Payroll Systems » Payroll for the Cannabis Industry

Payroll for the Cannabis Industry

Legal cannabis may be among the fastest-growing industries in the United States. Medical marijuana is presently legal in 35 states, including Washington, D.C. Adult-use cannabis (sometimes called “recreational marijuana”) is legal in 16 states, including D.C. However, regulatory uncertainty directly influences the availability of financial services. In fact, Arizona, New Jersey, Montana, and South Dakota voters approved recreational cannabis, and South Dakota and Mississippi voters approved medical cannabis in 2020 alone. And in 2021, states like New York and Connecticut have been rumored to be considering adult-use legalization in the near future.

As a cannabis business owner, you must take on the challenge of conducting normal financial operations, despite certain prejudices against the nature of your business. This means that your payroll service provider, along with others working with you (e.g., banks, payment agencies, merchant services, pay cards), also must follow strict guidelines.

The main reason that financial service providers for the cannabis industry exit the business is the lack of a formal compliance program and the lack of knowledge surrounding compliance issues. Adherence to regulations set by the Financial Crimes Enforcement Network (FinCEN), the Department of Treasury, and other regulatory bodies is mandatory and crucial in order to provide financial services to the cannabis industry.

It is possible to have the same level of financial services, for your cannabis business, as other
businesses enjoy. You should expect the following requirements to be compliant and transparent with your payroll and HR technology.

Extra financial due diligence—to ensure compliance with FinCEN and AML/BSA.

Be ready to provide similar documentation on your business as if you were applying for a loan.

Organization documents, ownership structure, operational information.

Documentation of SOP’s and employee training records.

Background checks on financially interested parties and key employees.

On-site visits from a compliance consultant.

Proof of business insurance.

With multiple estimates pegging an anticipated growth to eclipse the $20 billion mark by the early 2020’s, ensuring your compliance now, is more important than ever. When choosing a payroll provider for your cannabis business make sure you understand what their compliance protocols are and how knowledgeable they are with the current and ever-changing regulations in the industry. You will want to ensure their ability to provide any documentation or reports at any given time to keep up with audits and compliance protocols.

Are you ready to thrive with your industry? Are you ready to say good-bye to your payroll worries and partner with a payroll company you can count on year after year? The right payroll and HR solutions, resources to stay compliant, and the support of expert account managers can help your business grow and thrive.