Cannabis jobs used to pay well. Now minimum wage is catching up.

When it comes to paying her employees, Jasmine Johnson is one step ahead.

Minimum wage in Florida, where the CEO of hemp-derived THC retailer Gud Essence opened her first location in Clearwater, will increase from $14 to $15 an hour Sept. 30. But Johnson already pays front-line employees significantly more – and people appear to have noticed.

For front-line retail staff or budtenders, which Gud Essence refers to as wellness technicians, the starting annual salary is $45,000 — nearly $10,000 more than what they’d earn at $15 an hour. Advertising for just four open positions, Johnson fielded 209 job applications, she told MJBizDaily.

“We figure it’s a very technical job — it’s wellness, medicinal and holistic,” she said. “We make sure the pay matches what we’re asking for.”

Johnson is in line with past practices. Traditionally, many cannabis industry operators have offered above minimum wage to attract quality candidates and reduce turnover.

But with minimum wage increasing in 22 states and dozens of cities and counties this year – amid cannabis industry complications like price compression and debt – operators are facing a tougher choice.

And already, compensation at some big operators is trending downward, labor advocates told MJBizDaily.

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Arizona’s minimum wage increased from $14.70 to $15.15 on Jan. 1. And marijuana multistate operator Curaleaf Holdings is currently hiring two retail sales associate positions at cannabis stores in Phoenix just that. Other job postings for the same position in different stores are slightly above minimum wage at $15.25 per hour.

And workers and labor organizers are taking notice.

“We’re in contract negotiations with Curaleaf’s Midtown and Camelback locations to consider raising the wage to reflect the contributions workers provide to the world’s most profitable cannabis company,” Drake Ridge, assistant director of communications for United Food and Commercial Workers Local 99, told MJBizDaily.

“It can’t be minimum wage, and it can’t be slightly more,” he added.

Through its public relations agency, Curaleaf declined to comment.

The cannabis operators most likely to feel minimum wage hikes

Asya Hill, executive director of Illinois Women in Cannabis, started in the industry as a budtender. When minimum wage increased in the past, cannabis retailers typically raised their starting rates in excess of minimum wage to remain competitive, she said.

The higher-than-minimum-wage compensation reflects the specialized training required for budtending roles, Hill said. Standard training includes complex subjects, including the endocannabinoid system, terpenes and various THC and CBD formulations.

“In Illinois, the industry was all medical, so you wanted a higher caliber of employee to give medical-based recommendations,” Hill said. “As recreation rolled out, you want to keep that quality. If you keep the pay slightly above minimum, you’ll get better candidates.”

In Chicago, where the minimum wage increases every July 1, the impact on cannabis retail operations is likely to be limited, she said.

“If it increases to $16, dispensaries may increase to $18 per hour to make sure they’re keeping up with livable wages,” she said.

At the same time, cultivators and manufacturers – where front-line jobs are typically the lowest-paid in cannabis – may feel the impact of increased labor costs more keenly, she added.

The tough choices poised by minimum wage increases

Competitive cannabis operators have consistently offered premium compensation to secure dependable talent, said Karson Humiston, founder of Denver-based staffing agency Vangst.

“The most competitive companies are paying the most because they know to have the best business, they need the best talent,” she said.

“Reliable workers are hard to come by, and when you find them, you have to retain them,” she added. “Turnover is way more expensive than paying more than minimum wage.”

But some companies will struggle. Humiston said that financially vulnerable operators, rather than industry leaders, will face the greatest challenges.

For less stable companies, mandated wage increases add financial strain.

“It’s just going to be another blow to these businesses,” she said. “It’s why we need federal reform. If businesses could get rid of 280E, they could pay their employees more.”

Are minimum wage laws effective for cannabis workers and operators?

But as MJBizDaily has reported, many operators are already claiming relief from Internal Revenue Code Section 280E on their federal tax returns – meaning the impact of marijuana rescheduling on their balance sheets could be limited.

And some industry experts are critical of minimum-wage increases generally.

Avis Bulbulyan, CEO of California-based cannabis consultancy Siva, believes minimum wage increases could harm their intended beneficiaries by forcing companies to adapt in ways that don’t benefit their employees, such as investing in automation that reduces the number of workers they need.

“The industry has been steadily investing in and moving towards automation that minimizes the impact of minimum wage laws and labor demands,” he said.

A Congressional Budget Office analysis found that increasing the federal minimum wage causes some low-wage workers to lose their jobs.

But  the situation in Arizona represents a national trend downward, said Megan Carvalho, a UFCW national cannabis campaign coordinator. Once known for generous compensation, cannabis industry jobs are falling behind.

“In 2020 and 2021, as states raised their minimum wage, many cannabis employers followed suit to keep a healthy distance between the state minimum and their starting rate,” she told MJBizDaily.

“However, as minimum wages continue to rise, this practice is becoming less common, with employers failing to keep up with the rising cost of living.”

Margaret Jackson can be reached at margaret.jackson@mjbizdaily.com.