As plentiful as jobs are in the multi-billion-dollar cannabis industry, retention problems are rampant. In 2019, the Seattle-based cannabis business data and analytics company Headset Cannabis Intelligence looked at cannabis retailer retention rates in Washington and Colorado, two of the states with more robust recreational cannabis industries. What they found was astonishing—the average cannabis retailer saw an annual turnover rate of about 30%, particularly with budtenders, and 86% of those who quit did so within the first three months of employment.
Even worse, retention isn’t just an issue with entry-level employees—data shows it’s poor with upper management too. According to a survey by Bedford Consulting Group outlined by Bloomberg, 35% of cannabis companies experienced CEO turnover in 2019 and another 32% had CFO turnover due to poor performance on the stock market and other grievances. This degree of upper-level turnover in particular has catastrophic impacts on a cannabis company’s ability to compete in the industry. Upper-management positions are some of the most expensive to hire for, they often have unique skills and experiences that are difficult to replace, and they have a substantial impact on the rest of the company’s morale and performance.
In fact, one study on employee turnover published in the Journal of Psychology reports that “[o]perational disruption of the work unit will be increased by the turnover of all managers...[because] direct managers may have a greater influence on the day-to-day work activities of their subordinates, as they convey information about work tasks and priorities [and manager] turnover will be more detrimental to overall performance than turnover among work unit members, again because of the operational disruption caused by turnover among high-level employees.”
Luckily, offering retirement benefits at your cannabis company can prevent this degree of upheaval because it can address some of the root causes of upper-management turnover.
Retirement Benefits Attract Qualified Upper-Level Candidates on the Outset
The new-ness of the cannabis industry, and its scrappy, low-barrier-to-entry reputation—attracts many people to it. Unfortunately, this perception doesn’t always bring the best talent to the industry, especially when it comes to hiring experienced and loyal upper-management.
“I’ll get a lot of résumés from people who are passionate about the industry but don’t have a lot to offer. There’s a gap in professionalism,” Allan Golod, chief operating officer at Diego Pellicer, a high-end recreational marijuana dispensary based in Denver, told Talent Economy.
When cannabis companies accept the standard industry applicant—passionate about cannabis perhaps, but with little to no expertise—they set themselves up for higher rates of turnover down the road, especially with senior roles that involve more responsibility, leadership and skill. After all, as the adage goes: Retention starts with recruitment. This is why it’s essential to on-board professional, skilled talent at the get-go—and the savviest hiring managers know that to attract qualified talent, they may have to look outside the cannabis industry. Therefore, your company must be able to compete with the standard salary and benefit packages of other industries.
As the Cannabis Hiring Agency Vangst reports, “Offering competitive packages for outside industry pros...can take your company to the next level, and remember that there are many incentives you can build into your offer to create interest [like] base pay, bonus structures, and benefits packages.”
In other words, offering competitive retirement benefits helps you land that Chief of Marketing or Chief Financial Officer from the Beverage industry with professionalism and similar industry experience. Making professional hires also goes a long way to address the stigma around cannabis, which snowballs into better upper-level hires and less attrition industry-wide. As Jewell Lim Esposito, legal editor at CannabizCentral says of offering benefits industry-wide, “Cannabis companies would gain equal footing with non-cannabis companies to recruit, retain, and reward their employees. Basically, cannabis companies could compete for talent and offer the usual employee benefit perks for working in a still growing industry.”
Cannabis Retirement Benefits Incentivize Talented Upper-Management to Stay
Benefits are among some of the most important things to candidates as they deliberate whether or not to join a company. According to a GlassDoor Workplace Trends Assessment, especially in the post-COVID world, “there will be lasting impacts on workers and jobs. People will save money and plan for retirement differently and demand better health and flexible time benefits from employers.”
Understandably, the cannabis industry’s reluctance to make these offerings is also a major reason why upper-level turnover is so high. Frankly, cannabis employees just aren’t happy with their companies.
“Employee dissatisfaction [in Cannabis] is also a growing concern, because busy employers are often too consumed with regulatory compliance and scouring job boards to fully engage, train, and support their new employees,” reports Epay Systems.
To be fair, cannabis businesses aren’t entirely at fault for the untraditional and sometimes off-putting ways they do business. For one, the industry started on the black market, and, due to persisting stigma and Federal financial regulations, cannabis companies can’t bank with traditional institutions, forcing some companies to find illegal payroll workarounds—like under the table cash payments or product trades. Until quite recently, these financial regulations also impacted a cannabis business’ ability to offer retirement benefits. To set the record straight, offering cannabis retirement benefits is 100% legal under the Internal Revenue Service’s code. In fact, benefits are already being offered by industry leaders like Tilray and Aurora Cannabis. And, it’s no coincidence these companies are industry leaders—benefits packages have primed these companies for better retention, which Forbes reports is correlated with better business performance and higher profit margins.
In the end, offering benefits to cannabis employees isn’t just a good business practice—it can mean the difference between surviving and thriving in this burgeoning industry. Retirement benefits can help you attract and retain top-level talent, saving you the exorbitant costs of hiring and preventing the negative impact on operations that turnover can have, meanwhile galvanizing your cannabis company for innovation, growth, and profits.
Recently, due to retirement plan mandates, it is no longer an option for cannabis employers to not offer a retirement plan. Because of this, it is essential that you choose the plan that will grow and adapt with your business needs.
For more tips and information regarding retirement plans, contact us.
