Spend time carefully vetting each new employee to reduce employee turnover costs and minimize your risk of fraud.
- Put your network to work to help you find someone who comes highly recommended and has a good reputation.
- Make sure you're registered as a business entity – you will need to provide an EIN for your new hire.
- Assess your company culture to see what selling points will attract top talent into your business.
Speak to one of our experts to learn more about finding and hiring employees in the cannabis market.
As an entrepreneur in the cannabis industry, you’re no stranger to working hard. California’s adult-use cannabis market is complex. Setting up and monitoring your sales, supply chain, and financial controls is no easy feat. It’s important that your first hire is someone you can trust – and someone who can come in and take on the day-to-day management tasks that can take up much of your time.
By one estimate, the average cost of recruiting, hiring and training a new employee is close to $4,000. The cannabis industry already comes with high initial start-up costs, making it even more imperative that your first employee is the right fit. Ask these five questions before hiring your first employee.
1. Where’s the best place to find a first employee?
It might be tempting to post a description on a big jobs site like Monster.com or Indeed and see who shows up. But, according to the Wall Street Journal, referrals from friends, advisers, and industry colleagues are often the most efficient way to find new employees. Especially in the cannabis industry, you’re likely going to get a lot of applicants who aren’t qualified to be part of your business. Weeding through all those resumes and mismatched candidates is going to take too much time, energy, and resources that you can use to otherwise grow your business.
Instead, put your networking to work for you. Go to town hall meetings in your district, attend industry events or conferences, and even try a cannabis staffing agency to help you find qualified candidates. By going the networking route, you can safely assume that candidates have already undergone a certain amount of prescreening – or at least are interested in the job for the right reasons.
2. Is your cannabis company legally ready to bring on a new employee?
Before you hire, take these first steps to make sure you’re compliant with state and federal employment law:
- Register for an EIN*
- Register with your state’s Department of Labor
- Get workers’ compensation insurance (mandatory in most states)
*To register for an EIN number, you will need to become a legal entity first. See our post on types of entities to learn which one is right for you.
Keep in mind when you are hiring that cannabis businesses have to follow state employment law. Many states (like California) have rules regarding what you can and can’t ask a candidate about their criminal background, so review your state’s regulations before starting your hiring process. This site provides a good list of the legal mandates and requirements you must meet before bringing your first employee on board.
3. Can you find someone with the right background for the cannabis industry?
The cannabis industry is unlike any other job. Regulations are complicated, constantly changing, and require a high level of attention to detail. Businesses in this industry are dealing with lots of cash and high-value product. Likewise, in states other than California and Colorado where only medical cannabis is legal, employees will often interact with chronically ill patients. Your first employee must have the right mix of emotional maturity, compassion, and responsibility.
Consider this: cannabis businesses have reported generating $250,000 to $350,000 cash in monthly sales. Bottom line, you need someone you can trust, and usually what that means is someone with training and education specific to the industry. There are various certifications and online courses that help employees become knowledgeable about the cannabis market. You can also ask questions about their previous work that show how they will handle lots of responsibility and personal interaction with employees.
4. Is your company a place someone would want to work?
Many cannabis jobs require technical talent: talent that other industries are also competing for. According to one recruiter, there’s a huge demand in the cannabis industry for chemists, chief operating officers and master growers. These types of skill sets are often transferable to industries considered more “reputable.” Competition is fierce, and in the cannabis industry, there are a few more reputational barriers to overcome than elsewhere in the employment industry.
What can you do to make your offer more attractive? At a minimum, your cannabis business should offer a positive work environment and a decent salary. Decent salary for entry-level employees means at least $15 an hour. For more mid-level workers, that rate goes to $20/hour or $35,000 - $60,000 a year. Think about what kind of flex time, benefits, or career growth you can include to encourage talent to join your business.
5. Are you ready to onboard an employee?
Finding the right person is only half the equation. Once you’ve identified your perfect first employee, you need to get them set up for success. That means having a payroll system, some kind of accounting system accessible to more than one person, and other HR tools and processes. Your first employee will have the triple responsibility of learning the ins and outs of your unique cannabis business, the regulations of your industry, and also the basics of how your company’s operations work. Set them up for success with an employee handbook or training program.
Once you have the answers to these questions, go forth with confidence knowing your first employee is the right fit for your cannabis company. If you have questions about other best business practices, please reach out to Green Growth CPA experts.