As of September 2023, 19 states have passed legislation requiring business owners to offer retirement savings programs for their employees. Even more, 28 additional states have either introduced legislation to join the group, or are actively considering similar mandates.
What does that mean for cannabis companies in the 40 states with legal markets? It’s either time to begin offering a retirement program for your employees or get serious about exploring one. Start here with the ultimate guide on retirement programs, and the top things cannabis companies need to consider.
Retirement Plans: Now Government Mandated
According to the Center for Retirement Research at Boston College, just half of private sector workers have access to retirement savings programs across the US. A fact that has state and local governments fearing a retirement crisis for future generations.
To address the gap in retirement plan access, states are now enacting legislation that reduces barriers and provides incentives for businesses to adopt. In fact, many states are now even mandating workplace retirement savings programs, including –
- California
- Colorado
- Connecticut
- Delaware
- Illinois
- Maine
- Maryland
- Minnesota
- Nevada
- New Jersey
- New York
- Oregon
- Vermont
- Virginia
More than just doing the right thing by your employees and complying with state law, it’s the costly fines described below that cannabis companies should be especially wary of avoiding –
- Up to $250 per employee for first time offenders
- Up to $500 per employee if not resolved after 90 days
- Max fees per company $5,000 per year
This November 2023, warning letters will be sent to all businesses that are not enrolled in the state IRA plan, another retirement plan, or are out of compliance with the state IRA plan. If found out of compliance with any part of the program or not fixed within the allotted time frame, fees will be charged in February 2024.
Hence, the importance of searching for a plan that works best for your business. Of course, not all retirement savings programs can be treated equally. So, to help cannabis businesses protect their profits and bottom line, let’s cover how they can differ, next.
Retirement Savings Programs to Consider
Along with state mandates for retirement savings programs come state-sponsored programs like Auto-IRAs. However, businesses can also elect to adopt their own retirement plans. The main factors that will differ from plan to plan include –
- Eligibility
- Enrollment requirements
- Contribution rates
- Contribution limits
- Withdrawal restrictions
Many state sponsored auto-IRAs lack the flexibility that private 401(k) plans can offer, which specifically benefits cannabis businesses. Such as a limited annual contribution or income restrictions, that may prohibit many from participating altogether. On the other hand, private 401(k) solutions can offer a wide range of benefits because of their flexibility.
Choosing a Retirement Plan for Cannabis Business Employees
As a business owner, you know just how predatory some vendors can be. Retirement savings plan partners, unfortunately, are no different. For cannabis businesses that lack the time it takes to vet these various plans, the costs can be detrimental to their bottom lines.
That’s where MJstack and our relationship with Prosper Retirement Partners come in. Not only does MJstack believe all cannabis businesses should have a tech stack that supports individualized preferences and financial resources, but Prosper also believes the same.
That’s why, together, we offer businesses evolved and private 401(k) plans that help shed fiduciary liability, streamline administrative responsibilities, provide access to high-quality investments, and maximize available tax credits to make it even more cost-effective.
MJstack: Your Partner for Cannabis Industry Success
In its infancy, the cannabis industry has been slow to adopt traditional business practices. From health insurance to stock options, PTO, and retirement funds. However, due to widespread retirement fund mandates – that’ll soon change for many across the US.
But it won’t just stop here. Over the coming years, the industry will continue legitimizing itself through compliance requirements and business best practices.
At MJstack, we partner with cannabis businesses to best align their operations for success while professionalizing and evolving their systems for longevity, and prosperity. From CRM to payment processors, our experts expertly craft systems and tech stacks to support the unique operations and overall growth of our clients’ businesses. Which now includes access to retirement funds and other benefit partners at the best cost for optimal profit margins.
Ready to revolutionize the way you do business in the cannabis industry? Get in touch with the MJstack team for a complimentary consultation today.
