Handling Cash and Outsourcing Cannabis Employees

stephen sullivan ms mary staffing

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Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you looking for a fulfilling and lucrative career in the cannabis industry? Visit www(dot)cannainsider(dot)com/careers. That’s www(dot)cannainsider(dot)com/careers. Now here’s your program.

If you’re looking to break in to the cannabis industry or you’re an employer struggling with finding the right people to help your business grow, you’re really going to enjoy today’s interview with Stephen Sullivan of Ms. Mary Staffing. Welcome to CannaInsider Stephen.

Stephen: Thanks for having me Matt.

Matthew: Stephen before we jump in can you tell us what Ms. Mary Staffing is and how you serve clients?

Stephen: Sure. So we are a full service HR agency. We do payroll processing, recruitment, HR consulting and we’re serving the cannabis industry.

Matthew: And what were you doing before Ms. Mary Staffing? How did you get into this business?

Stephen: Well I was working staffing and engineering in IT. Then I wanted to bring the typical staffing model to the cannabis industry.

Matthew: Okay. Now many people listening may not understand that the cannabis businesses that touch the plant have a very difficult time paying employees and doing a lot of the things that normal businesses take for granted. Can you tell us about the cash issues dispensaries face and how you help your clients overcome those cash issues?

Stephen: Yeah it’s definitely difficult to run a business without a bank account, especially when you’re talking about payroll. So what we’ve done is we’ve implemented a PEO model that co-employment model where we step in and we hire dispensaries or cultivation facilities’ employees and we become liable for employment taxes, worker’s compensation and the client just pays us and we are able to accept cash. We work with a number of transportation companies like Blue Line Protection Group, NPS International. We’ve worked with both of those companies.

Matthew: Now Stephen, the PEO concept might be a little bit foreign to a lot of people listening, but it has a tremendous value for certain industries. First what does that acronym PEO mean?

Stephen: It’s Professional Employer Organization.

Matthew: Okay and so how does a Professional Employer Organization partner with an employer and how does that help them?

Stephen: So we step in and we go into what’s called a co-employment agreement with the dispensaries to where their employees now become our employees and we handle benefit administration, unemployment claims, we basically become the business owner’s HR department.

Matthew: This is really valuable for people listening. The problem is here is that most dispensaries don’t have a bank account. All they have is cash. So when they enter into an agreement with a PEO company like Stephen’s then Stephen can then accept that cash and pay the employees of the dispensary in direct deposit and he can also go to the state and federal level and pay those taxes on the dispensary’s behalf. And also this avoids the cash penalty. Now what is the cash penalty Stephen?

Stephen: Well the cash penalty is a 10% fee that the IRS charges if you pay your employment taxes in cash.

Matthew: So what other ways do PEOs help businesses besides just payroll?

Stephen: Well we become the full HR department for the business owner. So we do benefit administration, recruitment, making sure that the business owner is compliant with employment law, we also have employee handbooks. Basically anything HR related we can handle for the business owner.

Matthew: What are the type of things that you’re doing in compliance from an HR level because there’s weird little things I know in the HR world like if you don’t have a poster up or if you’re not doing things right, there’s like all these little pitfalls that you don’t know about that can kind of jump up and slap you. Can you tell us about one or two of those?

Stephen: Well you mentioned a couple ones. So when we first start working with a client we do what we call a free audit where we go in and we make sure that the business owner has those posters and has their employee handbooks and everything in order. Employment laws are constantly changing so that’s something that business owners have to stay on top of.

Matthew: What kind of staffing, what kind of positions do you help with staffing? Typical or what are your most popular?

Stephen: Our most popular, as you can imagine, are bud tenders, retail managers, trimmers, growers and everything in between kind of your harvest or your assistant growers.

Matthew: Now I’m really interested in attrition because there’s a lot of people trying to get into the cannabis industry, but from your point of view when you come on or what you hear back from employers when they let someone go, what are the typical reasons that someone leaves the cannabis industry or the positions that you see that kind of fall into the biggest bucket so we can understand why people leave.

Stephen: Well if you’re talking about employees quitting, usually it’s to move to a different… I see a lot of transitions between businesses within the cannabis industry. People come in and they get skills at a particular dispensary and then they move to another one.

Matthew: Okay. Is there anything where it’s involuntary where they’re leaving and you see…

Stephen: I have seen some cases where they were let go. Some employees were caught stealing product or stealing cash. I have seen cases of that.

Matthew: Yes. Pretty common I hear with trimming is kind of rampant with theft because you’re sitting around and you have huge amounts of cannabis and it’s something that happens when you have that valuable of commodity. Now I know this is a strange question, but do employers require drug tests and if so, what kind of drug tests?

Stephen: We’ve actually never had a request from any of our clients to do drug tests. We have the capability, just have never had anybody ask to do so.

Matthew: Yeah, that would be a funny kind of Candid Camera if we said we want to see if you test positive for cannabis and just watch their reaction. Now can you give us some examples of intermediate or executive positions that you’re starting to see more employers ask for?

