In new cannabis markets where compliance, scarce supply or testing logjams can delay cultivation and retail operations, it’s critical to retain talent during slowdowns and shutdowns.
Delays bogged down the launch of cannabis sales in Alaska, Hawaii and Pennsylvania. Industry experts in each state said it’s important to invest in your employees and keep them paid and productive through the uncertainty. It can save you money in the long run.
Employee retention during a market delay or slow period can involve several strategies, such as cross-training staffers to handle multiple duties or educating them about the uses and benefits of medical marijuana. Staffing based on market conditions also can ensure retailers, in particular, aren’t over- or understaffed.
And, above all, avoid layoffs.
“Your employees are your front line,” said Sara Gullickson, the chief medical cannabis consultant for Pennsylvania’s Solevo Wellness. “They’re the number-one reason (customers) come back. If you’re not investing in them, you’re not investing in your facility.”
What follows are five ways to retain and invest in employees during market delays that can slow or even halt business.
1. Avoid Layoffs
Downsizing in new markets could leave you understaffed once the market stabilizes. Job cuts can cost your business more in the long run.
That’s why it’s better business to pay employees to take a day off than it is to lay off or rehire and retrain an employee, industry executives agreed.
“Avoiding layoffs is really important, especially in Hawaii, where our unemployment rate is so low,” said Helen Cho, director of integrated strategy at Honolulu’s vertically integrated Aloha Green Apothecary. “If you let employees go, they won’t be back. And, if you lay them off and eventually have to hire them back or hire new employees and train them, your initial investment goes out the window.”
Aloha Green avoided layoffs during multiple market delays by encouraging employees to take longer vacations or unpaid leave, Cho said.
Scheduling was critical too, Cho said. You don’t want your team to be too strapped or your operation overstaffed while you’re navigating market delays. You should be lean without overextending your team and know how much your staff can do before you need to hire new talent, she said.
“You don’t want to have too many people on board and not enough for them to do,” she said.
To avoid layoffs, you must be creative and put employees to work on projects that support long-term strategy when day-to-day tasks are scarce, said Keenan Hollister, co-owner of Pakalolo Supply Co., a vertically integrated business in Fairbanks, Alaska.
Pakalolo’s employees helped in the cultivation facility, which was a former food-distribution warehouse. Before opening Pakalolo’s retail shop, employees converted a walk-in freezer to a flower room. After the dispensary opened, they spent mornings converting another walk-in freezer to a second flower room and packaged product before the store opened at 3 p.m.
“We cared so much about making this a real industry and not harming the optics of the industry that we worked very hard to not lay off our employees,” Hollister said.
2. Invest in Education
Cutting employees’ hours during market delays is also risky and diminishes morale.
“You have to be more creative than that,” Solevo’s Gullickson said. “To risk losing staff at that stage in the game is not something I’d ever really recommend. … These aren’t $100,000- or $200,000-a-year employees. A lot of investors have other companies, but (for $15-, $20- or $22-an-hour employees), this job is very important to them.”
Rather than trim hours or lay off employees during delays in Pennsylvania, Solevo paid them to attend events and develop relationships with members of the community.
“We wanted to bring this back to a very normal business activity, which is talking about what you’re doing in the community,” Gullickson said. “Time is best spent educating the community.”
Solevo paid its employees to participate in educational events with experts on autism, cancer, HIV and other qualifying medical conditions for MMJ patients in Pennsylvania.
Solevo also paid employees to attend networking events or set up booths – at food and wine festivals, in yoga and wellness centers and at libraries – to build a better understanding of cannabis in the community through consumer education.
“Your staff should be out and be mouthpieces for your dispensary and the industry, to change the perception of what this plant can do,” Gullickson said.
3. Hire Based on Market Conditions
A staffing plan is critical, Solevo’s Gullickson said. In a new market that you anticipate will have healthy supply, she advised to overstaff – or scale up your initial hiring. And in a market where supply and demand will be a challenge, scale back your initial hiring and develop a strategy to run a lean operation until the industry stabilizes.
In new, unpredictable markets, small, family-owned businesses that aren’t backed by venture capital should rein in their initial hiring, Pakalolo’s Hollister advised.
“Don’t put yourself in a position to have too much overhead tied up in labor until you know you have money coming in,” Hollister said.
When market conditions require you to operate a lean team, it’s important to have stakeholders who are willing to get their hands dirty, Hollister said. In the months before retail operations started, Pakalolo’s owners (the Hollister family) and a family friend cultivated, trimmed and packaged cannabis.
“You need to be willing to put in 10- and 12-hour days, seven days a week for months and months and months to make it work,” Hollister said. “That was our only option because we didn’t have the money to hire more help than we absolutely needed.”
