Despite the pandemic, cannabis sales are skyrocketing. Americans spent more than $18 billion on cannabis products in 2020—a 71-percent increase over 2019 revenues. Many companies are looking to cash in on the green rush, both startups and established businesses that want to expand into new states.
With more competition than ever before, how can new and expanding companies alike find success as the industry continues to evolve? The companies that flourish will be those that can hire and retain the right employees. Unfortunately, due to generations of prohibition, the industry is suffering a talent gap and a lack of diversity. Those gaps, coupled with a race to the top, cause many companies to disregard essential human resources best practices to foster an efficient workplace.
As the industry continues to mature, gaining real estate and keeping up with sales aren’t the only results on which to focus. Consciously building a healthy company culture to retain top talent will be critical to establishing and maintaining a competitive advantage in the marketplace.
Advice for startups
First, define your mission. Clearly articulate the purpose of your business and why it exists. Answering “What’s my why?” is a vital step toward building a company culture, which is increasingly important for attracting top talent under age 40. Culture and values provide a company with the foundation upon which everything else is built.
Then, create an attainable financial model. The days of hockey stick projections creating instant millionaires have passed. Cannabis is a highly regulated and extremely competitive industry, and your business plan and financial model should reflect this. Raise more money than you think you will need. Undercapitalization remains one of the most common challenges facing startups in this space. I have seen countless senior management teams spend all their time fundraising, taking away from business operations.
Next, prioritize your leadership team. Building a superior cannabis business starts with executive leadership and flows down the company from there. Establishing your executive team is all about finding the right balance of experience, company culture, and industry fit. Each member of your leadership team should understand how to coach (not dictate) and create a positive atmosphere to drive results. Focus on diversity when building your team to ensure a variety of perspectives, skills, and knowledge.
Remember: quality over quantity. Your employees are the heart of your organization and should provide value and feel valued every day. Hire individuals with experience and proven skills that will help your business during the early stages.
Also keep in mind adaptability is a skill. While growing rapidly, the cannabis industry is still in its relative infancy and things are changing all the time, especially when it comes to rules and regulations. Hire people who are flexible and can handle the ups and downs. Creative problem solving, performing well under pressure, and learning from failure are all highly desirable skills.
Advice for expanding companies
Before scaling up, revisit your mission. Your company culture and values are arguably the most important competitive advantage you have. As your company continues to grow and evolve, revisit your mission to make sure it is clear, attainable, and applicable to your future plans. Reevaluate whether your company is living up to its core values and beliefs; if not, plan new ways to align with them.
Go back to the basics. Sometimes revenue starts flowing in before the foundation is built, and many cannabis companies still lag when it comes to acting like proper multimillion-dollar organizations. We see many multistate operators lose talent because of poor culture, unclear career paths, and a lack of incentives to make employees feel valued and challenged. Effective leaders can foster open communication and empower employees’ entrepreneurial spirits to build a healthy corporate culture.
Do your research. Examine all the facts and data you can find when considering where to expand. Factors like population density, medical cannabis adoption rates, and consumer preferences can help you plan accordingly and pivot correctly for future growth.
Build a team for longevity. Once you’ve found the right employees, shift focus to keeping them around for the long haul. Create a thoughtful onboarding program and invest in your team by offering things like competitive compensation packages with room for growth and stock options or other forms of equity.
Ongoing education and training for staff can be another way to invest in your team for the long run. In a recent LinkedIn survey, 94 percent of employees said they would stay at a company longer if the organization invested in education.
The most effective leaders possess both corporate experience and a startup mentality. This combination provides the entrepreneurial spirit and personality necessary to deal with the countless unexpected changes the cannabis industry faces. Your leadership team needs to drive results so employees follow through on the company’s vision, but results aren’t the only thing that matters. Cohesive culture and company values help align vision across departments, unifying your team’s efforts and your brand. In turn, the likely results include positive sales numbers and satisfied investors. This simply cannot be achieved without a skilled, motivated, and positive team.
