Growth rarely comes without growing pains. For many cannabis enterprises, a major obstacle is finding — and keeping — employees. Employer-sponsored benefits can make a difference.
The cannabis industry is on a high-speed growth train
Fortune Business Insights projects the cannabis market size to grow from about $28 billion in 2021 to nearly $200 billion in 2028. That growth rate suggests anyone in the game will be successful. However, the cannabis industry can no longer rely on its coolness factor to attract and retain talent.
Headset, a cannabis data analytics firm, reported almost 60% percent of entry-level cannabis employees leave within their first two months. If you’re dealing with high turnover, you’re not alone, and it’s expensive. The Society for Human Resource Management (SHRM) estimates bringing a new employee on board costs between six and nine months of the employee’s salary.
The intangible costs are even greater. The departed employee’s workload falls to remaining employees. Those “left behind” can experience low morale, which can lead to more departures. Retail cannabis companies face the potential loss of customers and bad reviews if valued budtenders quit.
The importance of benefits for cannabis employees
2023 is shaping up to be a hard year for cannabis companies since investment capital is scarce. There’s an urgency to grab market share while closely managing costs. It’s important to realize that taking care of employees is essential to survival, not just the bottom line.
To stay competitive, cannabis companies are now viewing employee benefits as a toolkit to help attract and retain employees. Health insurance can play a significant role in leveling the talent war playing field. Of note, SHRM’s 2022 employee benefits survey found healthcare ranked the #1 most important benefit to offer employees. Other benefits like paid leave, mental health and wellness, and flexible work schedules are also benefits employees appreciate and even expect from their employers.
You may be thinking, “How can I do that? I’m not in an industry that gets tax breaks or healthcare credits, and I’m running on thin margins.”
It helps to look at employee benefits as a critical investment, not as a cost, for a couple of reasons. By providing a competitive health insurance benefit, employees have access to healthcare when they need it. Another way to look at it: Is the cost of healthcare and other employee-desired benefits more than the cost of losing talent you brought in for a reason?
Four steps to build a robust benefits program
1. Start with HR talent and a benefits advisor.
The first investment to make, if you haven’t already, is to hire an experienced human resources manager. Look for an individual who understands how to build a Total Rewards program. They will need to know how to communicate the value of benefits to employees. You’ll benefit from someone experienced in working with management teams to balance cost and employee experience.
Often, the HR manager will work closely with a benefits broker, who serves as an expert advisor to help them build a tailored employee benefits program.
2. Understand what benefits are top of mind for employees.
Your HR leader and benefits broker can help you get a sense of the current employee benefits landscape and employee expectations. Total Rewards packages can include compensation, wellness programs, retirement plans, paid time off, and more. What’s valuable — and seen as “must-haves” — to your specific employees will differ based on your location, employee demographics, and other factors.
3. Consider your employee demographics to meet the needs of the majority.
Cannabis employees typically are under the age of 35, a demographic that is statistically healthy. A high-deductible health plan with a lower premium may make sense for them and for you as the employer. But there are many reasons why employees may have broader health insurance benefits needs. Those starting to build families will look for family plans with a lower deductible. Meanwhile, those with ongoing health conditions will look for plans with more expansive coverage.
If you have a younger population, they will also value perks and benefits that match their current life stage. Benefits that are increasingly common in other industries include commuter reimbursements, mental health resources, and pet insurance. Even inexpensive team outings that serve to build connections can go a long way to communicating you value your employees.
4. Look for ways to manage costs.
Every organization has unique budgetary needs. Keep in mind that along with needing to prioritize employee wellbeing coming out of the pandemic, employers cannot shift costs to their employees as they may have done in pre-pandemic years. This is where the guidance of the benefits broker / consultant makes most sense to help navigate the trade-offs.
Even smaller companies have choices for managing costs. They can partner with a Professional Employer Organization (PEO). These organizations group your company with the other PEO’s co-employees to form one large group with “buying power.” The PEO can offer employers and employees access to health coverage and rates on par with that of a large corporation.
Creating a winning team
As you know, winning in the cannabis industry requires patience, perseverance, and creativity.
It also requires a dedicated team.
With a thoughtful approach, you can elevate your employee benefits program from a check-the-box exercise to a strong retention tool. You’ve got a great business strategy and management team — now you’ll have the tenured, engaged employees to help drive your growth.
Want to learn more?
Find Alex on LinkedIn, here.
Connect with the Risk Strategies Cannabis team at RSCcannabis@risk-strategies.com.
About the author
Alex Buschmann and his team advise cannabis businesses of all shapes and sizes on their risk management programs and best practices for their employees. He is on a mission to raise awareness about the link between employee benefits, happy employees, and industry success.
