Cannabis HR Tech CEO Sounds Off On How Industry Can Move Forward After Paychex Fallout

Even though two-thirds of the U.S. have legal medical marijuana markets and a third permit adult-use, the ongoing banking ban continues to be a blight on the industry. Recently, this issue came to a troubling head when Paychex, which provides payroll and human resource products and services, announced in a memo that it would no longer service cannabis businesses, effective May 1. This development will affect all companies and operators that rely on Paychex’s payroll services.

Recently, Scott Keyon, CEO and executive chairman of Wurk, a Denver-based provider of software that helps cannabis companies manage HR-related issues, offered insight on what this means for the industry moving forward.

This Q&A was edited for conciseness and clarity.

Iris Dorbian: What are the implications of Paychex no longer working with cannabis businesses?

Scott Kenyon: As one of the main payroll providers in the cannabis space, Paychex was an essential tool for cannabis businesses to ensure that their employees were paid accurately and on time with each paycheck. With Paychex’s decision to break ties with cannabis business clients, many companies are now at risk. Moving to a new payroll provider often takes up to 12 weeks—Paychex’s decision was a curveball thrown with little time to correct it.

In terms of greater, industry-wide implications, sudden decisions like these can set the industry back and delegitimize cannabis employment in the eyes of employees. With a tricky landscape wrought with stigmas, employees already have reasons enough to work in mainstream industries like tech or consumer packaged goods. Adding potential issues with payroll will only encourage top talent to steer clear of cannabis job opportunities, which will stifle industry growth by keeping out strength at all levels of employment.

Dorbian: What does this mean going forward?

Kenyon: Ancillary companies are the backbone of any industry, and cannabis ancillary services such as payroll and human capital management providers are certainly here to stay. Because of their dedication to the cannabis industry, cannabis ancillary operators should always be the top contender to provide services to plant-touching businesses. This is not the first time that mainstream players offering banking or payroll services and solutions have tried to enter the cannabis space and left operators high and dry and it won’t be the last.

Dorbian: What were the factors leading up to this?

Kenyon: This issue comes at a precarious time for banking across the board, the cannabis space included. For the cannabis industry, the continued failure to pass the SAFE Banking Act has deflated momentum in building up access to trustworthy banking services and institutions. Banks can continue to deny services to cannabis operators, leaving many scrambling to fund their goals and provide reliable financial support to employees. On a wider scale, recent scares in banking have only lessened trust in the financial sector, with the collapse of Silicon Valley Bank and other established institutions. This is a troubling and anxiety-provoking time for the finance industry, an uncertainty that only increases in the already complex cannabis space.

Dorbian: What can cannabis businesses do to amend this situation?

Kenyon: Cannabis operators that are affected or experience this type of situation in the future should gather all tax and banking documentation and dedicate time and resources to meeting short deadlines and deliverables, especially those multistate operators with multiple employer identification numbers.

Dorbian: Is there a lesson learned here for cannabis businesses?

Kenyon: With this situation, cannabis businesses should take note of the potentially underrated importance of aligning with a top-tier payroll provider that is willing to adapt to the complex circumstances of the industry. Payroll is not a service that should be undervalued: it is the lifeline of operations and something that every employee relies on. Cannabis businesses should be able to focus on their core competencies and goals rather than worrying about additional HCM issues.