When we think of startup industries, we often look to emerging sectors like psychedelics, climate tech, Web3, AI, and health tech —but few have moved as quickly or disrupted as widely as cannabis.
In a young startup, there’s often not enough funding to launch a new company with all the standard departments of a company. Most companies at least need finance, marketing, sales, operations, and human resources, and some companies may have in-house or may need to turn to support for legal services, product development, research and development, IT, and administration.
Operations, sales, and finance are often the first departments set up. And human resources is often the last on the list. While it makes sense for human resources to fall behind departments like operations and sales, it’s such an essential piece of a company for scaling efficiently and effectively.
The importance of HR in cannabis
Additionally, it’s critical to keep in mind that the cannabis workforce is mostly hourly workers across retail and production. This means that state and hour laws present a huge challenge for start-up businesses employing hourly workers, and unions are actively organizing cannabis facilities. Because of this, effective HR policies and leadership training are absolutely essential.
The cannabis industry presents an opportunity to unlock a culture where purpose equals productivity. Experienced HR leaders can assist in the compliance-oriented aspects of HR while also leading cultural initiatives like leadership training and retention programs to unlock this potential.
If you’re at a cannabis company that doesn’t have an HR department yet, but you know it’s time to hire key positions or a team, this may be a critical time to have a conversation about the need for HR. Employees may quite possibly recognize the need for HR before leaders, and leaders often wait as long as they can to invest in HR because they may not realize the wisdom of an HR investment.
These 7 points will help you further understand the benefits of HR and start conversations about investing in an HR department at your company.
1 HR as a strategic partner
HR sometimes gets downplayed as an administrative function, but it plays a much more strategic role in driving company growth than many people realize. Human Resources departments help shape organizational culture, attract top talent, and improve employee engagement. HR directly influences a company’s success and long-term goals. HR professionals should be included in key business decisions to help align HR goals with company objectives.
Why it matters in cannabis
There’s a need for a strong and agile workforce to help navigate complex challenges. Having a designated HR team ensures your company can effectively scale while sustaining a competitive edge in cannabis.
Even with an HR team. Finding the right people who both help maintain a competitive edge and fit the company culture can be hard. This is FlowerHire’s specialty. Reach out to an expert cannabis recruiter to strategically build your team.
How to bring it up
Use language that emphasizes HR’s role in driving company growth. Framing it as a valuable asset by linking it to business outcomes and improved performance. You can say something like, “HR is a key player in our business strategy — it directly impacts talent acquisition, organizational culture, and employee engagement, which are all critical for our long-term success.”
2 Navigating compliance in a regulated industry
HR helps ensure the company meets all legal requirements, reducing the risks of fines or legal issues in every aspect of the business, from hiring practices to employee benefits. An HR department can help implement a compliance framework that includes regular audits, employee training on regulations, and a system for tracking changes in laws. Consider HR tools and technologies that help monitor and enforce compliance, support HR functions, and train the workforce:
- Paragon – HR and payroll solutions for the cannabis industry
- engin – AI recruiting platform to source, screen + hire
- Green Flower – workforce training programs
- Würk – HR platform offering payroll, compliance, scheduling, and workforce analytics
- KayaPush – payroll, time tracking, and scheduling tools that integrate with cannabis POS systems; features like joint employer overtime support and 280E reporting
- Bamboo – all-in-one cannabis software platform designed to keep businesses compliant, efficient, and profitable; integrates with state traceability systems like Metrc and BioTrack .
- UZIO – An HRIS platform that offers payroll processing, benefits management, and time tracking, customized to the unique needs of the cannabis industry. UZIO aims to simplify HR processes and ensure compliance
- PNI•HCM – Provides stress-free, reliable payroll and HR software and services; platform includes features like MED Badge compliance tracking and automatic tax compliance reporting
Why it matters in cannabis
In such a highly regulated industry, non-compliance can lead to severe financial and reputational consequences. HR plays a key role in adhering to both industry-specific regulations and federal and state laws.
How to do it
If you’re bringing up the potential risks of not having HR, highlight the potential consequences and position HR as investing in safeguards and protection. You may say something like, “Given rapidly changing cannabis regulations, HR would help ensure we remain fully compliant. If we fail to meet regulations, the legal risks and financial penalties could significantly impact our bottom line.”
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3 Employee well-being and retention
Employees feeling valued and supported is critical to having a successful company. Companies that promote mental health, work-life balance, and career development have less turnover and increased job satisfaction. HR departments frequently create or facilitate low- or no-cost wellness programs and flexible work schedules and help define and provide career development opportunities. Of course, it’s important to get feedback from employees to see what they would actually find to be of value.
