The cannabis industry continues to pay competitively. Recruiting statistics show that compensation for most senior, middle, and sub-positions has increased year over year.
There is less evidence of the “insane lack of pay discipline” exhibited by some marijuana companies three or four years ago, said Dan Walter, compensation specialist and management consultant for BlueFire Cannabis in San Rafael, Calif., Of FutureSense, the national Compensation strategy company that provided payroll data for cannabis companies for this report.
“We’re seeing more people getting paid in proportion to their position in the company rather than just being paid for a title or relationship,” he said.
What are the consequences of this compensation development and the upheaval?
Senior and lower-level positions continued to see solid increases in pay, while mid-level positions saw more modest increases in pay – and even some declines.
Compensation rose the most in parts of the cannabis supply chain that saw sales increases – particularly in cultivation and retail. Meanwhile, roles related to manufactured cannabis products saw lukewarm growth.
Older and growing marijuana companies need high-level team members who have experience in scaling businesses.
This talent pool is still relatively small for cannabis companies, but it has grown – especially over the past year when layoffs brought a flurry of experienced people into the job market.
“Cannabis is increasingly becoming a competitive environment. All expanding MSOs (Multistate Operators) are hiring from a similar talent pool. So salaries are definitely going up, ”said Liesl Bernard, CEO of CannabizTeam, a marijuana-focused national recruiting firm headquartered in San Diego.
Walter agreed, adding that smaller cannabis companies should also be willing to pay executives competitively and offer subordinate employees above-average wages.
“You should know that if you want to hire a C-suite officer at your cannabis company and your cannabis company has more than 50 employees, you will likely be paying between $ 150,000 and $ 200,000 a year,” Walter said. “As a startup, you need to know that if you hire people to work in your stores, you are likely to pay them $ 15 an hour, no matter what the minimum wage (in your market) or what you think of someone at Taco Bell goes down the street. “
“Putting together a competitive compensation package” is vital for companies to win the industry’s recruitment battles, said Bernard. “More and more companies are recruiting employees with compensation packages that have higher base salaries, equity and a bonus component to attract the right talent.”
While the cannabis industry has been attracting executives from mainstream corporations for a number of years, the trend is accelerating as companies expand. When growing businesses are more complex to manage, they need higher levels of talent which is harder to find, which drives salaries up, compensation experts said.
“In terms of competitive wages, the CEO or other executives of a top cannabis company don’t make as much as the executives of top mainstream companies,” said Walter. “But the specialists of a large cannabis company will earn comparable or higher wages than specialists in other industries.”
According to a report by CannabizTeam, marijuana is “experiencing a second wave of executives … comprised of proven business executives from the CPG (consumer products), biotech, food and beverage, retail, financial services, and pharmaceuticals industries. Demand for this new talent has increased average executive compensation by up to 16% in 2020. “
Bernard said highly sought-after candidates who can claim high compensation include people with a compliance background, retail veterans who have run multiple businesses, chief financial officers, and lawyers for global corporations.
Bernard noted that there is now a huge difference in the CFO’s pay compared to four or five years ago.
“As MSOs grow, get more funding and move to new states, they need people with experience in public companies. … you need more sophistication. And that’s why they have to increase their salaries, ”she said.
Sales and Salaries
Several factors, independent of the candidate, affect salaries, including the performance of a company’s product lines. In the marijuana industry, observers say, success along the cannabis supply chain could also have an impact.
Marijuana Business Daily found that the average price for smokable cannabis and pre-rolls rose sharply in 2020, while almost all other categories – groceries, infused beverages, vape cartridges, concentrates, and others – saw declines, stayed flat, or increased modestly recorded best.
The compensation data for Denver-based cannabis recruitment company Vangst reflects this trend. According to the company, growing containers increased 5% in 2020 compared to 2019. The top positions – cultivation director and cultivation manager – saw salary increases of 25% and 3%, while salaries for subordinate positions such as trimmers fell or remained unchanged.
Retail salaries rose 3% in 2020 compared to 2019, Vangst reported. Salaries in the extraction sector decreased by 4% in 2020 compared to 2019.
While extraction and manufacturing salaries are lower compared to cultivation and retail salaries, they are expected to rebound as the economy recovers, cannabis companies expand, and consumers buy more expensive, value-added products like groceries and infused beverages said Walter.
As the industry matures and moves into more sophisticated products and scrutinized by regulators, people with a scientific background are becoming a hiring priority again.
“Regulators will force more science to do it,” said Walter. “There are already a few companies out there that say, ‘Hey, this is a competitive differentiator for us.'”
The right talent depends on the right experience, which increasingly means professionals have both mainstream experience and experience in the legal cannabis market. Ideally, this mainstream experience includes tenures with small start-ups and large, established companies.
“We’re getting more requests for cannabis experience,” said Kara Bradford, CEO and founder of Viridian Staffing, a Seattle-based marijuana-focused recruitment agency. She said companies would often say they’d like a CPG executive with at least five years of experience in the food and beverage industry before entering the cannabis room. Additionally, they want the candidate to stay in marijuana for another five years.
“There are some people who can, but you have to pay for them because that’s a limited pool of people who have so much experience on both sides,” said Bradford. “They can absolutely ask for higher salaries.”