Compete for Cannabis Employees with a Top-Notch Retirement Plan

Employee attraction and retention is a hot button issue in every industry. The cannabis industry is no different. As markets and businesses mature, attracting and retaining talent is becoming more competitive. One incentive a company can offer is a retirement plan. If a prospective employee is considering companies with similar pay, health benefits, and bonus structures, a top-notch retirement plan could make the difference between accepting and rejecting your job offer. Still, given the unique challenges cannabis and cannabis-related entities face relative to banking and regulatory laws, getting the ball rolling on a retirement plan can be difficult. Here are some tips to help you get started:

Consult with your financial institution. Chances are your financial institution representative will be able to establish a meeting with potential third-party administrators, advisors, and investment managers who are familiar with the cannabis space.

Be upfront with third parties about the structure of your business. If there is an entity structure in place where, for example, plant-touching employees are employed by a different company that provides the retirement plan, it is best to share that information with all parties. You don’t want to be in a position where an advisor needs to back out because of your relationship with cannabis.

Ask advisors questions. Being honest and upfront in the beginning of the process should be sufficient to explain the challenges you face as a cannabis business. However, ask the advisors if they have experience with cannabis-related companies. Request and review a copy of their most recent SOC1 report.

Consult with an ERISA attorney. Retirement plans are beneficial for companies and employees if operated efficiently. The cannabis industry, medical or recreational, is scrutinized enough; you don’t want compliance issues with the Department of Labor or the Internal Revenue Service over a retirement plan.

Consult with your CPA. A substantial amount of employee benefit plans are going to have a large number of eligible participants, which may subject your retirement plan to an employee benefit plan audit.

Determine your budget for the plan. You need to know the potential cost of establishing and maintaining the plan to make sure it makes financial sense. Will the employer or the plan be responsible for paying administrative expenses?

Know your legal obligations. An employee benefit plan is a long-term commitment to provide a financially secure retirement to participating employees. Even though you can outsource certain administrative functions of the plan, you are ultimately responsible for plan oversight.

HBK CPAs & Consultants can help you determine whether you need an audit, help prepare you for an audit in the future, and conduct the audit. In addition, HBK is a member of the American Institute of Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center. Our professional staff serving employee benefit engagements uses this affiliation to keep abreast of the latest developments in accounting for employee benefit plans, communicating with AICPA staff and other members on technical benefit issues, and continuing education and technical research in the field.

HBK Cannabis Solutions was among the first CPA firms to specialize in the cannabis industry and we have worked beside entrepreneurs in all industry segments—cultivators, processors, and retailers—from a single facility to multi-location and vertically integrated operations. We can assess your current accounting system, advise, and install accounting that complies with GAAP and IRS rules.

About the Author(s)
Eric T. Grischow is a manager in the Youngstown, Ohio office of HBK CPAs & Consultants and has been with the firm since 2017. He has extensive experience in assurance, compliance, and consulting in cannabis, manufacturing, retail, construction, real estate, and employee benefit plans. His background includes design and implementation of internal controls, budgeting, financial reporting, and cost benefit analysis. You can contact Eric at 239-263-2111 or by email at egrischow@hbkcpa.com.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

RECOMMENDED ARTICLES