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The cannabis industry presents unique challenges when it comes to managing payroll. With strict compliance requirements, cash-heavy operations, and dynamic labor needs, payroll management can quickly become expensive and overwhelming if not optimized. By implementing automation and leveraging cannabis-specific tools, businesses can cut costs, increase efficiency, and focus on growth.
A standout example of how automation can transform cannabis payroll is the experience of Vibe by California, a rapidly growing, vertically integrated cannabis company that achieved significant savings and operational improvements by switching to KayaPush. Let’s explore how your business can save money on cannabis payroll, with insights from Vibe’s success story.
Why Cannabis Payroll Needs Special Attention
Cannabis payroll management is far more complex than in traditional industries, requiring a tailored approach to navigate unique operational, financial, and legal challenges. Here’s why cannabis payroll demands special attention:
280E Tax Compliance
Cannabis businesses fall under Section 280E of the IRS tax code, which prohibits them from claiming standard business deductions. This makes precise payroll tracking critical to accurately allocate expenses and minimize tax liability. Accounting systems must be able to separate deductible costs, such as those directly tied to cost of goods sold (COGS), from non-deductible operational expenses. Errors in this area can lead to significant penalties or overpaying on taxes.
State-Specific Laws
Labor laws and payroll regulations in the cannabis industry vary widely across states, particularly in cannabis-heavy markets like California, Colorado, and Oregon. For example, requirements around overtime pay, time tracking, and employee classification can differ dramatically. Cannabis payroll systems must adapt to these regional variations to ensure compliance with local labor laws and avoid costly fines.
Cash-Heavy Transactions
With limited access to traditional banking due to federal restrictions, many cannabis businesses rely heavily on cash transactions — including paying employees in cash. This creates additional logistical and security challenges for managing cannabis payroll. Ensuring accurate record-keeping and compliance with reporting obligations becomes even more critical in this cash-heavy environment.
4 Ways to Save Money on Cannabis Payroll
1. Automate Payroll Processes
Manually running payroll increases the risk of errors, compliance violations, and wasted time. A cannabis-specific payroll platform like KayaPush offers specialized solutions to streamline payroll, automate tax calculations, and track labor expenses. This removes the risk of over or underpaying your staff, misfiling taxes, and breaking very expensive labor compliance laws. With KayaPush, payroll can be completed compliantly in under 10 minutes!
Case Study Highlight: Vibe by California, a vertically integrated cannabis business, faced significant payroll challenges before switching to KayaPush. By automating payroll and scheduling with KayaPush, Vibe saved on labor costs and reduced errors, achieving greater efficiency across multiple locations — they even saved the cost of an entire employee in each location! This was especially beneficial in the state of California, where labor compliance is stricter and PAGA fines are exceptionally expensive.
2. Optimize Scheduling to Reduce Labor Costs
Efficient scheduling minimizes overstaffing, prevents unnecessary overtime, and ensures adequate coverage during peak times. KayaPush integrates seamlessly with POS systems, enabling managers to make data-driven staffing decisions by analyzing labor needs against sales forecasts for optimized efficiency and cost control. This ensures that you are always perfectly staffed, preventing overpaying on your labor or understaffing your team during peak times. This can also reduce unnecessary overtime costs, with overtime alerts built right into the scheduler. And the best part? The scheduler and time tracker funnels hours directly into payroll, making payroll processing a one-click task.
Example from Vibe by California: Using KayaPush, Vibe’s store managers track labor costs in real time and make immediate adjustments based on live sales data. This flexibility allows them to save on labor expenses during slower periods by knowing when to send someone home.
3. Centralize Payroll and Employee Data
Managing payroll across multiple locations can create inefficiencies if employee data is scattered. Centralizing payroll and employee records streamlines the process and ensures consistent compliance across all locations. With KayaPush's enterprise dashboard, dispensary owners and managers can view reports with data from all locations in one centralized location. This makes it easy to identify which stores are underperforming and which stores are overstaffing. Owners can view trends, insights, and charts from anywhere at anytime, allowing them to spend less time analyzing and more time strategizing.