4. Cross-Train Staffers
At Aloha Green, retail employees were encouraged to work in cultivation or production when there wasn’t supply to keep the dispensary open, Cho said.
Cross-training makes for a more flexible staff, because employees can be used in other operations, she said. It also helps employees explore new skills, Cho said.
“We learned to let employees go where they’re happiest,” she said. “It makes them more productive, and it makes them happier. It would be harder for them to focus on work if they know there’s something they’d rather be doing. When everyone’s happy doing what they’re doing, more work gets done.”
“That initial movement can seem a little bewildering, and from an HR perspective, it can be chaos, but we want people to be happy,” Cho said.
Internal promotions are helpful to retaining employees, too. It gives employees a sense the company is investing in its team, Cho said.
“People know that most of our new position or midlevel management positions will almost always be filled by current employees,” she said.
5. Ration Your Products
During delays, consider capping the amount of product you’ll sell – in some cases, below the allowable maximum amount of product a customer can purchase in your state – so you can keep supply on shelves and your employees busy, said Solevo’s Gullickson.
“If there are delays, you need to have a crisis-management plan in place that outlines what you’ll do when or if there’s a product shortage,” she said.
In Alaska, only a handful of cultivators supplied product to the state’s first retail shops, which meant product was scarce and operating hours were scattershot. To provide some sense of normalcy, Pakalolo operated from 3 p.m. to 8 p.m. five days per week and rationed product. The plan kept doors open, product flowing and employees paid, Hollister said.
Pakalolo rationed its product by prepackaging items in grams and allowing customers to buy up to 1 ounce of flower total. Unlike other shops, Pakalolo didn’t give price breaks for customers who purchased multiple grams. That strategy kept its retail shop open longer hours and more days every week, Hollister said.
Limiting the amount of product customers can buy is a catch-22. It keeps a dispensary’s doors open and employees paid, Hollister said, but it can be frustrating for customers.
“We had to bear the brunt of the industry with the occasional angry customers who couldn’t buy their standard eighth or quarter (ounce),” Hollister said. “But their frustration wasn’t with Pakalolo – it was that there wasn’t enough weed in Alaska, that the prices were too high and that they weren’t getting a discount for buying in bulk.”
To combat that frustration, Hollister trained his team to talk with customers about why they were limiting the amount of product customers could buy.
Most were understanding when Pakalolo’s employees explained that rationing product meant more consistent business hours and better prices and larger purchases down the line.
Managing product flow and trimming hours of operation paid off for Pakalolo; at multiple points in the young market, it was the only dispensary open in Fairbanks.
“We were very communicative with our customers to help them understand the supply and demand of the industry at that time and that if we ran out of weed, we wouldn’t be able to open at all, which would hurt the image of the industry as a whole,” Hollister said.
Retaining Talent Starts with Transparency
Open communication during the hiring process can help manage employees’ expectations, so they’re not blindsided by market delays. Continued transparency keeps them invested in the business, even during delays.
Set reasonable expectations for job candidates. Tell them what’s happening in your market and explain potential regulatory delays, testing logjams or supply shortages, said Helen Cho, director of integrated strategy at Honolulu’s vertically integrated Aloha Green.
“During interviews, we tell candidates that we’re a startup,” Cho said. “That doesn’t mean we’re not doing well, but we haven’t broken even yet. We say, ‘There’s room for growth and excellent benefits – but if you’re just out to make a lot of cash, this probably isn’t the role for you.’ It weeds out people who’d be the first to walk away anyway if there was any issue or delay in the market.”
Aloha Green’s benefits package – full health, dental and vision insurance – is a big incentive that helps the business retain employees during delays.
Also, ask up front whether job candidates are interested in full- or part-time work. Schedule appropriately and find them a role that sets them up for success, Cho said.
Investing in local talent also makes it easier to retain employees, Cho said. In general, Aloha Green doesn’t hire employees who aren’t current, full-time residents of Hawaii.
Out-of-state candidates are talented and may have experience working in heavily regulated cannabis markets, but often they aren’t connected to the community and aren’t prepared for Hawaii’s high cost of living, Cho said.
“When employees don’t have roots in a community, they’re more likely to go back home when things don’t work out,” she said. “Ultimately, it’s harder for us to find local people and train them, but we can’t afford to invest in talent and then have them leave.”
After hiring, transparency and communication should be ongoing to keep employees informed and engaged.
“Transparency and communication are so important,” she said. “There’s no reason to hide when you’re still figuring things out, when regulations are up in the air, when there are things you didn’t know would happen until they happened.”
Every week, Aloha Green’s executive team hosts an all-hands conference call. Employees are encouraged to call in to hear market insights and learn what’s happening in the business.
“It helps people understand what’s happening in the business, so they understand that nothing is personal,” Cho said.