How to Get Your Cannabis Employees Paid – Keegan Peterson

keegan peterson

Keegan Peterson is the founder and CEO of Enjoywurk.com

Wurk helps cannabis business get employees onboard, paid and helps business owners optimize their employees to meet the needs of their cannabis business. It may seem like a simple thing to get your employees paid, but in the cannabis world, at least in the United States it isn’t. Keegan also has some great insight into what it takes to start a sustainable and profitable business in the cannabis industry.

Key Takeaways:
[2:26] – What is Wurk
[2:51] – Keegan’s background
[5:07] – Keegan talks about realizing the need for Wurk
[7:02] – Problems arising from not having payroll software
[7:54] – The birth of Wurk
[9:14] – How to get your cannabis employees paid
[10:07] – What is labor waste
[11:42] – Feedback from current Wurk clients
[13:48] – Wurk dashboard
[17:08] – Metrics in the retail world
[18:28] – How does banking interact with Wurk
[20:07] – States where Wurk is available
[20:49] – Handling state-by-state compliance issues
[21:47] – Wurk in the future
[26:46] – Keegan talks about his experience at CanopyBoulder
[28:17] – Keegan answers some personal development questions

Learn more at http://www.enjoywurk.com

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

Read Full Transcript

It’s one of the recurring themes of the CannaInsider show to highlight entrepreneurs who are engaged in making the picks and shovels to support the cannabis industry. One of those entrepreneurs is Keegan Peterson founder of Wurk. Keegan, welcome to CannaInsider.

Keegan: Thank you Matt for having me.

Matthew: Keegan give us a sense of geography. Where are you in the world today?

Keegan: Today I’m in Denver, Colorado which is where our business is headquartered. However, I spend a lot of time on airplanes in all the legalized cannabis states right now.

Matthew: Okay, and I am Edinburg, Scotland today. Yes you don’t hear that every day so it throws people off.

Keegan: I’m don’t, I’m jealous.

Matthew: I’m doing the interview in a kilt so I just wanted to make everybody aware of that so you can get a mental picture.

Keegan: It’s weird, I’m wearing a kilt as well.

Matthew: Really, wow what are the odds of that. Keegan, at a high level what is Wurk? What are you doing?

Keegan: Wurk is an HR payroll platform built specifically for the highly regulated cannabis industry. So we help business owners in this industry not only understand the typical complexities of running a business and dealing with employees but also to understand the compliance around running a cannabis business.

Matthew: Yes and there is a lot of compliance. Now what’s your background? How did you get started in this mad, mad industry?

Keegan: Yeah so I’ve spent the last eight years in the enterprise workforce management space working with folks like PetSmart, Target and a lot of the Fortune 500 retailers to help them understand their labor strategy and bring on tools and software to support that strategy. And a friend of mine happened to own a very large dispensary here in Colorado and kept on asking me for help and advice on how he could pay his people and run a more efficient business. After a while I realized there was a real problem in the space because there wasn’t software solutions to help these business owners.

Matthew: There is so much to running a dispensary. It really is crazy. I mean, people think of it as like oh I just get bud tenders interacting with customers, but if you have the cultivation side too, if you’re vertically integrated, that’s like a whole separate business. Then there’s just manage the employees and all the compliance and marketing. There’s just a lot of hats you have to really wear well that I don’t think is adequately covered about the industry. All people think about is hey you make a million dollars. You sell pot and that’s all there is to it.

Keegan: You’re spot on. Yeah you’re spot on, and the complexities of growing and selling the product are a whole other breed that no one has had to deal with before. So not only are you dealing with the complexities of running a business, just like any other traditional business owner has, now you have this whole new set of compliance that you have to report on daily. So it’s very challenging, and I would compare them to a Fortune 500 retailer who has distribution centers and has all these different types of business under one business. However, these smaller cannabis businesses don’t have the luxury of having thousands of employees to manage these processes. They have to figure it out on their own with a very small management team. So it’s a big challenge and these folks are doing an amazing job of making progress.

Matthew: So your friend says hey can you help us with X, Y and Z. You’ve got the background for it. What specifically were they looking for in terms of help and when did you realize this was going to be beyond just a little helping a friend that there’s a business here?

Keegan: So it was a back and forth. I was asking him for labor data to try to understand how the labor in this industry works and some of the drivers that run these businesses. When I asked him that question he came back and said hey I don’t even have a payroll system to pay my employees. I have no data to even give you to play around with. So after a back and forth I realized that he was paying his employees in cash and he was using Excel to track how much he had paid the employees and how much he’d paid in taxes, and then he was delivering cash to the IRS building downtown in a box to pay for his taxes, and I realized that there was a real problem here. When you’re paying that much tax at the end of the year, we’re not talking thousands of dollars, we’re talking millions in a box.

