HR SOPs: 7 Employee Management Tips For Cannabis Business Owners

Hiring employees is especially difficult and expensive for a Cannabis business owner. That’s because, as Liesl Bernard, CEO of Cannabiz Team told SHRM, says, hiring employees for cannabis-related companies “is more expensive because many states require additional screening, licenses and background checks”.

The additional employee screening checks aren’t the only Human Resource Management cost associated with cannabis operations. Having thorough employee management systems, HR SOPs, and access to frequent background checks online are all investments that will save you money and time in the long run.

Hiring and onboarding employees is an investment in your company and if you aren’t set up to hire good employees and nurture them, you will lose money. Spending the time and money to set up employee management systems and HR SOPs that attract and keep good employees is a worthwhile investment.

These are 7 employee management tips that you need to know in order to include efficient HR practices in your cannabis business.

For more on these tips, be sure to check out our podcast with HR expert Jill Avey from Southwestern HR Consulting, and background checks expert Dianna Canada from Maximum Reports.

Difference between a W-2 employee and W-9 (1099) contractor
How to write and use a job description
The application and interview process
Conducting background checks online
The hiring and onboarding process
Terminating an employee
How HR SOPs help with employee management
Wrapping up and reducing employee turnover

1) Difference Between a W-2 Employee and W-9 (1099) Contractor

It may seem obvious, but knowing the difference between what constitutes a W-2 employee and W-9 (1099) contractor is very important as a business owner. It is risky business to have someone do the work of an employee and operate as an independent contractor.

W-2 employee- someone who is on the payroll. As the employer, you regulate the employee’s scope of work and hours, and rely on the job description. You provide benefits, pay overtime, and payroll tax for a W-2 employee.

W-9 (1099) contractor- someone who owns their own business and pays their own taxes. A contractor provides the business owner with a scope of work and only performs the tasks that are agreed upon. They then invoice the business owner after the work is completed.

Since the state’s human rights bureaus have a lot of oversight regarding whether or not someone is or isn’t a W-2 or 1099 employee, you need to be sure that you are operating within the legal parameters in order to avoid costly mistakes.

For example, if you hire someone as a 1099 contractor who should actually be an employee, you will pay back payments for overtime and payroll taxes, in addition to fines and penalties.

2) How to Write and Use a Job Description

A job description is one of the strongest employee management tools for the life cycle of an employee. It’s a living, breathing document that should always be referred to and adjusted throughout the lifespan of an employment position.

A job description demonstrates:

The type of employee you’re looking for, listing the essential duties required in order to conduct the position correctly, and the skill set required to perform the duties of the position. This includes a description of all physical requirements in order to perform the tasks for the job, specifying any accommodation on behalf of the employer as an option.
The type of pay, whether the pay is exempt (salary) or non-exempt (hourly and eligible for overtime)
How applicants are to be interviewed if you will conduct virtual or in-person interviews and the period of time during which interviews will be conducted and ultimately closed.
How training, evaluation, and termination of employees are conducted. This documentation holds applicants and subsequent employees accountable to the standards of the job description.

3) The Application & Interviewing Process

You’ve posted the job on a job search board and are ready to receive applications. When reviewing them, it’s important to ask these questions in order to filter out applicants who are a good fit for an interview.

How Might They Fit In With The Company Culture?

Before you even post the Job Description, you should determine what type of person would make a good fit in your business culture. This is an important employee management strategy because personality cannot be taught, and finding someone who has the potential of growing with the company is ideal, both emotionally and financially.

Are They Teachable & Willing To Learn?

Know what skills can be taught to any employee in order to perform the required duties of the job. When filtering through applications, consider whether they seem like they are teachable — have they demonstrated that they can learn, or do they have any experience that lends itself to the position? This can be predetermined by looking at their previous experience.

What Does Their Previous Experience Look Like?

Reviewing applicants’ resumes can be very helpful if you are looking for things that impact or trigger your company culture. When you review their previous work experience, note how long they stayed with a company and if they grew within the company.

The Interview

You’ve filtered through the applicants and set aside those who have the most potential to be a good fit. Now it’s time for the interviewing process.

Have a set of questions that you ask everyone. This is important so that you can fairly measure every applicant’s answers to determine who might be the best fit. Follow-up questions based on the applicant`s answers can differ, but make sure you are asking the same set of questions to every applicant.

