HR concerns of the cannabis industry and how to avoid them
It’s hard enough starting a business if you have a background in business, but the cannabis industry faces a distinct set of challenges, regulations and laws that can make it even more difficult than similar industries without illegal roots.
With legal marijuana sales topping $3.5 billion in 2016 and more than 100,000 workers now employed in the industry, the key to a successful cannabis business may rest on the quality of employees hired and the ability to keep those employees happy — both functions of traditional human resources departments.
But where small, non-cannabis businesses can turn to professional employment organizations to outsource those duties and remain focused on their core operations, the unique needs of the industry put a heavier emphasis on cannabis-specific employment services.
That’s where Denver-based Faces Human Capital Management comes in.
Founded by managing partners Christopher Cassese and Caela Bintner, Faces provides an HR platform for any level of the industry, complete with payroll, taxes, benefits packages, employee tracking and even customizable reports for cannabis businesses.
Marijuana Venture interviewed the two HR specialists to find out what cannabis business owners need to watch for, including high turnover rates, employee classification and recruiting the right person for the culture of your business.
Cassese and Bintner met at a large, publicly traded company where they both worked. Cassese had 20 years of experience in sales at companies like Merrill Lynch and HSBC, as well as several years working in professional employment organization. Bintner had 25 years of experience in sales and public relations, including a stint with the first Bush Administration.
Together, they saw a need growing in Colorado and across the nation for traditional human resource services in the burgeoning cannabis industry, from recruiting to time and attendance to state compliance and offboarding.
“Anything an employee would need from hello to goodbye” they could address, says Bitner.
As the cannabis industry became a “burgeoning part of the economy” in Colorado, Cassese says he saw it moving from hippies to a more mainstream business crowd who would need professional services.
Bitner had already seen the value of cannabis and wanted to help bring it out of the shadows. So in July 2015, the pair founded Faces, offering an outsourced HR option for businesses working in cannabis.
“This industry needs to be legitimized,” she says.
While Cassese says all industries face the traditional fundamental issues of human resources such as paperwork and taxes, the nature of the cannabis industry often requires a different type of employee, making recruiting a top concern for many working in cannabis.
While there are crossovers such as logistics jobs, manufacturing work, front office and sales positions, Cassese says many cannabis retailers are looking for people who are more “nurturing” in nature, especially at dispensaries that serve a lot of medical patients.
Many employees, especially those with industry knowledge, are courted by multiple shops, often all paying around the same wage. That can lead to a higher turnover rate than in more traditional industries.
According to Cassese and Bintner, adding human resources services like direct deposit, health benefits and providing a path for career advancement, such as training for new positions and e-learning options, can keep employees happier and could prevent them from taking their services to the next store down the street for a few more bucks a week.
For example, can a trimmer work their way up to a better-paying job within your company? Are you offering workers training for other positions? A 401K?
Because of the state-by-state nature of the cannabis industry and the overarching federal illegality still in place, Cassese says another concern for many marijuana business owners comes in pay, taxes and paperwork. Many financial institutions still have concerns about taking marijuana money, but Cassese and Bintner say many banks are more willing to work with outside HR agencies like theirs, providing a way in for those in the industry, as well as providing software that offers direct deposit, moving the industry’s pay scale from cash to a more traditional model.
JOB DESCRIPTION AND ELIGIBILITY
Something as simple as a job description, designed to clarify expectations for both employee and employer, can help create a more stable environment, Cassese says.
Bintner adds that each retailer has a slightly different culture and target demographic, so it’s important to find someone that will fit in and understand that culture and that budtenders are seen as assets who can help a business.
Hiring an outside firm to help pre-screen potential hires can make sure those being interviewed have the qualifications and skills for the job, saving business owners time.
“Don’t spend 10 hours trying to find two front-line employees,” Cassese says.
In addition, a professional employment organization can help an employer navigate hiring concerns such as drug testing and driving records, employee eligibility and classification.
According to Bintner, a lack of knowledge about the human resources side of a business can lead to simple, but costly mistakes such as making sure I-9 eligibility forms are filled out correctly. An improper form could lead to tens of thousands of dollars in fines for a business.
Once an employee is hired, it’s important for them to be classified properly for tax concerns and overtime pay, the complexities of which someone used to working in an underground, cash-based industry might not understand. For example, an employee with an “exempt” classification is considered salaried and can work additional hours, whereas a “non-exempt” employee is eligible for time-and-a-half for any work over the traditional 40-hour work week.
Many outsourced human resource companies, like Faces, offer time and attendance software and on-site hours each week to help smaller employers ensure they are meeting all payroll requirements.
As human resource professionals, Cassese and Bintner suggest that companies have a good human resources information system, keep good records and collect proper documentation. Or, simply outsource those needs and “focus on revenue-producing activities,” they say.
“Your employees are your greatest asset,” Cassese says. “Treat them as such.”