With the challenges cannabis operators face every day, many times human resources (HR) get overlooked. Whether companies are considering mergers and acquisitions, receiving calls from the IRS about financial reports or trying to attract and retain talent, there’s so many aspects of HR that need attention.
To be fair, cannabis companies can’t take all the blame. Until recently, full-service, turn-key HR solutions and providers tailored to the unique needs of the industry haven’t been made readily available.
“HR solutions have historically been unavailable to cannabis businesses primarily due to the complex regulatory environment and the stigma surrounding the industry,” says CEO of Green Leaf Business Solutions Marc Rodriguez. “Many traditional HR providers were hesitant to enter the market due to the legal uncertainties and federal prohibition.”
Rodriguez also notes that banking restrictions and a lack of standardized compliance measures have made it challenging for HR providers to offer services to cannabis businesses. However, as more states legalize marijuana and regulations become clearer, these providers are recognizing the significant demand and opportunity within the industry.
Green Leaf Business Solutions is a partner in human resources and payroll areas for the cannabis industry. In this article, Rodriguez breaks down everything businesses need to know about HR and how to navigate this complex area.
Complex Payroll and Reporting
One particular area in which cannabis businesses make common mistakes is with payroll, according to Rodriguez. This can include misclassifying employees as independent contractors, failing to adhere to state-specific wage and hour laws, improper tracking of overtime and benefits, and errors in tax withholdings.
“Additionally, businesses often struggle with the complexities of managing payroll in a highly regulated environment, leading to compliance issues and potential penalties,” says Rodriguez.
So how can cannabis businesses avoid these mistakes?
Rodriguez advises to “invest in comprehensive HR and payroll solutions specifically tailored to the industry. This includes using software that ensures compliance with state and federal regulations, automating payroll processes to reduce human error and staying informed about changes in labor laws.”
Partnering with experienced HR providers who understand the unique challenges of the cannabis industry can also help businesses navigate these complexities more effectively.
Mergers and Acquisitions
Mergers and acquisitions (M&A’s) can sometimes be a helpful option for cannabis businesses that need additional funding. In order for these to be successful, Rodriguez advises businesses to conduct thorough due diligence to understand the financial health and compliance status of potential partners.
“It’s crucial to work with legal and financial advisors who specialize in cannabis to navigate regulatory hurdles,” he says. “Additionally, having a solid HR and payroll infrastructure in place will facilitate smoother integration of operations and workforce. Clear communication and alignment of company cultures are also essential for a successful M&A process.”
Talent Acquisition and Retention
Employee retention has been a difficult venture in just about every industry as of recent. Workers want more than just “pizza Friday’s” — they want to feel valued and appreciated at a company.
“To retain employees, cannabis businesses should focus on creating a positive work environment, offering competitive compensation and benefits, and providing opportunities for career growth,” Rodriguez suggests. “Implementing robust training and development programs, recognizing and rewarding employee achievements, and fostering a culture of inclusivity and respect can also enhance employee satisfaction and loyalty.”
While it can certainly be a difficult, if not impossible, task for smaller businesses, offering unique benefits such as 401k plans and health insurance can also help attract and retain talent.
There are also various HR technology solutions that enable cannabis businesses to track and evaluate employee performance, according to Rodriguez. “These include HR management systems (HRMS) and applicant tracking systems (ATS) that offer modules for performance reviews, goal setting and employee feedback,” he says. “Time and attendance software can help monitor work hours and productivity, while learning management systems (LMS) can track employee training and development.”
Unionization in Cannabis
Cannabis unionization is on the rise as more workers in the industry seek to improve their working conditions, wages and benefits through collective bargaining. According to Rodriguez, unions such as the United Food and Commercial Workers (UFCW) have been actively organizing cannabis workers and several states have seen successful unionization efforts.
“This trend is expected to continue as the industry grows and workers become more aware of their rights and opportunities to organize,” Rodriguez notes. “Cannabis businesses impacted by unionization should focus on maintaining open and transparent communication with their employees. Engaging in good faith negotiations with unions and addressing employee concerns can help build a cooperative relationship.”
Rodriguez underlines the importance of understanding the legal implications of unionization and how businesses should seek guidance from labor law experts to ensure compliance.
“By fostering a positive workplace culture and addressing employee needs proactively, businesses can navigate unionization more effectively,” he says.
Without proper HR solutions, a lot can go wrong for cannabis businesses that don’t know what they’re doing. Whether or not you can afford a proper HR solutions provider, even just hiring a legal expert can work wonders.
