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Flower-Side Chats Part 7: A Q&A with Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

By Aaron Green
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In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses integrate innovative practices in order to navigate a rapidly changing landscape of regulations, supply chain and consumer demand.

The California legal flower market is the largest in North America. According to recent BDSA data, monthly cannabis sales in January 2021 were $243.5 million. Flower sales represented 35.6% of overall sales, or about $87 million, representing a $1 billion yearly run rate for 2021 flower sales in California.

Union Electric was founded in California in 2020 as one of OpenNest Labs’ first incubator brands. Its model is uniquely asset-light, and focused on filling an area of opportunity with a consumer-first approach, aimed at an underserved market: the working-class customer. The name Union Electric was inspired by the punching-in and punching-out aspect of working a union job — more specifically, the average cannabis user’s job. The name also represents the brand’s union of stakeholders: Customers, cultivators and retailers alike, working together to provide affordable, quality products.

Max Goldstein is the CEO of Union Electric and Founding Partner at OpenNest Labs. Max incubated Union Electric at OpenNest Labs, a cannabis venture studio he helped co-found, and launched the brand in 2020 the day after COVID lockdowns began in California. Prior to Union Electric, Max worked at Google managing a 90 person, 12-market partnerships team.

Aaron Green: How did you get into the cannabis industry?

Max Goldstein: I’ve had a fun entrepreneurial and professional journey.  I started my career in my 20s with Google working in the marketing department sitting at the intersection of new product development and customers. During that time, I really learned the ins and outs of bringing products to market and building brands. I had to understand how to value and champion the customer, or the user. At Google, I was sitting at the intersection of people building products that are affecting billions of people’s lives and users and customers that potentially have really cool insights and feedback. It was an incredible learning experience. I was able to focus on what I’m good at, which is that early stage of businesses and most importantly, listening to the consumer and developing products and services that they ultimately really want.

Max Goldstein, CEO of Union Electric and Founding Partner at OpenNest Labs

Near the end of 2018, I co-founded OpenNest Labs, a cannabis venture studio. We came together as a four-person partnership to form OpenNest, as an assortment of skill sets, with all of us contributing an area of focus that we could really combine our experiences to take focused and concerted efforts at building brands that resonate with different consumers across various form factors in cannabis and health. My partner Tyler Wakstein has been in the cannabis industry for several years and helped launch the brand, hmbldt (which is now Dosist) and a number of other projects in the cannabis space.

Green: Was Union Electric an incubation project out of OpenNest?

Goldstein: Yes. Union Electric is the first project we incubated out of OpenNest. We launched the day after the pandemic. So, it was interesting timing.

At Union Electric we’re focused on the core, everyday consumer of cannabis. I think a lot of folks, particularly the new money that have come into the industry, have often focused on new form factors or things that they think the new cannabis consumer is going to enjoy or appreciate. Because quite frankly, that’s their level of familiarity with the industry. For us at Union Electric, we want to hit the end of the market with exactly what they want and that is high-potency, affordable flower with a brand that really stands for something and has values.

Union Electric is positioned as an advocate for the legal cannabis industry as a whole. We look at the stakeholders and the work that needs to be done across the board. The idea of just being one member of the value chain and not trying to ultimately uplift and elevate everyone in that value chain, it’s just not going to work in cannabis. We’ve seen a lot of people trying to go at this alone and I think the pandemic, if anything, showed that you’re only as good as your partners. We truly believe that the investment in our partners, in the local communities and everyone that’s really touching this industry is critical to ultimately building success for one company because a rising tide raises all ships.

Green: How did you settle on the name Union Electric?

Goldstein: One of the things that we wanted to do was focus the brand on who we see as the core consumer, which is somebody that is working hard, like a shift worker punching in and punching out and putting in the long hours on a daily basis and using cannabis as a critical part of their personal wellness and relief. There are elements of that which we certainly want to tap into. The “Union” represents our stakeholder approach, which is, all of us are in this together and our tagline “roll together” represents that. The “Electric” part is what we’ve seen cannabis sort of representing culturally, and for people more broadly. This is an exciting product that’s going to change a lot of people’s lives and, and I just don’t think there’s anything else in our lifetimes that we’re necessarily going to be able to work on from a consumer-packaged goods perspective, that’s going to change as many people’s lives. It’s electric. That’s how we came up with the name.

The coloring and a lot of the brand elements that we focused on were about providing transparency and simplicity to the marketplace: big font and bold colors. There are little nuances with our packaging, like providing a window just so people can see the flower on our bags. We look at the details and made sure that we’re ultimately out of the way of the consumer and what they want, but providing that vehicle that they’re really comfortable with.

Green: You have an asset-light business model, focusing on brand and partnerships. How did you come to that model?

Goldstein: I think everyone who’s operating and working in cannabis right now is looking at strategy and what the model is that’s going to work for them. We’re ultimately going to find out what works, which is why this industry is so fun and exciting. Our specific approach is really under the assumption that vertical integration in a market that’s maturing as quickly as California is going to be hard, if not impossible – it’s just too competitive. There are too many things going on in order to be successful in California. You have to be really good at cultivation, really good at manufacturing, really good at distribution, and then ultimately, you have to be able to tell a story of that process to ensure sell-through and that you really resonate with the consumer.

I think the big, missed opportunities that we’re seeing are that a lot of great cultivators are not marketers or storytellers. They really do need people that are there to help amplify and provide transparency to their stories. There are amazing stories out there of sacrifice and what cultivators have done to create a new strain. We all enjoy Gelato. What’s the process to make that happen or to create any other new strain? It’s fascinating. It’s too hard for a lot of these cultivators to go out and tell that story themselves. So, we act as a sales and marketing layer on top of the supply chain to provide visibility, transparency and trust with the consumer so that they know who grew their product, how it was grown, when it was cultivated and that they can build a real strong relationship with that cultivator as well.

