be available and responsive to your needs and questions. Having a dedicated service team of representatives has big benefits compared to having to contact a call center each time you need support.


Ask them: How does pricing for services work?

Many factors like your business’ size, benefits’ needs, and safety risk contribute to the cost of working with a third-party provider. Rest assured, pricing across vendors should not significantly vary; however, each HR provider has a different approach to billing for services. Many calculate their fee as a percentage of your payroll. While others charge a flat fee per employee. With the payroll percentage structure, your cost may rise if you pay your employees bonuses and commissions. With a flat, per-head fee structure, employee salary won’t affect cost.

Ask yourself: Is the cost for services too good to be true?

Focusing on saving costs isn’t always the best approach. Oftentimes, working with a provider at a lower cost means surrendering some of the most important services that truly benefit a cannabis business. For example, many low-cost HR providers do not offer products and services like e-verify, i-9 form distribution and collection, or work with a business to develop employee handbooks. Similarly, low-cost providers who offer to help with recruiting may only post job descriptions to job boards and screen candidates, but may not interview, issue new hire paperwork, or onboard. This is why it’s important to self-assess your needs and ask for specifics on services during your evaluation. You want to avoid paying for a service that doesn’t include obvious tasks and responsibilities.


For Best Results, Search for a Partnership

Hiring the right HR solutions and payroll provider could literally save your business. But, with many options available, how would you know which is best for your business? And how do you know that they will stay for the long-term? You can often avoid spending time and resources on a bad business relationship, if you focus your efforts on finding a partnership. A true partner is aware of the ongoing HR challenges in the cannabis industry and responds with offering support and services that are flexible to and fit your business’ needs.

A trusted partner also goes beyond a transactional relationship and delivers several benefits for your business including:

  • Increased productivity and profitability
  • Improved company morale and culture
  • Reduced employer liabilities and business risks
  • Controlled and contained administrative costs


Consider OROleafhr Your Trusted PEO Partner

OROleafhr serves the cannabis industry and understands the ongoing HR challenges many businesses are facing. Banking, payroll, and insurance providers are often unattainable, and those that are available have a hefty cost. Fortunately, OROleafhr can help. They have established banking relationships and the technology infrastructure to help cannabis businesses operate and thrive. OROleafhr manages and supports the entire HR function with services that include benefits and employment administration, payroll, tax compliance, and risk management. Your business will enjoy cost-effective HR management and operations support that improves operational efficiencies, reduces costs, and keeps your employees happy.

Download the ebook PDF for easier reading