As more and more states increase the minimum wage that businesses must pay to their employees, some have wondered whether this might affect the financial bottom line of the cannabis industry. However, industry experts do not believe that a minimum wage hike will have much impact on growers, cultivators, dispensaries, or the industry as a whole because most cannabis companies already pay their workers more than the proposed minimum wage. Keep reading this blog to learn more.
Cannabis Companies Pay More Than Minimum Wage in Most States
According to the 2020 Cannabis Industry Salary Guide, budtenders who work at dispensaries in states where cannabis is legal are paid, on average, $15 an hour. This is significantly more than the minimum wage in many of these states. Additionally, a lot of cannabis companies attract workers with generous benefit packages that put the workers’ annual pay well above the minimum wage. A recent survey of cannabis businesses found that roughly 90% offer benefits such as health insurance, paid leave, or a 401(k) plan to full-time employees who work at least 40 hours per week.
Some major nationwide retailers, like Target and Walmart, have announced that they will be moving toward a $15 minimum wage for all employees. However, many small businesses have not yet made that move – and it is here where cannabis companies are extremely competitive and, in many cases, are more likely to attract highly qualified job applicants.
So, why does the cannabis industry tend to offer higher salaries and greater benefits to employees? The specialized knowledge required to work in the industry and to serve knowledgeable customers often makes it difficult to find qualified workers. Moreover, cannabis businesses recognize the importance of retaining employees who are able to effectively do the job because continuity is critical to business growth.
Cannabis Businesses Thrive During COVID-19 Pandemic
While there were a number of thriving industries that paid good wages before the COVID-19 pandemic, the economic downturn caused by the pandemic forced many industries to scale back their operations and cut costs by either reducing their workforces or slashing salaries and benefits for employees. This was especially true of smaller businesses that needed to close their doors due to state lockdown orders. However, the cannabis industry actually managed to surge during the coronavirus pandemic because states declared dispensaries “essential businesses” that could remain open. The end result was that a lot of cannabis companies were able to maintain their workforces and, in some cases, even expand their workforces with increased pay rates and benefits.
Cannabis Operators Likely to Be Unaffected by Federal Minimum Wage Hike
While there has been talk in recent weeks and months of the U.S. Congress passing a $15 federal minimum wage, it appears increasingly unlikely that this will happen anytime soon. Despite the lack of a higher federal minimum wage, however, many states have been increasing their own minimum wage requirements for businesses. The highest minimum wage imposed by any state is California’s $14 an hour requirement, which applies to all businesses in the state that have more than 25 employees.
For cannabis operators with retail stores and cultivation facilities in states where cannabis is legal, the rise in minimum wage in many of these states has not made much of a difference to the businesses’ bottom lines. That’s because the majority of these cannabis operators are already paying their workers above the state-imposed minimum wage. Looking forward, any additional increases to state minimum wage requirements are also unlikely to affect cannabis companies in these states because most successful cannabis operators already factor in a higher cost of doing business – whether it’s higher salaries for workers or a “cannabis premium” imposed on real estate purchases.
Contact Scythian Cannabis Real Estate Today
Scythian Cannabis Real Estate is a privately held cannabis real estate fund based out of Denver, Colorado. Scythian has a current portfolio of cannabis properties used as retail dispensaries in Colorado, North Dakota, and Pennsylvania, as well as a pipeline of future acquisitions in states like Michigan, New Jersey, Massachusetts, and throughout the United States. If you are a cannabis operator looking to raise capital, or an individual looking to invest in the growing cannabis market, Scythian Real Estate can assist you. Contact us for more information.
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.