Ask open-ended behavioral questions. These questions will guide the applicant to share openly but pertaining to things that relate to the job. For example, asking “What is an example of a time you make a mistake, and how did you handle it?” is more effective than asking the applicant to “Tell us about yourself”. It’s nice to get to know applicants a little bit on a personal level, but this can get you in trouble if you base your hiring decision on things that don’t really pertain to the job.

Avoid peeking at applicants’ social media accounts. This can easily lead to biased and unfair hiring decisions that are potentially only based on a perceived idea you have from viewing their account. Since it’s not accurate, it’s a discriminatory practice and can lead to legal issues. Instead, be sure to get all the information you can from applications, resumes, and follow-ups with previous employers.

4) Conducting Background Checks Online

In this highly regulated industry, background checks are often required for all employees. However, no matter what industry you’re in, every business owner should perform a background check online for every employee so that you know who you’re bringing into the organization. Why? Because you can’t tell a person’s integrity simply by talking to them — but you can see their integrity in a background report.

Background checks can offer business information about a person’s social security, nationwide arrest records, driving records, and leans. Verification for previous employment (licensing, employment) of their work history and employment.

In the Cannabis industry, background checks should be performed either according to compliance regulations of jurisdictions or at least once per year. Staffing agencies do perform background checks, but it’s highly recommended that your company does an additional background check online before bringing on any employee.

Using a reputable service provider that is authorized to perform background checks online and follow compliant practices specific to the Cannabis industry is key.

5) The Hiring & Onboarding Process

You interviewed an applicant that you think will be a great asset to your company and you’re ready to bring them on.

Before they step foot in the door, you need to first make sure the background check and drug test (depending on your State or in-house regulations) are passed, make the job offer official, and have your onboarding processes prepped.

The Job Offer

An official document that requires signatures indicating an agreement has been made concerning the requirements of the job, who is to be reported to, any benefits, pay agreement, a notice of termination, etc.

Background Check and/or Drug Screening

The employee should have positive references and have passed a background check and drug test, if applicable.

Communication With New Employees

As the business owner or manager, you need to be thoroughly prepared for the arrival and training process and communicate the expectations of the first day with your employee before their arrival. This includes details about parking, dress code, lunch, etc. Having this practice as a part of your HR SOPs helps your employee feel valued and respected — and you’ll get bonus points for organizing a team and/or trainer to welcome them when they arrive.

Employee Orientation

Having HR SOPs that walk through the entire onboarding process will help keep you on track and record all of the training that has been conducted. Have everything ready when they arrive — all paperwork prepared, their tools and workstation set up, job description and employee handbook ready, and any other onboarding materials necessary.

Demonstrate Your Business Values and Company Culture

Paint the picture of what working in this culture should feel like. Introduce the new employee to the entire staff, including management and owners. Go over the purpose of the business — the brand vision, mission, and values.

Onboarding employees should never look like handing someone paperwork and then rolling into performing tasks. This doesn’t promote a positive work culture, and you’re setting yourself up for problems with employee performance and compliant practices.

6) Terminating an Employee

The HR experts at Southwestern HR Consulting advise business owners to “hire slow, and fire fast”. This helps you bring on candidates that have the highest potential of being a great asset to your company and protects your business by holding your employees accountable for their actions.

Knowing when to terminate an employee should be guided by your employee records and SOPs. Terminations should be based on employee performance, job description or safety violations. SOPs, logs, and forms will also act as a record of your decision to terminate lawfully.

Creating a culture of accountability is one of the keys to employee retention and protection. If you allow poor-quality work or behavior, you are putting your business at risk. You want your staff to know what is acceptable and what is not.

7) How HR SOPs Help With Employee Management

Your SOPs are the documentation that protects your business, your employees, and your customers. The communication you have with your employees should be reflected in your HR SOPs through

Employee training- records indicate that training was completed, and the employee and trainer both sign off on the completed task.
Evaluation and feedback- records of employee performance and any feedback including all commendations, positive and constructive.
Corrective action- documentation of all incident reports, write-ups, warnings, etc.

Using email or messaging software systems to follow up with employees is a great way to have a record of your communication and gives you time and space to respond efficiently and accurately. It also lowers the risk of liability in the event of a legal or compliance issue.

Reduce Employee Turnover

Employee turnover is high in the cannabis industry. As owners are implementing more tools like BMSOP into daily practices, they are creating better conditions for their staff and retaining employees for longer.

In creating an environment that has high expectations, integrity, and accountability, you create a culture of employees who operate with more maturity and responsibility.

For more tips on how to nurture a compliant culture, check out our podcast with Kristen Yoder.

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