Non-revenue-generating cannabis jobs in peril as demand grows for hourly workers

For evidence of headwinds facing the regulated marijuana industry, look no further than the cannabis labor market.

As headlines from the past several months attest, employers ranging from multistate operators to small cannabis businesses to ancillary companies have laid off employees.

And for the first time since regulated marijuana markets opened in the United States, the number of cannabis jobs in the country contracted during the past year, according to a report released in February 2023 by Denver-based marijuana industry recruiting firm Vangst.

A national decline in cannabis industry jobs was unfathomable a year ago, given the many new markets and those getting ready to launch.

But global inflation, depressed cannabis prices, a dearth of investment dollars as well as oversaturation in mature markets have compelled many marijuana companies to lay off workers, Vangst reported.

The firm found there were 417,493 cannabis industry jobs (both plant-touching and non-plant-touching) in early 2023, a drop of about 2% from the 428,059 jobs the firm tallied the same time last year.

The days of the “Great Resignation” seem a distant memory now. Recruiters report that fewer cannabis businesses are posting jobs, and many industry workers fear for their job security.

“The tables have totally turned,” Vangst CEO Karson Humiston said. “The days of candidates demanding double their salaries (not to leave a company) are over.”

At the same time, there are reasons to be hopeful that the cannabis industry could resume its place as the job-producing juggernaut it was not long ago.

“We are definitely seeing some layoffs in certain states, but it’s definitely not all doom and gloom,” said Liesl Bernard, CEO of CannabizTeam, a national recruiting firm headquartered in San Diego.

“We’re seeing a huge surge of hiring in the states that just became adult use, like Maryland and Missouri. All those eastern states are hiring.”

Amid the uncertainty and tumult, a few labor trends have emerged, and cannabis executives would be wise to remember them:

• This is an employers’ job market.
• Generally, jobs are being lost in mature state markets but gained in new markets, resulting in an eastward migration of cannabis workers.
• The most vulnerable jobs are in middle management, human resources and marketing, while hourly workers are in most demand.
• Many cannabis businesses are turning to temporary workers and part-time executives to replace full-time employees.

Observers hope the silver lining to the labor downturn is that business leaders will become more deliberate about workforce planning.

Employers’ market

In the current labor market, employers have leverage over employees, observers said.

“Companies have a lot more choice as far as top talent is concerned,” Bernard said.

“And a lot of companies are using this opportunity to upgrade their bench and look at their team, saying, ‘Where do I need more firepower? Where should I add executives?’

“Because they’re easier to find in the market right now.”

At the same time, as companies lay off more people, they in turn demand that surviving workers do more, observers said.

“We’re seeing many companies revert to earlier years, when executives wore three or four hats rather than having one specific job function,” said Kara Bradford, CEO of Seattle-based Viridian Staffing, a national cannabis recruiting firm.

“For example, someone who only handled Metrc for their entire organization now may be doing Metrc, quality assurance and compliance.

“What were three positions 10 months ago have now been rolled into one.”

Those employees could consider themselves lucky to still be in the cannabis industry, however, as people interested in joining marijuana companies are finding it harder to break in than in years past.

Companies are seeking candidates with cannabis experience, and many are looking for work, Bradford said.

The hardest-hit positions are in middle management, human resources and marketing, observers said.

Middle managers are frequently among the first to be laid off because when companies look to reduce head count, they try to balance the number of individual contributors reporting to a manager, Bradford said.

“You don’t want 50 people reporting in to one manager because how is that manager going to be able to help grow and develop those workers? … It’s just not reasonable,” Bradford said.

“When you’re reducing the number of individuals within your organization, you don’t need as many layers in the middle to support those workers.

“That’s the reason why we see middle management getting laid off, and it’s not just in cannabis.”

Other positions that are getting hit hard are those not perceived as “revenue generating,” Bradford said, including human resources, marketing and compliance, which are being outsourced to third-party providers.

One exception in the current environment is hourly positions.

“Hourly workers haven’t been impacted,” Humiston said, explaining that cultivators and manufacturers still need harvesters, extraction technicians, packagers and other jobs that get product to market.

Right time for part time

Economic uncertainty has led many companies to use temp workers, fractional staff and consultants because it’s more affordable than hiring permanent staffers and offers greater flexibility.

Employers don’t have to offer temp workers full-time benefits, for example, Bernard said.

There’s flexibility because employers can bring in talent as they need it, and there’s agility because the company that is hiring doesn’t have to go through a formal hiring process.

By trying someone out as a temp first, companies get the assurance of having seen them perform and deciding how they fit into company culture, Bernard said.

“We’re seeing a lot of companies switching to more of a hybrid workforce in the industry and only hiring executives full time that are key to the organization,” Bernard said.

CannabizTeam’s temp staffing arm is seeing more business from MSOs, Bernard said.

A lot of those jobs are entry-level positions to help with pre- and post-harvest staffing as well as spots on manufacturing and packaging lines, Bernard said.

Eastward migration

Most cannabis industry layoffs have happened in mature markets in the West – most notably California, which had the biggest drop in cannabis industry jobs.

However, job growth in the East has led to a migration of workers from western to eastern markets.

“The new license holders in those states are all hiring, and they prefer people with experience,” Bernard said.

“They’re luring them with better benefits and even higher salaries. Most companies will also pay for relocation.

“We’re definitely seeing a little bit of an eastward migration as far as talent is concerned.”

She added: “Cultivation and manufacturing are really big in Maryland right now, getting enough product available for the demand that they’re seeing with adult use. There’s a lot of hiring in each vertical, from cultivation, extraction, manufacturing, retail and all the C-suite roles in those states as well.”

Bernard noted that many East Coast natives who went west to work in cannabis are returning home.

Talent drain

One concern in the current marijuana labor market is that hourly employees and salaried workers will leave cannabis for other sectors because of the industry’s’ struggles and other sectors’ ability to offer attractive pay and benefits packages.

“Companies should retain as much of the exceptional talent we have in this industry,” Bradford said.

“I’m really worried about brain drain or talent drain, because as an industry we’ve spent so much time bringing in people from other industries and training these individuals, helping them understand cannabis and also learning from them about what best practices from other industries do and don’t work in cannabis.

“One of my biggest concerns is that we are losing talent to other industries, and we won’t be able to get them back.

“One big trend right now is attrition. It’s higher now than it’s ever been for hourly workers. … We’re competing for the same hourly worker talent as a lot of other industries right now.”

Source: https://mjbizdaily.com/non-revenue-generating-cannabis-jobs-in-jeopardy/