Arizona Cannabis HR & Payroll
Arizona Cannabis Legalization History
In 2010 Arizona legalized medical cannabis through the passage of Proposition 203 with the first sales taking place in December of 2012. In 2020, Arizona became the thirteenth state to legalize marijuana for recreational use as Proposition 207, the Smart and Safe Act passed. As a result, the state saw the first licensed recreational sales taking place on January 22, 2021. This made Arizona the fastest state to begin retail sales after recreational legalization. Arizona currently utilizes a statewide system that regulates all aspects of cannabis including if not limited to seed-to-sale as well as cannabis licenses for dispensaries.
The laws, regulations, and policies differ from state to state. As a result, many obstacles have been created for those starting and operating cannabis businesses. Our goal at Wurk is to alleviate stress and minimize risk for those in the ever-changing cannabis environment. As a result, our mission is to protect the people and businesses of the cannabis industry by managing payroll, human resources, timekeeping, scheduling, and tax compliance for our partners.
Current Challenges in the AZ Cannabis Market
The cannabis industry is constantly changing, which brings about many challenges for HR leaders of marijuana businesses. Here are a few of the challenges facing the Arizona cannabis market.
Retaining Top Talent
Finding and retaining quality talent is becoming the most important differentiating factor for cannabis brands in Arizona. Retain top talent by offering perks like direct deposit, 401(k), and easy mobile scheduling.
Keeping Compliant Records
Many cannabis companies have failed to keep detailed, compliant records of their employee’s payroll and tax information. This is often due to fragmented human resources technology that isn’t made for cannabis businesses.
Cannabis Payroll & Banking
Many cannabis companies are struggling to secure banking relationships due to the industry in which they operate. Many of our clients have been dropped by mainstream payroll providers because they are in the cannabis industry.
Wurk’s Human Resource Software for the Cannabis Industry
At Wurk, we like to focus on people, not paperwork. It’s impossible to create a successful, profitable business in any industry without great people. This is especially true for the cannabis industry, as we’re tasked with fighting for greater social and political acceptance. Wurk reduces costly administrative work with a workflow that automates:
- E-sign I9, W4 & 1099 forms
- New employee onboarding
- Cannabis industry badge capture
- Performance reviews
- Incident reporting
Discover how easy it is to select and make changes to individual benefit packages, record performance reviews, and help your employees exceed their career goals.
When you partner with Wurk, you will be able to create and streamline repeatable onboarding processes, benefits administration, and accurate employee records. Wurk also provides the tools necessary for managing ACA, FLSA, and FMLA requirements.
Many businesses struggle to find HR services built specifically for the cannabis industry, which is why Wurk created our cannabis human resource management system. With tight regulations varying from state to state, our easy-to-use system helps cannabis entrepreneurs new and old navigate the complex world of legal marijuana regulation.
Download our HCM Buyer’s Guide
Wurk’s Payroll Solution for Arizona Cannabis Businesses
We are proud to say we at Wurk have created a payroll solution created specifically for the cannabis industry. Your employees depend on a consistent, reliable paycheck that arrives on time. Our relationship with banks and financial institutions delivers crucial payroll management services to all verticals in the marijuana industry, even those who have not had access to these payroll management systems in the past. Wurk provides your business with automated payroll software, that easily syncs general ledger processing–and electronically files federal, state, and local taxes. The platform includes automated payroll management and reporting, the ease of direct deposit, and automated tax filing to maximize 280E deductions.
Wurk’s full-service payroll platform allows you to:
- Calculate and remit accurate taxes
- Utilize a reliable payroll system
- Reduce the risk of paying your employees
- Offer direct deposit, pay history, pay stubs, and other financial documentation to employees
Our primary goal is to ensure that you are always in compliance with all local, state, and federal laws. Since our cannabis payroll software is designed with the marijuana industry in mind, you don’t have to worry about being unexpectedly dropped from our services just for being a dispensary.
Managed HR & Payroll Services for Cannabis Companies in AZ
Supplement your team with our HR and payroll experts. Wurk provides a variety of HR and Payroll consulting services for cannabis operations of all sizes. Our certified team can manage workforce-related tasks that you may not have the time, resources, or expertise to maintain. Plus, Wurk understands the unique compliance requirements of the marijuana industry, including the complexities surrounding tax code 280E.
Payroll
Trust in Wurk to ensure your team is paid
Our certified Payroll Specialists provide operational support to process payroll, distribute pay, prepare statements and ensure compliance. With experience in the field and in-depth knowledge of core concepts such as employment taxes, employee benefits, and the Fair Labor Standards Act (FLSA), you can breathe easy knowing our WurkPros are managing your cannabis business payroll.
