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ebook: Top Five Reasons Cannabis Businesses Find Value with PEOs

The cannabis industry has grown exponentially over the last several years. As more states are legalizing recreational and medical marijuana, more and more grow rooms and dispensaries are popping up around the country. While the industry is certainly growing rapidly, the size of the cannabis businesses, i.e., number of employees, remains relatively small. This is due in large part to the need to staying current on strict governmental regulations at a local, state, and national level. Adhering to the ever-changing laws require significant time and attention. And staying current on governmental regulations is just one aspect of running a cannabis business and doesn’t even consider the HR side of business in general – staying current in hiring practices and employment law, payroll, updating policies, workers compensation, etc.

A small cannabis business may be able to get away with having a dedicated HR professional in-house for compliance and HR, but a one-person team is often not scalable as they grow. As such, businesses in the industry have seen tremendous benefits in working with a professional employer organization (PEO). A PEO partners with businesses to fulfill all things HR — from compliance, to payroll, to hiring and onboarding, to employee benefits, and cannabis businesses find value with PEOs to ensure your business stays out of legal trouble. Working with a PEO has helped many companies streamline their business operations and reduce administration costs, all while enabling employees and owners to focus on running and growing their business.

Small businesses that use a PEO grow 7-9% faster and save 35% on HR administration. – NAPEO

Top Five Reasons Cannabis Businesses find Value with PEOs

1. Regulations

Businesses value the PEO partnership to ensure regulation adherence. Laws and regulations are constantly being updated and changed, but they often differ in each state. Business owners or operators must abide by employee laws like the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA) and the Health Insurance Portability and Accountability Act (HIPAA). Additionally, they also must ensure they are legally licensed and have the right permit to operate your business, along with number of other criteria. For example, a California dispensary must have ID badges for all employees, security personnel on hand, alarm systems, commercial grade locks, and 24-hour video surveillance.

Cannabis businesses find PEOs extremely useful in freeing their time and resources from constantly trying to stay on top of laws and regulations. For example, a California dispensary must have ID badges for all employees, security personnel on hand, alarm systems, commercial grade locks, and 24-hour video surveillance. In addition to freeing time, businesses find PEOs knowledge of health and safety regulations extremely beneficial. For example, if you are operating a grow room, there are many occupational hazards that mandate a proper safety program in place. Without proper training on safety protocols, businesses can be at risk of violating OSHA Job Safety and Health laws and can be at risk of an employee lawsuit if an injury were to occur.
Cannabis organizations find peace of mind in knowing that a PEO can help steer them through the industry’s challenging legal landscape. They benefit from the PEOs ability to proactively see future compliance issues and bringing them to light, as well as suggesting and implementing ideas and concepts to efficiently and less expensively address compliance.

2. Benefits

Cannabis businesses find it cost-effective to use a PEO in providing medical insurance, health savings plans, retirement plans, and other benefits — a major incentive for job candidates. In fact, a Glassdoor survey reported that four in five employees prefer benefits and perks to a pay raise, and a 401(k) Plan ranks in the top five requested benefits. That’s why having affordable benefits to attract and retain employees ranks number two on a cannabis company’s list.
“Large 401(k) retirement plan providers are afraid to get involved with an industry engaging in activities still illegal under federal law, and a decades-old ban on most federal tax deductions can make providing plans expensive for the companies.”

Business also like that fact that a PEO will provide them benefits regardless of how small they are. Often if a cannabis business has less than 10 employees, providers often decline service simply on the fact that they won’t be able to profit off that customer. They also find useful that in addition to medical, health savings, retirement plans, they cost-effectively provide services including fulfilling the administration and enrollment period responsibilities, conducting participant verifications, distributing necessary documentation to participants, such as benefits statements, and handling any compliance reporting.

3. Hiring and Turnover

In this industry turnover is high. It’s often a revolving door of good employees and difficult to find good talent. Finding the right hires is critical to the success of any business. However, it’s particularly hard in the cannabis business as prospects are often young, inexperienced, and are of the generation that hops from job to job. And not just anyone can work in a grow room, you need the expertise to staff the perfect cultivation team.

Due to cannabis business’ size however, they often don’t have the time or money upfront to fulfill a diligent hiring or screening protocol. These businesses find that PEOs have really helped them in not hiring inexperienced, untrained, or poor-performing employees due to improper screening, which has helped them in avoiding delays in production, operational errors, and even compliance issues. Cannabis company feedback has indicated that they found that the most value in working with a PEO for hiring and avoiding turnover is in posting job descriptions, conducting screenings, performing background checks, and assessing salary compensation.

4. Training

Training is inconsistent in the industry as there are no national standards for training employees, especially dispensary employees. Cannabis companies like working with PEOs because they are the experts in providing training around company policies, discrimination, harassment, continuing education, and corporate training, which includes new laws and regulations in the cannabis industry.

As an example, let’s say a company is in the dispensary business. The dispensary employees are the frontline of the business. With the growing legalization of medical and recreational marijuana, dispensary employees not only have to be versed in state regulations and dispensary operations, but they also need to have working-knowledge of cannabis products. As with any business, the public will have questions on your products: What’s the difference between pill form and oils? Will this make me sick? How long is a single dose effective? Dispensaries and other cannabis businesses value having an expert providing comprehensive training on the products to best serve the clients and reduce liability.

Due to a PEOs training expertise, companies place extreme value on a PEOs ability to develop staff-wide training programs with the proper tools and channels that benefit their employees, business, and customers. They often rely on a PEO to help their business run, grow, and thrive through services like leadership development, continuing education, performance evaluations, onboarding employees, and corporate training.

5. Employee Handbooks and Manuals

Cannabis businesses have determined that employee handbooks and policy manuals are not only needed for large companies, or for businesses with several full-time employees. Many have found that PEO’s extensive experience with manuals have really helped in demonstrating their commitment to quality and compliance, streamlining operations during emergency situations, reducing risk for liability, and generally making employees feel more secure in knowing what’s expected of them.

Companies in the cannabis industry have realized that policies and procedures are the best protection they have, but they often don’t have the time or experience to develop and create them. These businesses find a sense of security knowing that a PEO specializes in this area and will work with them to develop the appropriate employee handbook and policies that can protect the business and foster a productive workforce.

OROleafhr is passionate about helping your cannabis business bloom. Our programs specialize in HR management and operations that support and grow your cannabis business. OROleafhr clients 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.

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