As Canada enters recreational marijuana market, Colorado tries to stem a brain drain on its cannabis industry

Key Points
  • Canada is now the largest national marijuana marketplace after legalizing recreational use on Wednesday.
  • As Canada and more states legalize medical and recreational marijuana, there is an effort to poach Colorado's experienced workers in the field.
  • The Federal Reserve Bank of Kansas City report estimates Colorado's marijuana industry currently employs approximately 18,000 full-time equivalent staff, a 17.7 percent increase over the previous year.
  • The annual salaries for director of cultivation now range from $47,000 to $250,000, according to Vangst, a cannabis employment agency.
Colorado Cannabis Convention

In the relatively new cannabis industry, Colorado has long led the labor market. But this soon may change. With more U.S. states planning to legalize medical and recreational marijuana — along with Wednesday's announcement that Canada is now the largest country with a legal national marijuana marketplace — they may seek to poach Colorado's experienced workers.

"The [workforce] needs are tremendous because the growth rates are very high relative to most industries. You're starting pretty much from scratch in most of these states," said Paul Seaborn, a professor at the University of Denver who teaches a "Business of Marijuana" class.

Industry publication Marijuana Business Daily recently estimated between 125,000 and 160,000 people work full-time in the U.S. industry, and market research firm New Frontier Data projects the legal market could create around 300,000 jobs by 2020.

While the cannabis industry makes up a relatively small share of Colorado's total employment at 0.7 percent, economists at the Federal Reserve Bank of Kansas City described it as one of the state's fastest-growing industries in an April report. In the first half of 2017, about 5.5 percent of Colorado's employment growth was attributed to the industry. By comparison, the leisure and hospitality sector was the largest contributor to total employment growth, at 23 percent, and the mining and logging sector at almost 7 percent.

The Fed report estimates Colorado's marijuana industry currently employs approximately 18,000 full-time staff, a 17.7 percent increase over the previous year. That does not include indirect employment in the marijuana sector — positions that do not require state licensing, such as security guards, construction specialists and legal services — which a 2016 report from the Marijuana Policy Group estimated to equal about 23 percent of cannabis industry jobs in Colorado.

As Colorado was the first state to legalize marijuana in 2012, the market there has matured to the point that opportunities for major growth and new customer segments are limited. Because of federal prohibitions, U.S.-based cannabis companies cannot move their products over state borders. These rules affect companies in all states, but the relatively established Colorado industry is especially feeling the pinch, according to Seaborn.

Knowledge transfer across the US

"What you're seeing is people starting to look at other locations, whether it's California or Canada, and see if they can take what they learned in Colorado and move somewhere else," Seaborn said. "It's actually a very challenging time because even though Colorado had this big head start, we're really limited in what we can reach as a state of 5 million people."

Industry workers from Colorado's highly regulated market are now leveraging that experience in other markets, especially in the Eastern U.S.

"Experienced people in Colorado are very used to working under very strict guidelines and regulations. [They] have a great experience in a mature, regulated and highly competitive market. Because of that, there are new and potentially lucrative opportunities in states that are newly legal, with similar highly regulated markets," said Ryan Smith, the COO of Cure Holdings, a Colorado-based medical marijuana company that also has operations in Pennsylvania and Ohio.

Vangst, a cannabis industry employment agency, recently compiled salary data from more than 1,200 cannabis companies for the most hired positions in the industry: director of extraction, director of cultivation, compliance manager, dispensary store manager, outside sales representatives, budtenders and trimmers. While lower-skilled jobs like trimmers, who manicure and prepare harvested plants to be sold, made between $11.50 and $14.50 an hour, Vangst found the annual salaries for director of cultivation ranged from $47,000 to $250,000. A director of cultivation's duties include establishing standard cultivation operating procedures and harvest schedules.

Companies in all legal markets are competing for experienced workers from growing, cultivating, processing to dispensing.

"You're seeing a knowledge transfer from the West Coast to the East Coast," Smith said. He has seen a number of people in the industry leave Colorado, Washington and Oregon for eastern markets.

