Despite the industry’s relatively short history, cannabis cultivators and dispensaries are already facing many of the same workplace challenges present in older, more established industries.
Major budtender retention issues, as well as the emergence of unions and new employee regulations, has forced many businesses to address the realities of navigating employment in a developing industry. Both the short- and long-term success of these businesses will be determined ultimately by how they respond and adapt to these new changes.
The labor crisis
The cannabis retail sector continues to grapple with a significant problem: high turnover rates among budtenders. According to a report from Headset, a cannabis-based data analytics company, 55% of budtenders in both the US and Canada had left their job within 12 months of starting.
Budtenders serve as the primary source of consumer education and play a crucial role in promoting marijuana brands and products. Cultivators and brands allocate a considerable portion of their budget to send sales representatives to stores to educate budtenders about their offerings, only to face the disappointment of seeing them leave shortly afterward.
For dispensaries, the costs can be more direct in the form of hiring expenses, training time, and the opportunity cost of not having a skilled employee in place.
Improving employee incentives
Part of the solution lies in legitimizing the employee experience within the cannabis sector. Many marijuana employees still receive cash payments, and modern benefits such as online pay stubs and 401(k) plans are not commonly offered.
While some businesses provide these services to cannabis companies, they are not as prevalent as in mainstream industries. These benefits often come at a high cost, and are considerably more expensive than what traditional businesses would pay for the same services.
While some companies in the cannabis space plan for high turnover as part of their business strategy, commonly known as “come, contribute, leave,” this approach may ultimately harm business owners in the long term. Jim Finkelstein, CEO of the compensation advisory firm FutureSense, suggests that a “come, contribute, and stay” approach may be a more effective strategy, as it reduces the costs associated with turnover.
Workers’ rights
Cannabis businesses need to be attentive to the emergence of new state and local laws aimed at protecting workers in the industry. Following the example set by Seattle, where three ordinances were signed into law in 2022 to promote equity in the cannabis sector, other jurisdictions may adopt similar measures.
The first ordinance signifies the city’s commitment to supporting cannabis workers and communities that have been disproportionately impacted by the federal War on Drugs. The second ordinance aims to advance equity in ownership by implementing social equity criteria for obtaining cannabis business licenses. The third ordinance establishes specific regulations concerning the workforce when a cannabis business undergoes a change in ownership or substantial transfer of assets.
At both the state and local levels, laws may encompass industry-specific regulations or cover employers across various sectors. In California, for instance, Cal/OSHA explicitly states that certain occupational safety and health regulations apply to workplaces in the cannabis industry. According to Cal/OSHA, all employers in the cannabis industry, including those involved in cultivation, manufacturing, distribution, sales, and testing of cannabis products, are required to take necessary measures to safeguard their employees from any health and safety hazards associated with their work.
It should be noted that laws and regulations can differ significantly among jurisdictions, making it crucial for cannabis businesses to familiarize themselves with the workplace rules and regulations relevant to the locations in which they operate.
Unionization efforts
With the cannabis industry experiencing rapid growth, labor unions view this expansion as an opportunity to expand their membership. This development raises various labor law considerations, including the ability of states to promote unionization while federal labor laws hold supremacy.
Given these circumstances, it’s essential for cannabis businesses to have a comprehensive plan in place to navigate and proactively address labor relations challenges as they arise. As more states legalize medical and recreational cannabis, several states are now mandating that cannabis employers establish a “labor peace agreement” (LPA) with a union as a requirement to obtain or maintain a license for cultivating, manufacturing, or dispensing cannabis products.
According to LaQuita Honeysucker, Director of Civil Rights and Community Engagement at UFCW, unionization doesn’t just benefit the employees, but the business owners as well. Union contracts offer some stability to businesses in the form of built-in pay increases, as well as national standards for budtender training, customer reference materials, cannabis extraction methods, and cannabis flower handling.
Learn more
Interesting in learning more about what’s new in the cannabis industry? Check out our white paper—”Top 5 Cannabis Trends for 2023.”
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