Matthew: Yeah so it’s like a Mission Impossible expedition just to get your taxes paid. You’re running around looking over your shoulder, make sure no one’s going to jack you.

Keegan: Exactly.

Matthew: That’s got to be nerve racking. So just the basic blocking and tackling of getting payroll done was just a huge obstacle.

Keegan: Yes, and it’s a security concern for not only that person who has to pay the taxes. It’s a security problem for all the employees that get paid checks in cash. It’s a security problem for the community that has folks carrying large amounts of money around. So it’s a really big problem. It’s plaguing this industry. It’s not just here in Colorado. It’s in every single legalized state, and until we started this company it didn’t seem like anybody was really going after the opportunity to help make this a better situation.

Matthew: So when you’re not able to have data around your payroll and do it digitally and so forth do problems kind of originate from that and then cascade into other parts of your business?

Keegan: Yes. So one it’s difficult to calculate how much you’re supposed to pay employees. Then it’s also hard to calculate how much you pay in taxes. If you do either one of those things wrong the penalties are very high. So the average employee lawsuit for being misclassified or paid incorrectly is $50,000 or 20% of their yearly salary, and then the penalties for not paying your taxes correctly can go all the way to the point where you get your business shut down.

Matthew: So you were talking with your buddy, you helped him out a little bit here and then when did that kind of idea germinate like I got a business here and I’ve got to start it. Did you talk to some other dispensary owners or where there a couple of other signs you saw where you say hey this has got to be a business. It’s an itch that a lot of other companies need scratched.

Keegan: Yeah when I sat down with him and I helped him create a solution he pushed me and said look I’ve been doing this for seven years. I know hundreds of businesses I can bring to you that are having the same problem. If you can fix this issue and sustain this and create a scalable business to solve not only this problem here but in multiple states, you have a really big business on your hands. So I started doing some research and I realized at that point that there were already 160,000 employees in the cannabis industry and the majority of them were underserved.

Matthew: Yes. So there’s a lot of aspects to Wurk I want to talk about, and just so people know Wurk is not spelled W-O-R-K but W-U-R-K. So we’re saying Wurk but it’s a little bit different spelling. Let’s talk about some of the features and benefits here with onboarding and so forth and tax paperwork so people can kind of get a sense of the full range of benefits they get when they come onboard with Wurk. I really want to highlight this because you’re not creating a spot product. It’s more of a solution that kind of engrosses all the pain points of your customers in an interesting way. So I want to give you an opportunity to talk about that a little bit.

Keegan: We’re a workforce management application so we look at the lifecycle of an employee within a business from the day you’re trying to attract him/her to the business to the day that they end up leaving the business. We look at that complete lifecycle and we’re building solutions to manage it as well as automate it. So that includes payroll. It includes HR and tracking of all the documentation that you need to when you onboard an employee, all the assets that you need to track while they’re with the business, t-shirt sizes, etc. We do all the time tracking. So how are you going to collect time from this hourly workforce? How are you going to schedule these employees? So all those different aspects we’re looking at that holistically and providing a one-stop solution to manage all of it in one place.

Matthew: Okay. What’s labor waste? How would you describe that?

Keegan: Labor waste comes in several different forms. So one is over scheduling. So if you schedule more labor than you have demand for. So let’s say you have four bud tenders working the counter and you only have three customers at the store, you’ve over scheduled and now you’ve spent more money than you need to. The opposite is true when you under schedule a workforce. So you have two bud tenders when you have ten customers in the lobby. Now you are going to miss out on sales because customers are going to get upset and they’re going to walk out the door. Overtime is another labor waste. Sometimes it’s necessary, sometimes it’s not. Managers tend to lean on it a little bit too much and think that it’s necessary when they can just bring in another employee that’s not being paid time and a half.

Then having the wrong employee mix. So sometimes you have too many junior bud tenders working the counter at peak hours and now you’re going to have less customer service than you would like to have, less experience than you would like to have at the counter which is going to result in less sales. So what we try to do is look at all of these holistically and build strategies for our clients to optimize in each one of these areas.

Matthew: Do you have any recent examples of how you’ve helped some clients improve efficiency by using work where they adopted the software and the solution, embraced it and then got some quick hits right away that they gave you some feedback on?

Keegan: Yes we have a client here in Colorado that has 300 employees and where we started building schedules into our solution, when we build a schedule it creates a budget. Sorry got some background noise in there.

