The U.S. marijuana industry may soon outpace manufacturing when it comes to American jobs — and that's with it being legal in only a little over half of U.S. states
As the budding (sorry, I had to) industry emerges from its shadier past, marijuana company managers are left to wrangle an untamed compliance wilderness where the rules may be as young, or even younger, than the companies themselves.
The added challenge: What may have once been informal must now be brought into complete, documented (and yes, likely boring) formality — but that gives HR leaders a chance they may not have had since the birth of Silicon Valley.
What happens when HR gets to be at the forefront of the forming of a new industry?
The compliance burden is real — and huge
The nascent industry was under fire late last year for a spate of sex abuse allegations at quasi-legal marijuana companies. As usual in these sorts of claims, extremely poor management is partly to blame. But in the marijuana industry, part of that problem may be due to companies being overwhelmed — and frankly, a little afraid — of their compliance burden.
In the marijuana industry, there are no overarching federal guidelines (since it is, obviously, still illegal), meaning compliance is completely on a state-by-state basis. Many of the employee guidelines are under state mandates. Colorado, for example, has a marijuana enforcement division that tracks everything from how much product is grown and sold to how many employees are in the industry.
"What's challenging for business owners is that many are fearful around regulations of product and selling that," Keegan Peterson, CEO and Founder of Wurk, told HR Dive. "Many overlook paying taxes correctly, handling employees correctly … and it can have even bigger consequences for the company."
Not only is compliance a different game in every locale, but it tends to be intensely monitored. That makes companies antsy — and forces them to rely on smart HR leaders in a way other industries (even comparably young ones like mobile app startups) don’t.
"HR leaders in these orgs are very strong because of how much compliance is required," Peterson said. Many states have badging systems for employees or require background checks. Accounting and tax issues can get in the way of employee compensation, too, due to the rules in place over expenses business owners are allowed to claim. Job descriptions have to be accurately worded to ensure employees can even be paid.
The power of HR and benefits is strong now
A dangerous combination is at work: Many marijuana company founders are first-time business owners facing an unprecedented amount of regulation. Despite demands for reporting, these founders may not have handbooks, harassment reporting procedures or even proper ways to pay overtime in place.
"All it takes is one bad manager," Peterson said.
The industry has high turnover, but larger companies are beginning to fight churn by improving their benefits. Retention is more often considered a business imperative, so employee management strategies are changing.
"What is interesting is the opportunity for HR to create a role in a new industry," Peterson said. In other industries, HR is fighting decades of structure and policy to train employers to see employees as assets that need to be treated in a certain way.
"But right now, we are creating it," he continued. "HR should be a major part of the discussion to how this industry will look and act. There's a real opportunity to set this up as something we want to see as HR professionals."
Proper HR channels help marijuana companies take advantage of the deep well of knowledge that employees often have, on top of protecting the business from compliance threats.
It goes to show what can be gained for having human resources at the forefront of the business. Putting HR first at the very beginning can help companies prevent costly compliance errors or harassment horror stories and ensure an organization starts out on solid footing.
If such practices scale throughout the industry, marijuana could — against the odds — become a model industry for how to handle human capital. That's something the tech industry could likely take a few pointers from, recent news considered.