A Cannabis Employer's Guide to Helping Employees Secure Their Financial Future (Retirement Edition)

Turning Challenges into Opportunities: How Cannabis Employers Can Champion Employee Retirement Planning

If you’re an employer in the cannabis industry, you're already juggling plenty of challenges—regulatory complexities, high turnover, and market volatility are just a few. But when it comes to offering retirement benefits for your employees, the task can seem even more daunting. Federal restrictions, access to banking, and a young workforce often make it easy to push retirement planning down the list of priorities. But here’s the thing: providing a solid retirement plan can set your business apart in this competitive industry, and it’s an incredible way to show your employees you’re invested in their future.

Let’s dive into how you, as a cannabis employer, can support your team in planning for their financial future, even with the unique obstacles the industry presents.

Retirement Planning: What’s Different for Cannabis Employers?

Retirement planning in the cannabis industry isn’t as straightforward as in other sectors. For one, the industry is still federally illegal, making it tough to access traditional financial services, like offering a 401(k). According to a 2022 National Cannabis Industry Association (NCIA) survey, 60% of cannabis businesses have trouble accessing standard banking services. It’s frustrating, right? This hurdle alone limits what you can offer your team, and it often feels like you’re left with few options.

Moreover, turnover in the cannabis industry is incredibly high. In fact, BDSA reports a 35% turnover rate for the sector in 2023, which is far higher than industries like finance (10-12%) or even healthcare (18-20%) (Bureau of Labor Statistics). High turnover makes it difficult for employees to stay consistent with their savings, but it also means that any benefits you offer—especially retirement—become that much more crucial for retaining your best talent.

There’s also the fact that many of your employees might not be thinking long-term. According to Leafly, over half of cannabis employees are between the ages of 25 and 34, and many are more focused on short-term career goals rather than retirement. This youthful workforce needs guidance to see the importance of saving now, even if retirement feels like a distant goal.

So, What Can You Do as a Cannabis Employer?

Despite these challenges, there are several practical steps you can take to help your employees build a secure retirement. The key is to get creative, stay informed, and think about what works best in the cannabis industry.

1. Offer Flexible Retirement Plans

Even if offering a traditional 401(k) feels out of reach, you have other options. You can set up Solo 401(k)s or Individual Retirement Accounts (IRAs) for your employees, which allow them to start building their retirement savings. For instance, if you run a small dispensary in Colorado and can’t offer a company-sponsored 401(k), your employees can still open an IRA and benefit from tax-deferred growth. The flexibility of these accounts makes them great for the cannabis industry, where employees might move between jobs frequently.

Let’s say you own a cultivation business in Nevada. You can help your employees set up Roth IRAs, which offer tax-free withdrawals in retirement—perfect for younger employees who are likely in a lower tax bracket now than they will be when they retire. Even better, you can work with cannabis-friendly financial institutions, such as Safe Harbor Financial, to help your employees navigate the often-confusing world of banking in this industry.

2. Leverage Employee Stock Ownership Plans (ESOPs)

One way to really hook employees is through Employee Stock Ownership Plans (ESOPs), which let employees own a piece of the company. Imagine you’re running a vertically integrated cannabis company. Offering your senior growers shares in the business not only builds loyalty, but as the company grows—or even goes public—those shares could become a significant part of their retirement savings. ESOPs are an excellent way to align your team’s success with the company’s growth, and they can give employees a sense of ownership and security that’s hard to match with other benefits.

For example, the CEO of Pharmacann has publicly shared how implementing an ESOP has motivated the team and given them more financial security. By directly tying employees' financial futures to the company's success, you encourage them to stay for the long haul.

3. Provide Access to Financial Advisors Who Understand Cannabis

Navigating retirement in the cannabis industry can be tricky, so why not bring in the experts? Partnering with financial advisors who specialize in the cannabis sector is a game-changer. Cannabis businesses face unique challenges, such as the 280E tax code, which limits the deductions they can take. Imagine you own a dispensary in California—working with a cannabis-friendly CPA can help you minimize your tax liabilities and advise employees on how to plan for retirement despite the financial obstacles.

These experts can also educate your employees on the basics of retirement savings. Not every budtender or trimmer is thinking about what they’ll need when they’re 65, but with the right guidance, they’ll understand how starting early can make a huge difference. Whether it's setting up a consultation or hosting financial wellness workshops, this extra support will go a long way in building trust and loyalty.

4. Help Employees Manage Cash Flow with Financial Wellness Programs

It’s no secret that the cannabis industry can have unpredictable cash flow due to market shifts, seasonal demand, and even licensing delays. You can help your employees get ahead of this by offering financial wellness programs that teach them how to budget and manage their income, especially if they’re paid in cash.

Take the example of a dispensary in Oregon that has peak sales in the summer, but much lower income in the winter. Offering employees access to budgeting tools like Mint or YNAB (You Need A Budget) helps them spread out their savings, so they’re consistently setting money aside for retirement, even when business slows down.

5. Stay Informed on Cannabis Legislation and Banking Opportunities

The legal landscape in cannabis is constantly shifting, and this could open new doors for your retirement offerings. Federal legalization would be a game-changer, allowing cannabis companies access to more traditional banking services, including 401(k) plans and employer matching.

Until that happens, you need to stay up-to-date on state regulations and banking opportunities as they evolve. For instance, Safe Harbor Financial and other cannabis-friendly banks have been stepping up to offer retirement plan services in states like Colorado and Washington. Regularly checking in on changes in legislation will ensure you’re ready to take advantage of new benefits as they become available.

Why Retirement Planning Is a Win for Employers, Too

Retirement planning isn’t just a perk for your employees—it’s a strategic move for your business. When you offer comprehensive retirement benefits, you’re telling your team, “I care about your future,” and that goes a long way in building loyalty. High turnover is a massive challenge in the cannabis industry, but with the right retirement plan in place, you give your employees a reason to stay, grow with your company, and feel secure.

Plus, offering retirement benefits can help you stand out when attracting top talent. In such a competitive industry, having a well-structured benefits package is often the deciding factor for candidates choosing between two jobs.

Ready to Help Your Employees Secure Their Future?

Here’s how you can get started:

• Assess Your Options: Talk to a cannabis-friendly financial advisor and explore available retirement plans like IRAs, Solo 401(k)s, or ESOPs. Determine what’s feasible for your business based on your size and resources.
• Educate Your Team: Hold financial literacy workshops or one-on-one consultations to help your employees understand the importance of planning for retirement.
• Adapt and Evolve: Stay updated on cannabis regulations and adjust your retirement offerings as the legal landscape changes.

Let’s Make It Happen

Want to support your employees in planning for their financial future? Contact us today, and let’s work together to create retirement solutions that demonstrate your commitment to their well-being. Paragon offers robust retirement planning options through our trusted partnerships, providing tailored solutions that align with your employees' specific needs. By offering these comprehensive plans, you’ll not only foster loyalty and improve employee satisfaction but also enhance retention rates and attract top talent. Investing in your people’s financial future is a powerful way to show you care, while also securing the future success of your business.