Matthew: Pull them in there Keegan. I want to chastise them for interrupting your interview.

Keegan: It’s actually my speaker phone. It just randomly talks to me when it’s upset.

Matthew: Okay, darn, that would be fun. Okay go ahead.

Keegan: I’ll yell at it later. So but when you create a schedule in our system, because it’s tied to payroll, it tells you how much that schedule costs. So I’m going to have 10,000 hours, each hour is going to be worth $10, now I’ve got $100,000 schedule for this week essentially. Now when that schedule gets worked over the next seven days I’m going to have my actual and that creates a variance report. Now your actual is obviously different than what you scheduled because you have people working into overtime, you have people who don’t show up for work.

So when you look at these two, variance report and schedules, it clearly shows you where you’re being inefficient. You’re creating a budget. Your business is based on that budget and now you have an actual report that’s much different. If your actual are a lot higher than that schedule, then you know that you have some unexpected costs. Now sometimes that’s good, sometimes it’s bad. That’s where you start to see the overtime waste, and with our client that had 300 employees they started seeing overtime waste where managers were allowing folks to work into overtime when they didn’t necessarily need to and they had other employees that were available who weren’t in their overtime threshold. So for them we were able to quickly with one report be able to tell them here’s an opportunity for you to save a lot of money over the next twelve months.

Matthew: Okay kind of tailoring the work needs to the demands of the business. That makes sense.

Keegan: Exactly.

Matthew: Let’s say I’m a Wurk client and I login. Is there a dashboard that greets me and tells me something and if so, what do I see at first?

Keegan: There is and the great thing about our solution is the dashboard is customized to the user. So if your role in the company is to run payroll, then your dashboard is going to be our payroll dashboard and you’re going to see all the payrolls that you’ve run. You’re going to see missing time punches and how you can quickly fix them. You can also see employee birthdays so you can notify them happy birthday, thanks for working for our business. If you’re job is a manager, it might be more time tracking and scheduling features. So depending on who the user is in the business, when they sign on they’re going to have a dashboard that’s customized to what their job role is.

Matthew: Okay. So did you name all the roles there or are there more roles than that?

Keegan: There are more roles than that. So you got the business owner who wants a high level perspective of the business. So he’s going to want reports. He might want to see that variance report of schedule versus actually, not only short term but long term. Your general manager is going to care about seeing different stores in comparison to each other so that they can keep their managers accountable. Your managers are going to care about the employees that report to them and the manager’s goal is to hit their budget for the week. So if they get $10,000 dollars of labor, they’re goal is to work towards that 10,000 hours and they got to figure out where they need to flex. And then you’ve got your employees who care about their schedule, when are they scheduled for this week, can they request time off, is their timecard accurate, did they forget to clock out and they need to go in and change that. So those are different perspectives and we try to create a customized look and feel that gets the end user exactly what they’re looking for.

Matthew: So employees can request time off within the system?

Keegan: Right within the system, yeah, and the nice thing is being connected to payroll. All of that flows over into your payroll system and gets cut at the time of payroll.

Matthew: Okay very helpful. Is Wurk hosted on your servers or third party servers.

Keegan: Yep.

Matthew: Okay that’s how it works.

Keegan: It’s all in the cloud. We have redundant servers in place. We’re going through an SSAE audit right now. We’re an enterprise level application. We take security to a whole new level and we’re making sure that we’re doing everything on our end to protect our data and make sure that our clients are safe.

Matthew: Okay. So I’m looking at the dashboard for the first time. It sounds like this is a great way to pinpoint waste and allocate resources which is kind of what your background is in, but you mentioned a little bit about how the employee scheduling and so forth kind of addresses throttling the right amount of employees to the demand, but what are some other ways that a business owner can look at the dashboard or otherwise and say hey I see a distortion here in the business and it needs to be addressed according to this dashboard or what are some other things that business owners look at the dashboard and kind of pinpoint right away that they weren’t able to get access to before because they didn’t have the data?

Keegan: The most important measurement or metric in the retail world is labor as a percent of sales. So when you marry the data coming out of our system with your POS data and we can bring labor drivers into our system and create reports off of that. You now get a perspective of for every hour of labor out of spending here’s how much I’m getting in return in sales. That’s a very important aspect. I don’t know if a lot of cannabis business owners are running their business with that in mind and our goal is to help them get to that point. That shows you very specifically if your operation is efficient or not. Then when you have multiple locations, especially multiple locations in different states, having that statistic, that metric to compare location to location really gives you an idea of okay is my managers doing a good job, is my operation there set up. Here’s my secret sauce, have I applied that to every one of my locations or is one of my locations missing the bar. So I think that’s a really important statistic that folks in this industry need to start focusing on in running their business too.

