Buying Strategies

5 Questions to Ask When Evaluating Cannabis-Payroll Companies

February 15, 2021
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Brett Ungashick
Founder

There are unique challenges that cannabis or cannabis-adjacent companies face when evaluating payroll solutions. The federal restrictions on cannabis have led many leading payroll companies to avoid working with cannabis companies. Finding the right provider in a narrow pool of options can be a challenge for businesses. Here's how you can make the most of your evaluations.

Cannabis and cannabis-adjacent companies have been shut out by many of the large national payroll providers, due to the continued federal restrictions on cannabis.

These restrictions limit the pool of payroll providers that cannabis companies can choose from. Due to that limited pool, companies do not have quite as many vendors who can meet their needs, making it all the more important that buyers run a rigorous buying process.

Blog: The Best Cannabis-Friendly Payroll Software

1.) How long has your company been processing payroll in the cannabis industry?

By and large, the cannabis industry is doing great work and developing a new and legitimate sector of the economy. However, there are many opportunistic companies that only see dollar signs and aren't actually invested in the long-term success of the industry.

By asking about the vendor's history within the cannabis industry and learning about their motivations to get into the cannabis space, you'll have a better understanding of who is in the industry for the right reasons

2.) What is the nature of your banking relationships?

In order to process payroll, payroll companies need to have secure banking relationships that will allow them to move massive amounts of money from your account, into theirs and then into the employee's hands.

The federal anti-money laundering laws have scared many banks from participating in this process and if the banks can't complete transactions than payroll can't be processes.

Asking about the bank that backs your payroll company is a totally legitimate question. You'll want to know how long the bank has been in the space, how they are able to stay above board and their ability to operate in multiple states

Request a free vendor report comparing all of the leading cannabis-friendly payroll providers

3.) How can we be certain that we won't be dropped from your roster?

Anyone who has been in the cannabis space long enough has seen the nightmare scenario:

A software vendor sells you on their solution and says that there are no problems with compliance preventing them from supporting you. Then somewhere along the line, the legal/compliance team finds out about your company using their platform, panics and drops your company.

This leads businesses to be out in the cold having to scramble to find a new partner and processing payroll manually in the meantime.

Make sure the partner you're evaluating isn't going to leave you high and dry.

Work with an OutSail advisor to help run your evaluations and ensure you ask the right questions

4.) What are your workforce management capabilities?

Most cannabis companies have a very diverse workforce. They will often have a combination of white collar office works and field or store workers. Those different employee types often require very different technology solutions.

Most HRIS vendors can manage the salary, white-collar workforce easily, but many vendors struggle to handle the complexity that comes with an hourly workforce.

You'll want to really dig into the payroll provider's capabilities around workforce management, including their scheduling, time-off and shift swapping functionality.

Blog: HRIS Requirements Builder

5.) How will you stay ahead of new legislation changes?

Finally, the legal landscape in the cannabis industry is ever-changing and most HR teams don't have the time to monitor CSPAN to stay up on the latest announcements.

It is imperative that your new partner has a dedicated team that is staying up-to-speed on new changes and is proactively communicating those changes to your organization.

Ask about how they stay ahead of those changes and how suggested changes are communicated to customers.

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Brett Ungashick
Founder
Brett is the founder of OutSail. He spent the early part of his career selling HR software before switching sides and going to work for the people buying the software.

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