Stephen: Intermediate I would say kind of your assistant retail manager, even some managers I would place in that category. Executive positions more of your facility managers, of course partners within the business. Maybe a consultant partner as well.

Matthew: Okay, now let’s say you just took on a new client and they’re a pretty average client in that they don’t have everything just perfect yet. What are the mistakes you see that most dispensaries have in common or maybe not mistakes but things they can do better?

Stephen: Employee handbooks are definitely something that we notice a lot with our clients, with new clients, that they don’t have proper handbooks. A lot of times, as you mentioned earlier, the posters that they’re supposed to have up aren’t up which is why we offer a free audit to any of our new PEO clients.

Matthew: Now from when you started this business to where we are now and where do you think we’re going in the next couple of years, how have the staffing and employer related needs evolved and how are they evolving?

Stephen: Well it’s constantly, rapidly evolving especially with regulations that business owners have to stay on top of as well as employment laws that are constantly changing and then now the new healthcare, Affordable Healthcare Act which requires employers to stay on top of benefits for their employees which can be a challenge for small business owners.

Matthew: Yeah and there’s some kind of magic number where if you’re over a certain employee count, the Affordable Healthcare Act behaves one way and if you’re under it, it behaves another way. What’s that number? Do you know?

Stephen: Fifty, fifty employees.

Matthew: Okay so after 50 what happens?

Stephen: You are required to offer health benefits to your employees, full time and part time.

Matthew: So I imagine that there’s going to be a lot of employers that magically start changing behaviors at the 49 number, somewhere around there, unintended consequences. Okay. Now what about employees from non-cannabis industries transition to the cannabis industry? How is that done successfully because there’s a lot of people listening that are not in the cannabis industry but they want to be in it. So how can they make that transition?

Stephen: I would say look at your past experience and your skills and really figure out what you want to do in this industry. If you have good customer service or retail experience, you’re most likely going to be better going the retail, bud tender route. If you kind of have a green thumb, maybe cultivation. It really depends on what you enjoy doing.

Matthew: So I want to circle back to this PEO concept for people, and again it stands for Professional Employent Organization. Is that right?

Stephen: Yes, Professional Employer Organization.

Matthew: Because it’s kind of a new concept still but it’s very very powerful in that if you’re an employer, you just write one check to Ms. Mary Staffing or whoever your PEO is and they take care of everything and it’s a great way of outsourcing the stuff you’re not great at. And in terms of cost is there any kind of ballpark figure of what this costs a dispensary owner for your services?

Stephen: It depends on how many employees and how frequently payroll is. We base it off of that and then it’s a percentage of gross payroll.

Matthew: Okay got it. So if you do a monthly payroll, it’s cheaper than if you do it every couple weeks?

Stephen: Right yeah, if you do it compared to a weekly.

Matthew: Now is there any other tips or information that you think would be valuable for people trying to get into the cannabis industry to make sure they stand out in one way or another?

Stephen: Well there’s several resources out there now. If you don’t have knowledge of strains, definitely tap into those resources to learn about the actual product before you try to get into this industry. That’s something that I see a lot. People don’t know much about marijuana but they want to jump into this industry.

Matthew: Okay. Very cool. Now Stephen if people want to learn more about Ms. Mary Staffing, how can they do that and tell us what state you’re in as well.

Stephen: Well we’re in Colorado, Washington State and Oregon at the moment and we’re rolling things out in Nevada here within the next month or two.

Matthew: Stephen is there anything strange in Washington’s law where it would prevent an employer from working with a PEO?

Stephen: Yeah the way Washington State has their marijuana laws set up it makes it very difficult for PEOs to operate, even staffing agencies to operate. So we just work under what’s called a direct placement staffing model.

Matthew: What does that mean exactly, direct placement?

Stephen: We still help with the recruitment, but instead of paying payroll through us we just charge a percentage of the annual salary as say a one time direct placement fee. Kind of like paying a consultant.

Matthew: Got it, that makes sense. Now Stephen can you give out your website for listeners?

Stephen: Sure it is www.msmarystaffing.com.

Matthew: Okay great. Well Stephen thanks so much for being on CannaInsider today. We really appreciate it.

Stephen: Yeah thanks for having me.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guest to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five major trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on CannaInsider, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

Stephen Sullivan of Ms Mary Staffing (a cannabis staffing company) explains why it is often a way better deal to outsource your staff to his company. He also talks about how your cannabis company can legally handle cash.

Key Takeaways:
[0:57] – What is Ms. Mary Staffing
[1:42] – Stephen talks about the cash issues dispensaries face
[2:39] – Stephen explains how a Prof. Employer Organization helps employers
[4:51] – Stephen talks about the staffing aspect of Ms. Mary Staffing
[5:28] – Why do people leave the cannabis industry
[6:55] – Stephen talks about intermediate and executive positions
[7:29] – What can dispensaries do better from an employer perspective
[9:15] – How can someone make the transition into the cannabis industry
[11:11] – Contact details for Ms. Mary Staffing

Learn More:

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: https://www.cannainsider.com/trends