Human Resources
Rely on us for your cannabis HR needs
Depend on a Human Resource Business Partner (HRBP) to manage time-consuming, complicated administrative tasks so you can focus on larger business strategy. Remain in regulatory compliance with Federal and State laws and reduce legal risk by partnering with our certified, experienced HRBP team.
HR Support Center
Access online tools & documents anytime
Even experienced HR professionals must rely on tools to stay updated on evolving labor laws and to answer complicated workforce management questions. With Wurk’s HR Support Center, you have the power to research legal matters, find solutions to issues related to ACA, and discover helpful documents, such as new hire kits.
Cannabis Tax Information
We at Wurk know how challenging it can be to navigate and manage cannabis tax requirements and regulations, which is why we are here for you. Here’s a summary of the IRS Tax Code 280E and what it means for cannabis businesses today:
- Intended to prevent drug dealers from claiming tax deductions for their business expenses
- Interpreted to include state-legal cannabis businesses
- Reduction of deductions results in increased taxable income
- Marijuana companies face higher federal tax rates: 40 – 80% vs 21% corporate tax
From an industry outsider’s perspective, it may seem like legal cannabis business owners are swimming in profits. However, 280E is making a huge portion of dispensary revenues susceptible to tax, hindering these licensed businesses from being able to invest in building improvements, pay raises, benefits, operational expansions, giving back to the community, and so much more.
Since 280E is directly related to selling or the “trafficking” of cannabis-related products, it impacts retail operations the most. However, it is important to understand the entire seed-to-sale concept and overall structure to truly understand how your business will be affected.
Marijuana verticals are categorized by these functions:
- Cultivation / Grow
- Processing / Infusions / Extractions
- Retail Dispensary
- Vertically Integrated: Licensed in every area of the cannabis lifecycle, meaning you grow, produce, and sell your own products.
If you wholesale product to another vendor or retailer, this is considered trafficking, and you can be subject to 280E. When calculating deductions, having a distinct separation between these verticals and seed-to-sale job functions will be vital.
Accurate labor tracking through cost centers enables managers to streamline identifying 280E workforce deductions, which can significantly impact the negative effects of the code. For example, it’s important to track if a budtender rolls joints for a few hours in the morning (deductible) then begins selling product in the afternoon (non-deductible under 280E).
- Utilizing employee time and attendance software for cannabis can greatly improve your ability to optimize labor deductions by providing:
- Self-service on any device employees to track tasks, jobs, and cost centers
- Pre-built labor reports and audit trails
- Easy on-screen access to compliance-related data
- Multi-format data exports for additional systems or accounting software
Unlike mainstream Human Capital Management (HCM) solutions, industry-specific cannabis software and systems are built to support the complex marijuana regulatory environment and its many tax intricacies.
If 280E is not managed properly, profits can erode quickly by increased tax liabilities… and in some cases, be wiped out completely. Understanding the implications of the code and partnering with experienced cannabis tax advisers is key to operating a compliant, profitable cannabis company.
AZ Cannabis License Information
Arizona Cannabis License Guidelines
The Arizona Department of Health (ADHS), has devised a set of rules and regulations that commercial cannabis businesses must abide by. Below are a few of the most important cannabis requirements for operators:
- To legally operate a cannabis business in Arizona, operators must be licensed by the ADHS
- Applying for a non-profit medical marijuana dispensary is a $5,000 fee
- Cannabis operators must employ a licensed Arizona physician as part of their staff
- Marijuana businesses must establish and maintain operating procedures that are consistent and compliant with department regulations
Cannabis Cultivation Laws in Arizona
The state of Arizona does not technically have a cultivation license but solely a dispensary license. When registering there is an option for applicants to select growing their own product which requires additional application materials to be submitted. Only state-licensed non-profit dispensaries have the capability of producing and distributing cannabis to both qualifying patients or caregivers. In addition, cultivation sites are required to register as dispensaries. Everything must be documented in a process map before applying to ensure you can show proof of location, inventory, and policies and procedures are in place.
Businesses must ensure they are licensed by the Department in order to own and operate a marijuana establishment in the state. It allows individuals to operate a single retail location or a single off-site cultivation location where marijuana or marijuana products can be legally sold to consumers. This will also allow them to cultivate marijuana and or manufacture marijuana products. However, at off-site locations, marijuana and marijuana products may not be transferred or sold directly to consumers.
The cost to register a dispensary in Arizona is $5000, with a renewal cost of $1000. For those who are hoping to expand or add cultivation sites, an additional cost of $2500 will incur per location. In order to become a cultivator, one must pay a total of $7500 at registration.
Arizona Cannabis Law and Compliance
The commercial cannabis industry in the state of Arizona is managed by laws and regulations that indicate actions needed to be taken for each step of the supply chain process. This includes information surrounding cultivators, manufacturers, distributors, and retail establishments. The websites below can help shed additional light on up-to-date information regarding each of these categories:
