Close this search box.

Cannabis Business: How Do Dispensaries Pay Their Employees?


You’re about to open up shop to your new cannabis business, but you’re left with a lingering question you can’t seem to answer, “How do dispensaries pay their employees?” Better yet, how do I pay my employees legally?

Even though the sales of recreational marijuana continues to legalize throughout The United States, there’s still quite a bit of loopholes cannabis business owners have to jump through to ensure they’re operating legally under federal and state regulations.

Most of the challenges cannabis business owners face is how they’re able to pay their employees, or as we like to call them, budtenders. The obstacles that many cannabis businesses are faced with can seriously set back the operations of that business because many reputable or well-known U.S. banks refuse to do business with them.

Is it better to risk it and pay my employees illegally?

The difficulties of cannabis banking typically leave a business owner feeling helpless and uncertain of where to turn next. “Is it better to risk it and pay my employees illegally?” “Do I try to find a reputable cannabis banking institution, and hope they know what they’re doing?

As a cannabis business owner, it probably seems defeating to feel like the only reason you can’t begin sales is because of banking issues, which are really out of your control. However, you’re in luck, and you’ve come to the right place.

Follow along as we explore the different ways in which dispensaries pay their employees, the challenges that come along with cannabis payroll and banking, and the best tips for new dispensaries.

Payroll Within The Cannabis Business: The Wrong Ways To Pay Your Employees

Like we mentioned above, it can be challenging to find a credible and knowledgeable bank to assist you with the payroll needs of your cannabis business. These difficulties make it easier for business owners to go their own way— by paying their employees illegally.

Some cannabis businesses pay their employees by cash or using a product trade-out or bartering system, both of which are frowned upon.

Another way many cannabis businesses pay their employees is by paying them as a 1099 employee, or a more common term you might know, “under-the-table.” Paying employees this way does not pull any state or federal taxes from their paycheck, which creates a whole other problem for these business owners.

A huge issue of paying your employees is the implications that follow when you don’t follow the tax laws of the state and country you operate in. When it comes to labor laws, the federal government mandates that taxes be pulled from every working citizen.

If you’re illegally operating by paying your employees as 1099 employees, and the labor board happens to walk into your store and see that your employees are being paid improperly, you could face substantial fines.

Not only could these fines completely wipe you out financially, but you could be ordered to pay back all the taxes you’ve missed, or owed by each of your employees. Many employers don’t realize that even if they think they’re flying under the radar, all it takes is one small instance.

For example, any one of your employees could potentially come after you and your business for unemployment money they’re unable to collect from the government. If employment taxes have never been paid, how is that employee able to receive their unemployment?

You’ve probably heard the quote, “Everything is ok, until it’s not,” and it couldn’t be truer in a situation like this. Most businesses don’t understand the liability that comes with hiring employees, which is why it’s so important to find a bank who specializes in cannabis and industry banking.

To learn more about cannabis banking issues, check out an article we recently published, Cannabis Business Payroll Provider Issues – Best Next Steps.

Finding the Right Solution For Your Cannabis Business

Now that you’re more up to speed with the wrong ways to pay your employees, let’s talk about the importance of paying your employees the right way, and the best ways to do so.

It’s critical you find a cannabis banking solutions partner who takes all the guesswork out of your payroll and HR policies and regulations. You need a team of professionals that allow you to have banking solutions that are federally insured, who understand cannabis banking issues.

An important factor that makes a cannabis banking partner great for your business is one that has no regulations on how much cash you’re able to deposit, whether that be $400 or $40,000. Many banks say they support the cannabis industry, but have strict regulations on how much you’re able to deposit at once.

You might have overlooked that we’ve been referring to a cannabis banking solutions company as your “partner,” which is a pretty great thing. A great cannabis banking partner is there to do the hard work for you when it comes to payroll, HR, workers compensation, safety, benefits, administration, and compliance. All of their efforts allow you to focus on what’s most important: growing your business. It’s a true partnership.

Speaking of solutions, Cannabis Dispensary recently published an article you might find interesting, 9 Tips for Maximizing the Value of Your Cannabis Company.

Best Tips For A New Cannabis Business Owner

If you’ve recently opened up a cannabis store, or close to it, there are a few tips you should know that helps make the cannabis banking process a little easier.

1. Find a trusted HR partner. It’s necessary to do your research and find a well-qualified cannabis banking and HR partner that is a veteran in the business or industry. It doesn’t always pay off to partner with the newest and shiniest payroll company. Look for an actual industry expert.

2. Learn your local and federal laws. As you know, there’s a lot of loopholes when it comes to cannabis banking and paying your employees, so it’s essential to learn everything you can about the cannabis business laws in the city your operating in. Requirements that you wouldn’t think pertain to your business, typically do. For example, it’s crucial to understand that workers compensation is not an option, it’s the law!

3. Understand taxes for businesses. We would never discredit your knowledge, but it’s critical to know that the taxes and laws for businesses are much different from personal taxes you apply to yourself. Owning and operating a business is a lot different than you might expect, especially a business in the cannabis industry.

There’s a lot that goes into a thriving cannabis company, and a successful banking partnership is just the beginning to achieving that success. As a reminder, you’re in control of who you hire, and the standards you set should always be applied to everyone who works for you. It’s not always about you abiding legally, but your employees should do the same.

To learn more about employee behavior and the best ways to guarantee your needs as a business owner are met, read our article, Correcting Employees’ Bad Habits.

Greenleaf HR is here to educate and inform you on the cannabis banking industry while providing you with the resources your business needs to thrive. Whether you’re a current client or a business owner interested in cannabis banking services, we strive to supply you with the best ways a cannabis banking partner can support your business. To learn more about cannabis banking, HR, or financial services, or about any of the services we provide, reach out to us, here. Let us help you take your company forward, faster.

Table of Contents

Share This Post

Recent Posts
Learn the 7 Biggest Risks of Non-compliance for Cannabis Business Owners
7 Risks of Non-Compliance for Cannabis Business Owners

Highlights:  The U.S. cannabis industry is experiencing explosive growth. But navigating the complex and ever-changing HR regulations can be a minefield. The risks of non-compliance are serious, including lawsuits, fines, and even license revocation. This blog dives into the consequences

Read More »
Learn What Is a Cannabis PEO and Why Your Business Needs One
What Is a Cannabis PEO (And Why Your Business Needs One)

Highlights Companies in the cannabis sector face unique HR challenges. With ever-changing regulations across different states and difficulties with payroll and banking, there are many hurdles to navigate. But fortunately, cannabis PEOs can help. By partnering with a specialized firm,

Read More »