Human Resources & Cannabis Industry Challenges
As recreational cannabis into a legitimate billion-dollar business from its seedy past, human resources professionals are encountering business challenges that are both familiar and new. Dispensaries must tackle the same problem any new business faces: how to get started. In states with legalized recreational cannabis, business is blooming.
With that much green, the recreational cannabis industry is attracting entrepreneurs and deep-pocketed investors. Since 2014, public and private companies over $1+ billion in capital to work in the cannabis industry, according to a recent report published by Arcview Market Research, a research firm dedicated to the cannabis industry.
But behind the large sums of investment money pouring in and media excitement about this budding industry, cannabis dispensaries must tackle the same problem any new business faces: getting started. A lot of people have trouble setting up their company correctly from a corporate structure. The initial fringe appeal that brought people to the cannabis business has given way to trying to figure out how to be a full-on, legitimate industry.
As the production and sale of cannabis moves from an illegal, underground endeavor to a legitimate multibillion-dollar industry, employers are encountering challenges similar to any other business when it comes to recruitment and workforce management.
Additionally, since cannabis remains an illegal Schedule 1 drug under the federal Controlled Substances Act, and state laws allow employers to maintain drug-free workplaces, recreational cannabis dispensaries struggle with the ambiguity that governs the industry.
From this perspective, recreational cannabis dispensaries face common, difficult challenges to operating a successful business.
HR Adapts to an Unknown Industry
As cannabis continues to expand into the consciousness of corporate America, human resources professionals also are learning how to navigate in a relatively unknown industry with strict regulations that vary by state.
In a sense, HR professionals moving to the legal weed business are trailblazers of a final business frontier, as the policies and procedures developed over the next few years as the industry grows could set the precedent for how HR departments of dispensaries are run for years to come.
You can’t take a blueprint from the retail industry and graft it onto the cannabis industry. How do you hire people correctly? How to make sure you’re paying them correctly? Cannabis compliance training is at the forefront of this industry. The companies that put it at the front of their business are growing.
However, growing dispensaries are finding it difficult to find the right people to hire. As a result, many HR pros at dispensaries are wearing many hats. Sometimes the rigorous background checks required by states like Colorado turn up information that bars an individual from being able to work in the cannabis industry – information that would likely have no impact on working in a more traditional line of business.
Likewise, dispensary hiring managers are receiving interesting résumés that have people admitting they’ve committed felonies or weren’t caught committing felonies. This situation can put dispensary owners in an awkward position of not being able to hire people with past experience growing and selling cannabis.
Other times, hiring obstacles arise when applicants are unaware of state-mandated prerequisites needed to obtain a job at a dispensary, leading to many résumés being disqualified immediately. And like any other industry, many résumés simply lack the minimum experience required for the job opening.
Entrepreneurs in the industry have responded to hiring challenges by developing cannabis job-hosting sites similar to Indeed or Monster. A quick look at CannaStaff, a popular cannabis job site, corroborates expert claims that dispensaries are hiring for positions ranging from security to culinary assistants.
Others still are taking a different approach to hiring the right people. Many dispensaries tackling challenges by looking at people outside of the industry who have the right skill set who can adapt to working at a dispensary. Hiring growers are one of the most unique challenges. It’s not a person growing weed in their house or yard anymore. There’s an agricultural aspect to it.
Any grower will tell you there are a thousand different ways to grow the product, and none of them are the best. Can this grower adapt to our way of doing it? Is it a match? Is the skill set a match? Do past results dictate future success? From the dispensary’s point of view, every position has its own unique challenges. As such, somebody with no experience in cannabis but a long career in commercial agriculture may be the best fit for a Master Grower at the cultivation facility.
Part of the reason cannabis businesses look outside the industry is that they haven’t developed any habits within the weed industry. They have their own abilities that translate to a new cannabis industry. Hiring good managers who aren’t overly passionate about the product, but about doing the work. There’s a lot of cannabis résumés from people who are passionate about the industry but don’t have a lot to offer. There’s a gap in professionalism.
Cannabis Compliance: Devil’s Lettuce in the Details
In addition to hiring challenges, many dispensaries struggle with payroll issues, due largely to the fact that cannabis is still classified as a Schedule 1 substance – equal to drugs like heroin and LSD.
In other words, while Canada has completely legalized it federally, there are numerous states and Washington, D.C., that have also legalized cannabis, it is still illegal in the eyes of the United States federal government.
This initially prevented banks from working with dispensaries. The industry’s banking situation appears to be improving. Just two years ago, the U.S. Department of the Treasury permitted banks to work with cannabis businesses, provided they follow a series of guidelines.
In 2014, only 51 banks and credit unions worked with cannabis companies; that number rose to 301 in 2016. While this is an improvement, it represents less than 3 percent of the nation’s 11,954 banks and credit unions, according to the Arcview Market Research report.
It’s still common for employees to get paid in cash, which can potentially create dangerous situations for dispensaries and its workers. But entrepreneurs are developing products that aim to bring stability to the industry and make it safer by partnering with banks and credit unions to provide electronic payroll options that allow dispensaries to pay employees through options like direct deposit.
The key to dispensary payroll is staying on top of industry compliance trends and being able to communicate changing regulations clearly and automatically to clients. In addition to banking and payroll, the disparities between state and federal laws regarding cannabis also create legal ambiguity when it comes to unionization within the industry.
Trying to find clarity within this issue from a federal standpoint is a growing industry trend. When recreational cannabis became legal in California, cannabis dispensaries will be required to remain neutral toward union campaigns.
But there’s a question mark about laws at the federal level. It gets trickier when you’re looking at union campaigns because it’s federal enforcement and this administration is hostile toward it. Nobody knows what will happen if there’s a dispute. You can be welcoming to employees, but from time to time there will be differences in opinion.
A lot of the industry is supported by investors right now. There may be setbacks if raids start to happen, but the federal government may take, the success of recreational cannabis, legalization wins in more states every year, plus the billions of tax dollars generated, it will be difficult to shut down the cannabis industry.
If businesses follow the laws of the state, do not divert product out of state, keep the product out of the hands of children, do not support cartels, and do not launder funds, then the federal government will take a hands-off approach to cannabis law enforcement.
From this perspective, one can see the critical value HR can bring to the recreational cannabis industry through compliance. There’s a real opportunity for the HR world to take part in this industry. People and cannabis workforce management are at the forefront of this industry and it wouldn’t happen without that.
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