Vangst CEO Karson Humiston said the company has noticed companies in newly legal states recruiting out of Colorado. One client in Maryland recently hired a director of cultivation from Colorado after doubling the salary offer to $180,000, "because these people are few and far between," said Humiston.

Garden Remedies operates a cultivation facility in Fitchburg, Massachusetts.
Garden Remedies

"How many people have set up and scaled a legal cannabis business? All of these new companies and markets are taking the talent from Colorado, which is fine — that opens up opportunities for people to be promoted," she said. "But I think Colorado companies may be sort of mad because a lot of their talent are being stolen by new states that are opening up."

Christopher Burke is one such example. Burke is currently the director of retail operations at Storehouse, a Maryland marijuana dispensary that used Vangst to hire a candidate out of Colorado. He previously worked at a dispensary in Denver.

"The East Coast had a bit of appeal to me just because it was a brand-new market," said Burke. "Maryland was particularly well positioned just because of how much time there has been between when they voted it and when dispensaries and cultivators came to market. It's been a great market so far that's gotten to a high level very quickly."

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Maryland legalized medical marijuana in 2013, but the state's program did not become operational until 2017. Storehouse applied for a license three years ago and was able open this past August, according to founder and CEO Jeff Jacobson.

When recruiting, the company looked immediately to more established markets like Colorado. "There's a lot of intricacies that come with the business," said Jacobson. "Looking at the local talent pool, they just don't have a big knowledge base." The company wanted a candidate that understood both compliance and the retail process, so bringing in experienced talent was a crucial business decision, he said.

Burke said working in the Colorado industry helped him bring a combination of the product knowledge and understanding of the intimate details that go into highly-regulated legal cannabis operations to Maryland's newer market.

Employment site Indeed found Florida, California, Maryland and Pennsylvania had the highest percent increase in share of marijuana-related job postings from 2017 to 2018, according to an October analysis by the site. Those four states each had a more than 100 percent increase in such postings, with close to a 200 percent jump for Florida, which legalized medical marijuana in 2016. The share of such postings in Colorado grew 14.6 percent over the same period, though the state still has by far the highest share of marijuana job postings on Indeed, with 988.7 per 1 million jobs in 2018.

Along with the increase in job postings, Indeed has seen a rise in marijuana search terms by its users for jobs in almost every state. Oklahoma searches, in particular, shot up more than 3,000 percent from 2017 to 2018. Oklahoma became the 30th state to legalize medical marijuana in June. Colorado did see an increase over the same time period, but paced behind the vast majority of other states.

Talent war heats up

One job in high demand is "budtender," a retail worker at a medical or recreational marijuana shop. "Budtender" was one of the top 10 fastest-growing job searches in the U.S. on Indeed, growing 292 percent from 2016 to 2017.

"There's a competition for talent across the industry," Smith said. "If people have the talent, experience and are willing to move, there are larger pay packages in some of these emerging markets. It's definitely a drain on the talent pool here [in Colorado]."

The National Cannabis Industry Association does not believe there is a problem of talent leaving Colorado or other states, as people in the industry moving to other states would make room for newer employees to gain more experience. Industry staffing companies are "making it easier for cannabis businesses to find potential hires with broader and more traditional work experience, as well as making it easier for people with all levels experience in the cannabis industry to connect with employers," it stated via email. "This is already helping to ease staffing issues within the cannabis industry and will continue to do so even more as additional state markets open up."

The newer state markets also are pushing to develop their own talent.

"The expertise that comes from out-of-state doesn't necessarily work in states like Massachusetts," said Karen Munkacy, president and CEO of Massachusetts-based medical marijuana company Garden Remedies. She cites weather differences — Colorado's low humidity versus Massachusetts's high humidity — as one example. Munkacy said Garden Remedies prefers to hire locally and train employees in-house who may not have experience in the industry.

"This is not an industry in which there's a proven approach," University of Denver professor Seaborn said. "It's much more a trial-and-error, survival-of-the-fittest industry where everyone's figuring out the right way to go."

Correction: This story has been updated to reflect the fact that Cure Holdings has operations in Colorado, Pennsylvania and Ohio.

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