Matthew: How does it work with the banks? Do you have the relationship with the bank that you manage on your client’s behalf or is the client’s account, I mean how does that work.

Keegan: Yeah so we’ve partnered with several banks that are in the industry and our goal is to be a channel to the banking system. So for clients that are unbanked we introduce them to our banking partners and if the banking partners see that their business is compliant and fit, then they usually sign them up for an account and at that point we feel comfortable working with them. We also have clients that are unbanked. Some states just don’t have banks yet and they’re using our system as an audit trail. So their employees go into our system and sign off that they’ve been paid, even though it’s been in cash, but it still gives them the audit trail that they need in case an employee comes back and says I’ve never been paid. Now they’ve got an IP addressed signed to that person saying yes they have.

Matthew: So this is helpful for the cannabis related business that wants to get banks and isn’t when they say look I’m coming above board and documenting everything possible. Does that give the bank a little bit extra layer of comfort like okay they’re working with Wurk to document everything?

Keegan: Absolutely. That’s what these banks want to see now. There’s obviously a limited number of banks that are in this industry and there’s a surplus of businesses. So these banks want to see that someone has put the measures in place to be a compliant business and not overboard. So having a payroll and time tracking system that shows very granular who’s worked where, how much these employees are paid, how much taxes were paid is one aspect of that compliance check.

Matthew: What states are you operating in now, are you servicing clients?

Keegan: We’re in ten different states right now. So we’re in Oregon, Washington, California, Nevada, Colorado, Illinois, New Jersey, Florida, New York, Vermont and I believe Massachusetts, eleven states.

Matthew: Okay, good memory. And now in terms of a compliance checklist and such because each state’s compliance regulations are different. Some a lot different than others. Is there built in modules or add-ons or features for people that want to get into more compliance related tasks with Wurk?

Keegan: Absolutely. We actually rolled out a module called Comply and that module is focused on the state specific compliance that the state marijuana enforcement division is putting on to that state. So for instance in Colorado the marijuana enforcement division is the regulatory body. Here there is new hire reporting that they require. Their employees have to badged before they can work in a facility. So we work with the MED to really understand those compliance and then build it into application and we’re going to do that state-by-state. For some of these states we’re in a wait and hold pattern as they’re trying to figure out their regulatory body and what they’re going to require. As soon as those get finalized we’ll build those into our application.

Matthew: Okay. And where do you see Wurk going in the next couple years? I mean it’s kind of getting everybody into the fold and making sure their employees are paid and documenting all that, but how do you see it evolving?

Keegan: Yeah that’s a great question. There’s so much opportunity right now because the market is so underserved that we’re focusing on getting this application in the hands of business owners and helping them run a compliant business. Our goal is to service every legal cannabis state in the United States. We’re going to focus on the United States for the time being. Then we’re going to look at the lifecycle of the employees and the different things that they have to do and we’re going to continue to build solutions to support those. So we will be bringing new products to market over the next year to two years, but they’re always going to be focused around employee management and employee engagement.

Matthew: Where are you in the investing process right now? Are you looking for more investors? How many investors have you had? What can you tell us about that?

Keegan: We’re not looking for more investors, but we will have some news coming soon.

Matthew: Yeah. Okay. And you’ve had some high profile investors. I imagine if anybody does a Google search they could figure out more about that. I don’t know how much you’re willing to talk about that, but I thought I would throw that out there.

Keegan: Yeah we’ve been very fortunate. We have an amazing investor base. Poseidon is one of those investors. Rick (23.01 unclear) is one of those investors, and we have some more folks that are coming onboard that really are thought leaders in this space. They’re really connected in making a difference in this space. So we’ve been very fortunate to have them a part of what we’re doing, and they fit the standard for who we want to be working with.

Matthew: If there’s any aspiring entrepreneurs listening, Keegan, that want to know what it’s like to spot an opportunity, build a team and raise capital, what would you tell them about that process and maybe encourage them and tell them what to look out for both to and avoid.

Keegan: I’ll say it’s very challenging. The last two years of my life have been very challenging to say the least, but they’ve been the most exciting years of my career and my life. It’s a real honor to have an opportunity like this to work with amazing people. This industry is full of different people than in the traditional world and that’s what I love about it. Some of the challenges, fundraising is not easy in this industry. A lot of folks are conservative investors looking for conservative investments and I think the challenge is really understanding your business model and understanding to a point where it can become investful to another individual who may be conservative. So you really have to look at how you’re going to scale your business, how this business is going to be able to support multiple markets and how you can easily bring a business to profitability. I think the one thing that we were lucky with is there is a lot of comparables as far as payroll companies that have been created over the last five years. Business owners look for that.

