4 Quick Tips for Creating a 401(k)

Like any industry, cannabis companies need to stand out to attract and retain workers. Offering a retirement plan is a good first step for operators who partner with the right benefits provider.

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Illustration: HRx Photo / Shutterstock

Demand for employees continues to grow in the high-flying cannabis industry, but the celebration over such news eases once today’s tight labor market is considered. In 2021, 47 million workers voluntarily left their jobs, and 43 percent of workers cited inadequate benefits as a factor in quitting.

As the cannabis industry is not immune to any of these labor challenges, operators can turn to improved employee benefits to help them stand out as an employer of choice. Adding a 401(k) retirement savings plan can be an essential tool for attracting and retaining employees.


Given the complexity of the cannabis industry and its hazy legal status in the U.S., it has been challenging for cannabis companies to find benefits providers willing to work with them to offer retirement plans. However, there are options, as a growing number of boutique firms offer 401(k) programs and other benefits for this industry—it just requires the right partners to find the right plan.

4 tips for creating a 401(k) for cannabis workers

These four tips can help cannabis companies offer a 401(k):

  1. Determine goals, design plan. Outline the objectives of the organization’s 401(k) plan and how the plan will be set up, including how employees will be rewarded for participation. Consider developing a formal investment policy statement that includes monitoring the plan.
  2. Offer a 401(k) matching and auto-enrollment. Offering to match employee contributions tends to increase participation in retirement plans and employee satisfaction. For instance, cannabis companies could match 50 percent of salary up to 6 percent. And automatically enrolling employees in the plan has been shown to increase both participation and engagement.
  3. Educate employees. Employees may be unfamiliar with how 401(k) plans work and how to optimize their investment choices. Cannabis companies need to offer clear information on the benefits of the program, including information on managing their portfolio. This approach will make workers feel more comfortable with their investments and encourage engagement.
  4. Ask the experts. Cannabis companies that want to implement a 401(k) should partner with brokers or consultants who understand the complexities of the sector and know what retirement benefits companies cater to the industry

Jay-Virdi-hi-res-2021 Jay Virdi is chief sales officer for Hub International’s cannabis insurance and risk services in the United States and Canada. He focuses on developing Hub’s expertise and resources to serve the cannabis industry across the two countries. Hub comprises a network of risk, insurance, employee benefits, retirement, and wealth management specialists.