How to Handle the Top 3 Cannabis HR Compliance Hurdles

Overcome obstacles with sound hiring and onboarding practices.

Cannabis HR Compliance Puzzle
Cannabis HR Compliance Puzzle

Despite widespread legalization and social acceptance of marijuana, the cannabis industry continues to face some of the toughest compliance and business obstacles out there. Hiring, onboarding, and even employee retention struggles often are the result of conditions employers can’t control. With the cannabis market rising to a $57-billion industry by 2027, challenges are going to increase as workforce and output expand.

Managing a smooth hiring and onboarding process while meeting industry compliance requirements is especially difficult due to conflicting federal and state laws. Here are the top three problems and their solutions.

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1) Overcoming hiring hurdles

Hiring is hard. Regardless whether your business is hiring for cultivation, production, or retail, a host of details must be gotten right. From using the correct words in job descriptions to sorting through and interviewing candidates, each critical piece holds the potential to lower turnover and maximize productivity. But be warned: Hiring is often a cannabis business’s greatest weakness. 

In an increasingly competitive landscape, you need to make sure your business isn’t losing potential employees due to an outdated hiring process. According to Glassdoor, job openings in the cannabis industry rose 76 percent from 2017 to 2018. Candidates are far more likely to say yes to a company’s offer if they’ve experienced a positive interview process.

Here are a few ways to keep potential candidates informed and engaged while maintaining compliance: 

Lead with the correct expectations. Take care to include all aspects of a given position, especially concerning specific verifications or qualifications required to fulfill each role. When describing ideal candidates, avoid words that could be considered discriminatory. Most of all, be transparent about the process you’ll follow once a candidate is considered. This helps avoid setting your potential candidates up to fail.

Hire a human resources specialist. Recruiting, posting jobs, managing leads, and hiring requires a great deal of effort and attention. Don’t make the mistake of thinking it’s too expensive to hire a full-time HR specialist. HR pros should know how to interpret compliance laws to avoid lawsuits from employees, suppliers, and business partners. The money and headaches saved by entrusting compliance to an expert more than pays for itself.

Automate your process. Workforce management software allows you to integrate with leading job boards, screen applicants, and track potential employees throughout the hiring process with minimal effort. With so many types of information to manage, using modern solutions can ensure an operation is free of missteps and inconsistencies in a fraction of the time required to do everything manual operations would require.

2) Avoiding I-9 compliance pitfalls

The I-9, or Employee Eligibility Form, is the federal form filled out by both employers and employees to verify their identity and eligibility to work in the United States. The form was created by Citizenship and Immigration Services. For many, this is by far the most difficult part of a compliant hiring and onboarding process.

Providing documentation is not always straightforward. If someone was not born in the U.S. but is legally able to work here, they are not to be denied employment due to lack of citizenship. The Immigration Reform and Control Act prohibits any form of discrimination based on citizenship or national origin where legal permission and representation have been obtained.

The best way to navigate this step in the hiring process is to:

Use E-Verify. E-verification allows employers to verify the identify and employment eligibility of new hires electronically. The system compares information provided by employees on the I-9 with records maintained by the Social Security Administration and the Department of Homeland Security. 

Operate in a timely matter. One of the most common errors employers make is not completing the I-9 form within three business days of the employee’s first day on the job. Make sure to register new employees with the state to avoid accumulating penalties.

Be transparent with potential employees from day one. The last thing you want to do is select a perfect candidate, only to face complications clearing them with the federal government. The more transparent you are from the start about what verifications are needed, the more likely you are to avoid complications.

3) Achieving wage compliance on every level

Wage compliance may end with payroll, but it starts with classification. If you are classifying employees as contractors when they’re actually full- or part-time workers, you risk not only internal conflicts, but also legal penalties, costly lawsuits, and incorrect tax filings as well. You need to identify, from the get-go, what types of workers are required to fulfill each position and what federal and state compliance dictates for each type. 

Classify your employees correctly. You may be hiring seasonal contractors as part of your harvesting or trimmers force come fall, but most marijuana businesses hire primarily full-time or part-time employees. The rules for these two employee types (contract and non-contract) are typically mutually exclusive, so be clear and consistent with each type of employment.

Know your city- and state-level specifications. Don’t assume federal compliance is enough. Things like minimum wage and number of employees affect various types of compliance depending on the rules and regulations within your city, county, and state and the size of your business. Review elements such as shift differentials for hires taking on multiple roles and overtime regulations to keep one onboarding mistake from costing you down the road.

The cannabis industry is evolving rapidly, and for many new and growing businesses, there is still much to learn. By developing sound hiring and onboarding practices and maintaining strict labor compliance, you can overcome common challenges and position your business for maximum growth. 


Michelle-Lantner-Smith-Epay-Systems-headshot-mg-magazine

Michelle Lanter Smith is chief marketing officer at EPAY Systems, where she oversees the company’s go-to-market strategy, customer success, and technical support operations. She possesses more than twenty years of leadership experience with high-tech and service-driven firms. Smith holds a Master of Business Administration from Northwestern University’s Kellogg School of Management.

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