5 Key Questions to Ask When Choosing a Cannabis Payroll Provider

There are unique challenges that cannabis or cannabis-adjacent companies face when evaluating payroll solutions. 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.

Brett Ungashick
OutSail HRIS Advisor
July 4, 2023
user comparing HRIS systems

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.

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

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.

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.

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.

FAQs
How long has your company been processing payroll in the cannabis industry?

Understanding the vendor's experience and commitment to the cannabis industry helps gauge their long-term dedication and reliability as a partner.

What is the nature of your banking relationships?

Inquiring about the vendor's banking relationships is crucial due to federal anti-money laundering laws affecting cannabis-related transactions. Ensure the vendor has secure banking partnerships capable of handling payroll transactions in multiple states.

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

Seek assurance that the vendor will not unexpectedly terminate services due to compliance concerns, leaving your business in a vulnerable position. Clarify expectations regarding ongoing support and commitment.

What are your workforce management capabilities?

Given the diverse nature of cannabis industry workforces, inquire about the vendor's capabilities in managing both white-collar and hourly workers. Assess features like scheduling, time-off management, and shift swapping to ensure they meet your company's needs.

How will you stay ahead of new legislation changes?

Given the dynamic legal landscape of the cannabis industry, inquire about the vendor's strategies for staying informed about legislative changes and proactively communicating updates to clients. Ensure they have dedicated teams monitoring regulatory developments and implementing necessary adjustments.

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Meet the Author

Brett Ungashick
OutSail HRIS Advisor
Brett Ungashick, the friendly face behind OutSail, started his career at LinkedIn, selling HR software. This experience sparked an idea, leading him to create OutSail in 2018. Based in Denver, OutSail simplifies the HR software selection process, and Brett's hands-on approach has already helped over 1,000 companies, including SalesLoft, Hudl and DoorDash. He's a go-to guy for all things HR Tech, supporting companies in every industry and across 20+ countries. When he's not demystifying HR tech, you'll find Brett enjoying a round of golf or skiing down Colorado's slopes, always happy to chat about work or play.

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