Matthew: You’re lucky you’re in a niche that really business owners need. It’s not something like do I need this or do I not. It’s a staple of any business so that’s a good thing to be pitching investors always.

Keegan: It is. If you want to keep your doors open, you want to make sure you’re paying your employees correctly. It is a nice spot to be in and the more folks that we can get introduced to and help, the more we can help this industry stay alive and continue to grow.

Matthew: Yeah and there’s an additional benefit of this being kind of a sticky application. The more you use it, the more it gets woven into the fabric of your business and it’s probably hard to leave or transition which you know I’m not going to say that that would be a problem for you but that’s a benefit because as the clients commit to you they get deeper and deeper into work and it’s just woven so tightly. So that’s another benefit for investors potentially.

Keegan: It is, and the more that we can really understand these businesses and help them implement labor strategies and control their labor, the more they’re going to want to use our service. And that’s our goal is we do payroll. That’s one aspect of it and that’s a big challenge in this industry, but when you start marrying in the labor efficiencies and understanding how I deploy my labor, that’s where you really see long term value for your business and I think that’s where the industry is moving as we continue to evolve and get bigger.

Matthew: You were part of the CanopyBoulder cannabis technology accelerator program that focuses on ancillary cannabis businesses. Can you tell us a little bit about that. That’s where we originally met. I was over there and I met you and I learned about your business. Can you tell us about your experience there and what it was like?

Keegan: It was an amazing experience for me. I learned a lot. I matured as a person, as a business owner. The business matured very quickly. Our goal through that program was to mature the business model and make it investable and then prepare ourselves to scale into multiple markets and that’s exactly what we did over the three month term. So the program is led by Patrick Rey and Mika Tapman and both of them have experience in building, in investing in businesses. So they give you a whole plethora of their experience but then they bring mentors and advisors who have done similar feats that these young entrepreneurs are trying to accomplish, and help them accelerate their business in a very short period of time, and you can see from the companies that have come out of Canopy that they have figured it out and they’re really doing a lot to help these businesses grow. We were fortunate to go through that program and our business has definitely grown and seen the results of going through such a program.

Matthew: Keegan I like to ask some personal development and enrichment questions so listeners can get a sense of who you are personally. I normally ask two questions but I’m going to ask you seventeen. I’m just kidding. I’m only going to ask you two. Is there a book that has had a big impact on your way of thinking or given you a new lens or perspective on life that you would like to share with listeners?

Keegan: Yes. Never Eat Alone was one of the books that I read a couple years back, and I think the author is Keith Ferrazzi. That’s a book that really pushed me outside of my boundaries to invest in the people that are around me, the friendships, the business partnerships and it helped me learn to enjoy those conversations. That was one book that really stood out in my development.

Matthew: Is there a tool web based or otherwise other than Wurk that you consider indispensible to your day to day productivity?

Keegan: Trello I use quite a bit. It’s a gant chart and I want to… or (29.08 unclear) I’m sorry, and it helps me organize what I’m doing, when I’m doing it and prioritize my tasks so that’s one thing I lean on quite a bit.

Matthew: So Trello is a web based tool where you have these cards. They look kind of like index cards or something that show what your working and then your team shows cards of what they’re working on. Is that what it is?

Keegan: Yes and how I set it up is I have a card for each department in the business and then on each card I have different tasks that are associated with what I want to get done in that department and then I can bring team members onto those cards who are associated with that side of the business. Then we can prioritize when we’re going to get these tasks done, and then we have a separate card for things that we get accomplished so that we can see how much we’ve accomplished in the last week, month, quarter, etc.

Matthew: Would you say that lends itself more to software development in general or do you think any team could benefit from that?

Keegan: I think any team could benefit from it. We use it more on the operational and sales aspect. Obviously we’re trying to grow this business very quickly. So we’re trying to look down the road 12 months at where we need to be, what policies we need to have in place, what structure do we need to have built in order to support more customers and more sales reps etc. So we use it mostly in our sales and implementation process to organize what we’re doing.

Matthew: Okay. Keegan as we close can you tell listeners how they can find Wurk online?

Keegan: So you can go to www.enjoywurk.com and you can see all the different products that we have available. You can request to see a demo, you can connect with someone on our sales team. If you would like to email us directly, you can email us at sales@enjoywurk.com and we would love to hear from you.

Matthew: Great. Keegan thanks so much for coming on CannaInsider today. We really appreciate it.

Keegan: Thank you for having me.

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