How KayaPush Helps: With KayaPush, Vibe by California unified payroll and employee data across its retail, cultivation, and distribution operations. This saved significant administrative time and allowed for seamless schedule adjustments across roles.
4. Leverage Mobile and Automated Features
Features like mobile clock-ins, automated time tracking, and break waiver forms eliminate paperwork, reduce errors, and save time for both employees and managers. With KayaPush, employees can view their pay stubs and schedules from anywhere, directly on their phone, increasing transparency and alignment. Employees can also request time off or swap shifts on the employee app, reducing the administrative burden from managers. KayaPush's new chat feature even enables easy texting and communication across the entire time, without sharing personal details.
Case Study in Action: Vibe by California benefited from KayaPush’s mobile clock-in and geofencing capabilities, ensuring accurate time tracking for on-the-go employees like delivery drivers. Automated break waivers helped Vibe remain compliant with California labor laws while saving valuable administrative hours.
Vibe by California: A Cannabis Payroll Success Story
Vibe by California’s journey with KayaPush highlights the transformative impact of a cannabis-specific payroll solution. As the fastest-growing cannabis company in California, Vibe faced unique challenges in managing payroll for its multi-location operations.
Challenges Before KayaPush:
- Difficulty managing payroll and compliance across multiple locations.
- Limited reporting capabilities and inflexible software.
- Time-consuming manual processes for tax reporting and scheduling.
Key Benefits After KayaPush:
1. Real-Time Labor Tracking: Enabled immediate staffing adjustments, saving on labor costs.
2. Management Dashboard: Centralized operations, making it easy to monitor labor data and break schedules.
3. Automated Time Tracking: Reduced manual errors while maintaining compliance with California labor laws.
4. Mobile Clock-Ins: Simplified time tracking for distribution staff and other mobile employees.
5. Break Waivers: Automated compliance for employees working shorter shifts, eliminating paperwork.
Richard McLean, Head of Retail at Vibe by California, stated: "The combination of KayaPush's features has really helped us save a lot of money and time, providing us with great efficiencies."
How Automation Translates to Cost Savings
By automating payroll and employee management, cannabis businesses can experience tangible cost savings in several areas:
1. Fewer Compliance Errors: Automated tax calculations ensure accurate deductions and compliance, reducing penalties.
2. Increased Operational Efficiency: Managers spend less time on administrative tasks, redirecting efforts to growth-focused activities.
3. Improved Employee Satisfaction: Accurate and timely pay boosts morale, increasing retention and reducing recruitment costs.
Key Results for Vibe by California: With KayaPush, Vibe saved the equivalent of "almost an entire human" in labor costs for every location, proving that automation directly impacts the bottom line.
Tips to Save More on Cannabis Payroll
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Why KayaPush Is the Ideal Solution for Cannabis Payroll
KayaPush is the leading cannabis-specific payroll solution, addressing unique challenges like state-specific labor laws and cash-flow sensitive operations. With automation at its core, KayaPush simplifies payroll management by integrating scheduling, tracking labor costs in real-time, and ensuring compliance with labor laws. By eliminating manual errors and streamlining processes, businesses save time and money while focusing on growth.
Designed for dispensaries, cultivators, and multi-location operators, KayaPush provides tools like mobile-friendly clock-ins, automated tax calculations, and centralized employee data management. Whether you’re managing one location or many, KayaPush empowers cannabis businesses to reduce costs, stay compliant, and scale operations effortlessly.
Conclusion
Managing payroll in the cannabis industry doesn’t have to be a costly and complex process. By automating payroll, optimizing scheduling, and centralizing employee data, businesses can achieve significant cost savings while staying compliant. Book a demo today to experience strain free payroll!