Why it matters in cannabis
Employee retention is vital in the cannabis industry. High turnover rates are far too common, and there’s often a shortage of qualified talent. In an industry that relies heavily on maintaining a competitive edge, ensuring you retain your employees is extra important.
How to do it
When you bring up this conversation, tie employee retention to company performance, highlight HR’s impact on profitability. You can say something like, “Maintaining a competitive edge is always a priority. To further stand out, we should prioritize employee well-being to keep our employees engaged, more productive, and more likely to stay and be committed to our company goals.”
4 Data-driven decision making
No one wants to waste time coming up with new policies that don’t work… An HR department, can analyze and leverage data to measure the effectiveness of policies and practices. Informed decisions can be made by using HR analytics tools to track employee engagement, retention, and performance and provide insights for the future.
Why it matters in cannabis
As markets shift and the industry evolves, data-driven HR decisions can help identify trends to make proactive adjustments within the organization to stay competitive.
How to do it
Bring up the idea that HR is not just about managing people but about making data-backed decisions that drive results. You can say something like, “We can ensure our employees remain, since they are a core asset, by gaining deeper insights into employee engagement, turnover trends, and performance metrics. By utilizing HR data analytics tools, we can refine our strategy to most effectively align with business objectives.”
5 Inclusion efforts
Even as we have all recently observed some major companies shifting away from inclusion efforts, the FlowerHire team is united in our commitment to addressing the undeniable injustices that have shaped the cannabis industry and destroyed the lives of countless people. Even a cursory disregard of inclusion efforts ignores the history of the plant, and the industry. This is not reflective of any political agenda, but in cannabis, and in particular in ‘human’ resources, we stand beside solid business data that confirms that inclusion gives a competitive advantage and diverse teams are smarter.
In considering how your company might prioritize inclusion efforts, HR is the department at the forefront of implementing these initiatives.
Why it matters in cannabis
In cannabis, sometimes the best person for the job may be the person with the least on-paper experience. Persons who have experience in the unregulated market may have more applicable skills to the role than a person who has a stronger resume. The cannabis industry is rich with diverse cultures, and these cultural dynamics can play a huge part in what makes cannabis companies successful.
In the cannabis industry, a diverse team helps a cannabis business meet its objectives through broader perspectives, stronger community trust, better problem-solving, and improved innovation.
How to do it
You can say something like, “Building an inclusive team isn’t just about checking a box. It’s about creating a team that better understands its customers, is more innovative, and is authentic to the history of the industry and the plant.” Cannabis HR professionals can strengthen team performance and workplace culture by:
- Offering skills-based training
- Creating mentorship opportunities
- Setting clear and consistent workplace policies
- Reducing bias in hiring
- Ensuring fair pay practices
- Encouraging employee-led groups
- Tracking engagement metrics
- Recognizing diverse perspectives
- Making the workplace more accessible to everyone.
6 Investing in employee development
People are the most valuable asset in any business, but this is critically so in the cannabis industry. People are the most efficient way to grow your business. But only if you hire the right people and invest in their development. Employee development leads to higher productivity, job satisfaction, and long-term retention.
An HR department will find and implement ways to provide training and development to foster internal mobility. Employee development is foundational to growth, retention, and long-term success
Why it matters in cannabis
Since the cannabis industry tends to have a high turnover rate, and the markets are ever-changing, it is especially critical for cannabis companies to retain their employees and develop them for improved internal mobility and competency. Learn more about the benefits of internal mobility.
How to do it
Start the conversation by focusing on how employee development can drive company growth. You might consider saying something like, “Investing in employee development will help make our workforce a valuable asset that increases performance and productivity. We should consider workshops, certifications, and mentorship programs.”
7 HR’s role in organizational change
HR plays a vital role in guiding companies through organizational change due to mergers, expansions, and business strategy shifts. When there is a big shift, changes need to be communicated effectively, employees need to feel supported, and new expectations need to be clear.
Why it matters in cannabis
The cannabis industry also experiences merger and acquisition (M&A) activity. With regular shifts in regulation, companies need to reorganize and adapt quickly, and HR helps with these transitions and keeps employees engaged and aligned with the company vision.
How to do it
When bringing this up to leadership, you may say something like, “As we go through changes, whether it be expansion, restructuring, or regulatory shifts, HR can help make these transitions as seamless and stable as possible. Having a dedicated department will help the company stay agile and cohesive.
HR isn’t just a back-office function —it’s a strategic driver of growth, compliance, culture, and employee success, especially in an industry as dynamic as cannabis. Whether building a new HR department or expanding an existing one, early investment in human resources sets a company up for long-term resilience and competitive advantage.