Würk – Solving HR for the Cannabis Industry: Cannabis Interview with Keegan Peterson, CEO & Founder
Anyone who has worked in the cannabis industry and any other sector will tell you that our industry comes with many unique challenges. That’s one reason the opening up of the cannabis market is so exciting – not only can it help millions of people in a number of ways, it creates opportunities within the industry to solve some of those cannabis-specific challenges. That’s exactly what the team at Würk has done. They’ve taken a huge challenge faced by many cannabis businesses and created an opportunity to help solve the problem, while pushing the industry forward.
The interview below, with Würk’s Founder and CEO, Keegan Peterson, details their journey and their approach to helping cannabis businesses get a handle on their HR and payroll challenges. Check it out!
CM: How did the idea for Würk come about?
Keegan: I founded Würk in 2015 after learning my friend’s legal cannabis business was dropped six times by mainstream payroll providers. I had spent over a decade working for high-growth HR technology companies and saw was a clear demand for a human resources and payroll provider designed specifically to help both plant-touching and ancillary businesses navigate the unique challenges facing the cannabis industry. Würk takes on the financial and human capital challenges that mainstream HR and payroll providers don’t have the expertise, resources, or willingness to handle.
CM: What specific issues do you see cannabis companies encounter more than companies in other industries? Have you seen any issues specific to the cannabis industry be remedied?
Keegan: The legalization movement has considerably advanced the regulated industry, but we are still seeing fully compliant companies being dropped by their payroll providers with little notice and overpaying taxes or even losing their licenses due to complicated tax laws. The most notable is the 280E tax law, which prevent cannabis businesses from deducting operational costs like employee wages, technology, accounting, and rent. Consequently, cannabis businesses can pay up to three to four times more than what non-cannabis businesses pay in taxes. Cannabis companies are also challenging to manage because they are required to comply with a lengthy list of specialized and complicated tax and banking regulations –some companies have over 27 tax IDs due to state laws and many mainstream human capital providers are ill-equipped to handle the logistics.
These challenges will not be constructively remedied until the federal government either fully legalizes cannabis or passes more industry-friendly legislation like the SAFE Banking Act which would give cannabis companies more legitimacy and infrastructure to operate.
CM: Are there any issues you’ve seen rise for cannabis companies in 2019 more so than previous years?
Keegan: The operational costs associated with cannabusinesses has been on the rise this year, especially for plant-touching companies. Increasing state and city taxes being levied on the plant has been detrimental to these businesses’ bottom lines. There is no other industry that is being as aggressively taxed as cannabis is. It’s understandable that the government wants to make more tax revenue from cannabis sales, but it has reached a point where tax rates are driving many cultivation and retail companies out of business or, even worse, driving customers to the illicit market where they can buy cheaper products. State regulators must work with cannabis companies to develop a middle ground solution to create a sustainable stream of tax revenue without significantly straining companies’ margins.
CM: How does Würk help cannabis businesses grow and expand?
Keegan: Würk provides software and services to manage people, payroll, HR, scheduling and time keeping. Our cloud-based platform allows clients to scale nationally while helping them stay ahead of local laws and regulations specific to individual states. We effectively help our clients eliminate the opportunity cost of spending unnecessary time and money on human capital management so that they can spend more time on R&D, sales, and actually running their business.
CM: Looking forward to 2020, what are the most important things for cannabis HR teams to keep in mind?
Keegan: Based on our survey of leading enterprise cannabis businesses, the biggest challenge that HR leaders have right now is scaling their business. Cannabis operations grew before they had the infrastructure to do so, because they had to address the demands of the market quickly. Now and into 2020, HR teams will need to focus on managing this massive growth by implementing tools and best practices that harness efficiency. Training and performance development that align with company values and culture will be vital. We’ll also see further automation of processes, adoption of analytics tools to strategically manage growth while controlling costs, and continued M&A activity.