Top Ten Tips for Cannabis HR Compliance in 2025

With everything going on in the world of cannabis, day-to-day personnel matters can fall by the wayside. International markets are beginning to emerge, bringing the potential for expansion and investment, but also increased competition. Here in the U.S., many anticipated that 2025 would see rescheduling, clarification around hemp manufacture and sales, and perhaps even safe banking legislation.  However, the chaotic transition of the new administration, supply chain issues, and continuing financial challenges around taxes and banking have put this progress in serious doubt. Some state markets are growing rapidly, while others are stagnating.  The cannabis industry is at an inflection point. Yet while these macro issues may consume substantial time and resources, it is important not to neglect everyday personnel issues and HR compliance.  

Whether your business is growing, shrinking, or simply trying to stay on top of daily operations, here is my list of top ten tips to refresh and maintain your HR compliance: 

1. Responding to requests for leave: Ensure your policies and documentation are up to date and have a plan in place for who will respond to requests. Know whether state or federal FMLA requirements apply and whether your business is covered; ensure you have proper documentation of all requests and that you are responding within the timeframes specified by statute and/or your internal policies.  
2. Responding to requests for disability-related accommodations: Be sure to engage in the interactive process and follow up on vague or ambiguous documentation as appropriate. What is reasonable will depend on the position and specific circumstances of your business.  Keep in mind, a request may invoke leave and accommodation requirements, and you may need to consider both frameworks in responding to a particular request. And, as always, document, document, document!
3. Immigration compliance and enforcement actions: Now is a good time to audit your employee I-9 forms and ensure compliance with federal laws and regulations.  Know your rights and responsibilities if you receive a visit from federal immigration enforcement authorities.  
4. Reductions in force & WARN Act compliance: Ensure you are complying with state and federal WARN Act requirements which kick in when your business is closing a site or laying off a significant number of employees. Note that the triggering events and notice requirements vary by state, so be sure to check your state statutes and consult counsel as needed. Penalties for failure to provide proper notice to employees and state authorities can be costly. Indeed, a Massachusetts cannabis company was recently sued for violating the WARN Act’s notice requirements. 
5. Tracking state paid leave requirements: Many states have recently enacted paid parental and/or sick leave laws. Some notable examples include New York, Massachusetts, Minnesota, and Connecticut. Ensure your HR team knows the relevant requirements and has a system in place for tracking leave accruals and use.
6. Addressing internal complaints: Be sure to record, investigate, and address all internal complaints of discrimination, harassment, and safety violations. Ensure that your business posts all required notices of employee rights and that your handbook contains procedures for complaint reporting. Documentation of the investigation process and results is essential evidence if your business ever winds up in litigation. 
7. Correctly classifying workers as exempt vs. non-exempt: Many employers misclassify certain employees as exempt, and thus, improperly fail to pay overtime. Federal law limits "exempt" employee status to specific, defined categories. However, these classifications are often difficult to evaluate and apply in practice, and penalties for misclassification are steep.
8. Correctly classifying workers as employees vs. independent contractors: This issue comes up particularly in the context of management and co-manufacturing agreements common in the cannabis industry. Classification will depend on both federal and state requirements. Ensure that your organization has an agency agreement or contractor services agreement in place that clearly spells out who the employer is (e.g., who pays wages and determines work hours), coverage of employee claims, and on-site supervision, among other things.  
9. Labor Relations: Many states require Labor Peace Agreements between unions and cannabis businesses, which mandate neutrality towards organizing efforts and prevent strikes and lockouts.  Some states also require Project Labor Agreements for cannabis-related construction projects. Know your state's requirements and be sure to review all labor agreements carefully with counsel before signing. 
10. Strategic use of severance agreements: When making reductions in force or managing a difficult employee separation, consider offering a severance agreement in exchange for a release of liability.  Severance agreements are an important tool for mitigating risk and promoting good will with departing employees. 

Over the last few months, we have received an increasing number of employment-related questions from cannabis business: some of whom are growing their workforce, others who are reducing their workforce, and others yet who are trying to manage increasing and complex leave and accommodation requests. You are not alone in struggling to stay on top of the ever-changing state and federal regulatory landscape. Our experienced team of cannabis and employment attorneys are here to help.