A recent report from cannabis data and research company Headset indicates that employee retention is a challenge in
the cannabis retail space. 

The report, which examined real-time employee sales data in nine states and four Canadian provinces from June 2021 through May 2022, found that about 55% of dispensary employees, typically referred to as “budtenders,” will resign within a given year. The report also found that approximately 25% of newly hired budtenders quit their job within the first month.

Cannabis Business Times caught up with Kevin Hart, the founder and CEO of Green Check Verified, a Florida-based software company solutions provider of cannabis banking and expert advisory services for financial institutions, to better understand what factors may be contributing to the high turnover rate and what businesses owners should actively be doing to improve employee retention.

Andriana Ruscitto: A recent report from cannabis data and research company Headset found, on average, 55% of budtenders in North America will resign within a given year. What key factors do you think lead to that turnover rate?

Kevin Hart: As part of my background in different technology companies, we had CPG (consumer packaged goods) experience. I have a lot of experience in CPG, retail, operations, etc., across different product lines. With as many businesses as we have on the platform, we get to meet a lot of these clients and go [visit] them. I think the retail experience of cannabis is no different than the retail experience of anybody else. It comes down to what that experience is and what that expectation would be, and if that expectation isn’t defined, the experience is never going to be delivered in that. I saw that you wrote about Planet 13. … As a consumer, your expectations [of Planet 13] are set in the parking lot, and then they only get enhanced when you walk through the door.

RELATED: Planet 13: The Dispensary Disruptor

The reason why that works is because the staff at Planet 13 is trained well. They’re working in an exciting, vibrant environment. They’re properly trained, they’re properly communicated with, and from my perspective, they’re not expected to just be there to fill an order and get you in and out the door with as much stuff in the bag. They have the right approach; they have the right experience and expectations. There is no separation between the consumer and the staff experience. They are one in the same. I think that’s a major, major challenge for the cannabis industry because you have a lot of first-time entrepreneurs who’ve all been consumers, but … they lose that connectivity of being a consumer. … I think the interesting thing, too, from a data perspective, is that geography plays a big part in that turnover category.

AR: Geography, that’s interesting. So why do you think that plays a factor in employee turnover?

KH: Because of how they set up the experiences. Is it a race to open, or is it an operation that’s trying to serve consumers? I think you see the pressure for a lot of cannabis businesses that they focus on the race to open, and they’ll deal with things later. I understand that economically, but the amount of time and level of effort to set those expectations –[for] consumer and staff–as equal right at the beginning, doesn’t take a lot of time.

In fact, I would argue if you did it the right way, you’re actually going to save a significant amount of time because you’re not dealing with the churn and the retraining, and the loss of productivity associated with it. So again, first-time entrepreneurs [have a] lack of understanding of the consumer-to-staff connectivity of the experience and the expectations.

The other part, too, and I think a lot of operators overlook this greatly, is the complexity of the job. … Budtenders themselves, you’re expecting these individuals to be a pharmacist to some degree, you want them to have the knowledge … Because of the variety of the products, you’re expecting them to approach it with a Nordstrom, Four Seasons, Ritz Carlton personality, and that doesn’t necessarily align itself to the consumer experience, depending on the vibe and the setup of that store. So again, you’re creating this disconnect right away because consumers are presented with far too many options as to the latest product, the hottest product, the different brands, the different names. … So instead, greeting and educating the consumer with, ‘Hey, this is who we are, and this is what we do,’ set that expectation. … Direct them to a consumer experience. A lot of [budtenders] let the consumer come in and go, ‘What would you like?’ … So, if somebody walks in and they say, ‘Well, I want this,’ [and the budtender says] ‘We don’t carry that,’ all of a sudden, you’re creating that environment where expectations aren’t being met, and the budtender is feeling that pressure of, ‘I’m just saying no a lot here.’

AR: How can cannabis companies hire right and reduce turnover at their business?

KH: One of the things that I’ve always done is, if I’m ever looking at a retail operation as a client, or as a job, etc., I secret shop. As part of the hiring process, dispensary owners should encourage people to secret shop the [store] and come in and go through that experience, because now you’re going to be on the other side of the counter at some point. … I think that’s exceptionally valuable. … [If] I was a dispensary operator, I would actually require somebody to secret shop. Because that way, when they come in, [they can] tell me about [their] experience. 

Don’t interview to hire, interview to partner. Get the people engaged because, again, that expectation. I think from an operator’s perspective, they could communicate a lot better. It’s disappointing to hear that a lot of dispensaries don’t have a team huddle before they open the door in the morning. If you’re going to open at [nine], get everybody together at 8:55, share an anecdote, have a lesson, have a conversation. It’s not cheerleader, ‘rah, rah, rah,’ type stuff. Just get everybody engaged and let them know how the operation’s going. [Ask and answer questions like] ‘Are we busy? ‘Are we too busy?’ ‘Are we hiring?’ ‘Do we have referral bonuses?’ ‘How are we doing on numbers?’  I see many people who don’t communicate [those things] because they want to keep those numbers close to themselves.

Lastly, I think they need to make their work environment more fun and not competitive on how many line items you get in a bag. People will spend more money if they’re in the right environment, and people will recommend things better when they don’t feel that pressure. It’s somewhat retail 101, but it’s just not being thought of and taught [that way].

