(This story is part of the cover package for the April issue of Marijuana Business Magazine.)
The cannabis industry continues to pay competitively, with statistics from recruiters showing year-over-year compensation increases for most top, mid- and lower-level positions.
There is less evidence of the “insane lack of discipline on pay” that some marijuana companies exhibited three or four years ago, said Dan Walter, a compensation specialist and managing consultant for San Rafael, California-based BlueFire Cannabis by FutureSense, the national compensation strategies firm that provided cannabis business payroll data for this report.
“We’re seeing more people being paid relative to their position in the company as opposed to just being paid for a title or for a relationship,” he said.
• For salary details on nearly 100 cannabis industry positions, a free report from our data partners, BlueFire Cannabis by FutureSense, can be downloaded here.
What are the consequences of this compensation evolution and upheaval?
Executive and lower-level positions continue to enjoy solid compensation increases, while midlevel positions have seen more modest increases in compensation—and even some declines.
Compensation increased the most in parts of the cannabis supply chain that experienced sales increases—most notably in cultivation and retail. Meanwhile, roles related to manufactured cannabis products experienced more tepid growth.
Mature and growing marijuana companies require higher-level team members who have experience scaling businesses.
That talent pool remains relatively small for cannabis companies, but it has been growing—especially over the past year, when layoffs released a flood of experienced individuals into the job market.
“Cannabis is becoming more and more of a competitive space. All the MSOs (multistate operators) that are expanding are hiring from a similar talent pool. So, salaries are definitely increasing,” said Liesl Bernard, CEO of CannabizTeam, a national marijuana-focused recruitment firm headquartered in San Diego.
Walter concurred, adding that smaller cannabis companies should also be prepared to pay executives competitively and offer better-than-average wages to lower-level employees.
“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 people, you’re probably going to pay them somewhere between $150,000 and $200,000 a year,” Walter said. “As a startup, you need to know that if you’re going to hire people working in your stores, you’re probably going to pay them $15 an hour or regardless of what minimum wages are (in your market) or what you think somebody at Taco Bell makes down the street.”
“Putting together a competitive compensation package” is critical for companies to win the recruitment battles shaping up in the industry, Bernard said. “More and more, we’re seeing companies recruit people with compensation packages that have higher base salaries, have some sort of equity and a bonus component to it, in order to attract the right talent.”
While the cannabis industry has been drawing executive talent from mainstream businesses for a few years now, the trend is accelerating as companies expand. When growing businesses become more complex to manage, they require a higher degree of talent that is harder to find, which pushes up salaries, compensation experts explained.
“In terms of competitive pay, the CEO or other executives at a top cannabis company won’t make as much as the executives at top mainstream companies,” Walter said. “But the specialists at a big cannabis company will make comparable pay—or more—compared to specialists in other industries.”
According to a report from CannabizTeam, marijuana is seeing “a second wave of senior management … drawing from proven business leaders from the CPG (consumer packaged goods), biotech, food and beverage, retail, financial services and pharma industries. Demand for this new talent has pushed average executive comp up as much as 16% in 2020.”
Bernard said highly sought-after candidates who can command high compensation include people from compliance backgrounds, retail veterans who have managed multiple stores, chief financial officers and lawyers from global companies.
Bernard noted there’s a big difference in chief financial officer pay now compared to four or five years ago.
“As MSOs grow, get more funding and move into new states, they need people with public company experience. … They need more sophistication. And, because of that, they have to increase their salaries as well,” she said.
Sales and Salaries
Multiple factors independent of the candidate influence salaries, including how well a company’s product lines are doing. In the marijuana industry, the degree of success along the cannabis supply chain could have an impact as well, observers said.
Marijuana Business Daily found that the average price of smokable cannabis and pre-rolls was up sharply in 2020, while just about all other categories—edibles, infused beverages, vape cartridges, concentrates and others—saw declines, stayed flat or had modest gains at best.
Compensation data from Denver-based cannabis recruitment firm Vangst echoes this trend. Cultivation salaries were up 5% in 2020 compared to 2019, according to the company. The top posts—cultivation director and cultivation manager—saw salary increases of 25% and 3%, while salaries for lower-level posts such as trimmer decreased or stayed flat.
Retail salaries were up 3% in 2020 over 2019, Vangst reported. Salaries in the extraction sector, meanwhile, were down 4% in 2020 compared to 2019.
While extraction and manufacturing salaries are down compared to cultivation and retail salaries, they are expected to bounce back as the economy recovers, cannabis businesses expand and consumers can afford more expensive, value-added products such as edibles and infused beverages, Walter said.
As the industry matures and delves into more sophisticated products and garners more scrutiny from regulators, people with science backgrounds will again become a hiring priority.
“Regulators are going to force more science into this,” Walter said. “There are already a few companies saying, ‘Hey, this is a competitive differentiator for us.’”
The right talent comes down to having the right experience, which increasingly means professionals who have both mainstream experience and legal-market cannabis experience. Ideally, that mainstream experience will include tenures at small startup companies and large, established companies.
“We do get more requests for cannabis experience,” said Kara Bradford, CEO and founder of Viridian Staffing, a marijuana-focused recruitment agency based in Seattle. She said companies often say they’d like an executive from CPG with at least five years of food and beverage experience before entering the cannabis space. And on top of that, they want the candidate to have another five years in marijuana.
“There are a few people who can do that, but you’re going to have to pay for them, because that’s a limited pool of individuals who have that much experience on both sides,” Bradford said. “Absolutely they can ask for higher salaries.”