AR: Headset’s report also found that roughly 25% of newly hired budtenders will quit their job within the first month of employment. What should employers do to ensure every new hire is set up for success from the start to increase retention?

KH: I think the interview process, as I said, is flawed. I highly recommend a secret shopper. I highly, highly recommend that members doing the hiring have a special question. It’s not supposed to be a trick question, but a special question, because that way, you’ll have a sense of how somebody’s going to act in a certain environment. When we’re hiring engineers, I’ll just ask a question, ‘Why are manhole covers round?’ I’ll blurt it out in the middle of the interview [when] things are going [good] and we like each other. … And it’s not important if somebody knows the answer; It’s how they handle the question. So, if they go, ‘I don’t know,’ well, guess what, when a customer asks them a question, something they’re going to say is, ‘I don’t know,’ instead of, ‘Well, nobody’s ever asked me that, let me ask somebody, let me research it.’ Because again, that expectation has to be met. Instead, [most people] go through this standard interview process instead of trying to create the connection, understand what they like to do outside of work and then touch base with them. It’s hard [and] it’s intensive, but we have one-on-one meetings here at Green Check every day, all the time, with different people. So let them know that they are a team member, and it’s not just some moniker that you threw on them. Instead of calling [them] an employee, treat them as such.

AR: Some cannabis employees across the U.S. are also choosing to unionize/strike. Why do you think that is?

KH: Certainly, I have seen it in pockets, and we see that in terms of our direct relationship with those cannabis businesses. It’s a normal day of operation, and we’ll see their sales go to zero; It’s not a holiday, they actually had to close. … [The reason] that unions still exist is because employees are unhappy. Everybody’s trying to deal with the outcome instead of the symptoms. Unhappy people unionize. …You’re always going to have factions of people that will want to unionize regardless of circumstances. But it goes back to the hiring and the culture you’re putting in place, and I also see quite frequently that a lot of people are hiring because they have to fill the spot. They’re not hiring to create the opportunity. If you bring in a bad employee, you’ll end up with three more like that because they’re not doing their job.

AR: I’ve noticed that some colleges and universities, especially in adult-use states, have begun to implement cannabis-specific degree programs. What benefits do adding cannabis-specific degree programs to university curriculums to adequately train future workers?

KH: I think it’s wonderful, and I’m so excited. It’s so encouraging to hear that many universities are actually offering a program. One of the things that we learned through our process is that education is at the tip of the spear, especially if you want financial institutions not to run away. … So, we knew we had to educate and then automate. That’s one of the mantras that we have, and we have since evolved our education processes to financial institutions, [too]. …

RELATED: New Jersey College Adds Cannabis Programs to Meet Demand

We’re partnering with a couple of firms. … [and in] this conversation with this particular firm, there are 40 different universities that actually have [cannabis] programs. Now I know of a handful; when they said 40, that is encouraging. … And I genuinely hope that they [will] take the next step [and] actually create intern programs around this as well. Academia is great, but it does not [always] prepare you for the real world.

AR: How could passing legislation like the SAFE Banking Act improve employee work conditions and unfair labor practices?

KH: I don’t think [the] SAFE Banking Act is going have any impact on employee work conditions. If anything, I think it might make it worse. [And] the reason why I say that is the SAFE Banking Act, when it [passes], there’s going to be more rules and regulations, not less, [but] significantly more. And so, I think that’s going to create an environment where a lot of the point-of-sale providers and technology providers that are being utilized in these environments, they’re not structured properly to handle modified rule sets. I think you might see back to that lack of training, lack of education, and lack of awareness. I think you might see some different pressure points associated with that.

As far as the unfair labor practices, it’s really disappointing anytime that occurs. What I’ve been more encouraged by, and I think the industry should be promoting and be more encouraged by, is what’s happening at the state levels. States now are mandating that if you’re a cannabis business and you have X number of employees, you do X number of revenue, you have to have a 401k program, you have to have benefits.

I think the state programs are good. And I think there are some states that are actually doing a really admirable job. In Colorado, they require that if you have 50 employees, you got to have a 401k program. … Now the challenge becomes, ‘Okay, I want a 401k provider,’–good luck going to find one, because then I have to find a payroll provider in a bank, etc. So that’s where SAFE will help, but it’s not going to help the hiring and the training practice. You got to go back to the basics of ‘What’s my business?’ ‘What do I want to achieve?’ and ‘How do I want my employees to drive my customer success?’

RELATED: U.S House Passes SAFE Banking Act as Amendment to Defense Bill

AR: Is there anything I missed, or you think would be beneficial to add or include?

KH: The one thing I would add is, in any of these environments, they’re supposed to be low stress. The purpose of cannabis, aside from its medical value, is supposed to be low stress. As an owner-operator, try to pick up that vibe and keep it and retain it. And if you’re trying to go with this antiseptic look, or you’re just trying to be hip and cool, but you’re not matching that with your behavior … the consumers can read through it. Staff will certainly see it [because] they get to live it over and over again. Align your values to what it is that you’re trying to do. Your opportunity to make money will be there. In fact, your opportunity to make more money is actually there if you focus on the right things.

Editor’s Note: This Interview was edited for style, length, and clarity.