It’s also hard to be a brand that’s using 19 different suppliers, selling the same genetics and expecting the same results. As an example, we’ve gotten Fatso from one of our partners, Natura. We’ve also gotten Fatso from Kind Op Corp (fka POSIBL). We renamed one of the strains – by adding a number on the end – just so that the consumer knew that we’re not saying that this is the same product, because it’s not. It’s from a different farmer and there’s going to be differences. While it does create a little bit more complexity for the consumer, we ultimately believe that every consumer has a right and will expect to know that type of information in the future.

Green: You launched Union Electric one day after the COVID lockdowns began in California. How did you navigate that landscape?

OpenNest Labs Logo

Goldstein: A lot of praying to the cannabis gods! It was really an incredibly challenging and difficult time. We were all concerned about the impacts of the virus. There were moments where we didn’t even know if dispensaries would be open, particularly in states that just legalized. You went from something being completely illegal to an essential business in 12 months. As a team, we were just trying to hold on to our hats and focus on product and partnerships.

Fortunately, with a brand like ours and the price point that we’re operating at, we just needed to consistently be on the shelves and available, and to be present with the bud tenders. So, we focused on that and shoring up our supply chain and just trying to wait it out. COVID forced a lot of cannabis companies to make a lot of decisions quickly and I think in some ways, because we have not been in the market for 24 months under one paradigm, we were pretty quick to be able to adjust and keep the team super lean to fit the emerging and rapidly changing environment. We learned a lot. We focused on partnerships and we leaned into the model that we set out to build which is being asset-light and focusing on the sell-through.

Green: I understand you have a 2% giveback program. Tell me about that.

Goldstein: The 2% giveback program was something that we wanted to put on the bag from day one. It’s on every bag that we made and put out into the market. We’ve seen a lot of cannabis companies come in and invest tens and hundreds of millions of dollars in infrastructure. Then, month 24 they realize “oh, crap, I gotta figure out what I’m going to do to get back and actually tap into the issues that are most important to cannabis consumers.” These are issues like social equity, equitable development of the industry, and ensuring that cannabis companies and its owners are active, responsible members of society.

What we’re going to focus on with our giveback program is working with our supply chain partners. We highlight the local communities, because when you look at the landscape in California, two thirds of its municipalities still don’t allow cannabis operations. We’re in a heart and minds battle still, even here in California, just proving that the operators here are not criminals and that they’re not going to bring negativity to local communities.

As we scale in California and scale to other states, the giveback program for us is a platform and a medium to work with our supply chain partners to make sure that we’re giving back and investing every step of the way. As founders and operators, it’s how we show that we are being mindful of the importance of equitable development of the industry. Ultimately, prosperity is going to come if everyone is getting a piece of the pie.

Green: What are you most interested in learning about?

Goldstein: I’m a student of history (I was a history major) and I was very fortunate to be part of a big evolution of technology development starting in 2011 working at Google and other tech companies. In some ways, this is the second generational industry that I’ve been a part of, and I have a lot of regrets about how the first one developed – not that I necessarily was the chief decision maker. The idea that large tech companies would always act responsibly (i.e. “Don’t be evil”) didn’t really pan out. I think it was an ignorant thought process as a person in my young 20s.

What I’m most interested in learning is: Can the cannabis industry develop consciously? Can you keep the greed and the things that bring industries down at bay? How can I, as an operator, be the best facilitator of that future? I’m always thinking how I can continue to bring in the people around us and around me as the CEO of Union Electric to ensure that we’re always focused on that.

Green: Great, that concludes the interview. Thank you, Max.

Goldstein: Thanks Aaron. 

From Union Electric: Union Electric Cannabis will be offering their first Regulation CF crowdfund raise in an effort to give everyday consumers a stake in one of California’s fast growing cannabis brands. Due to the ever-evolving legal status of cannabis in the US, there have been very few opportunities for individuals to invest early on in American cannabis brands. This decision to give everyday cannabis smokers access to investing in their favorite cannabis brand (for as little as $100) is a natural manifestation of Union Electric’s mission: Collective power and championing accessibility for the plant. You can learn more about their raise by visiting https://republic.co/union-electric

Updates in Employment Law: CA, WA & CO

By Conor Dale
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A number of laws have gone into effect in 2021 which may have a major impact on cannabis industry employers; clearly understanding the changing legal landscape is essential to avoid and limit potential liability in the new year and beyond. Below is a brief summary of some relevant new employment laws in cannabis friendly states:

California:

  • Expansion of family and medical leave: California has long required employers to provide job protected medical and family leave if an employee worked at a jobsite with 50 or more employees within a 75-mile radius.
  • Senate Bill 1383 now requires all employers with five or more employees to provide up to twelve weeks of unpaid, job-protected leave for employees to bond with a new child or to care for themselves or a family member suffering from a serious health condition. To be eligible for the leave, an employee must have at least 12 months of service with the employer and have performed at least 1,250 hours of work in the previous 12-month period. While on leave, employees are entitled to continue to participate in an employer’s health insurance plan and to return to their job or a comparable position at the conclusion of their job-protected leave. Previously exempt small employers should be aware of these obligations moving forward.
  • Employer Pay Reporting Requirements: Under Senate Bill 973, employers with 100 or more employees that are required to file an annual Employer Information Report, colloquially known as the EEO-1 report, must submit annual information on its employees’ pay data to the state’s Department of Fair Employment and Housing (DFEH). The report must include the number of the employer’s employees by race, ethnicity and sex in specific job categories and pay ranges and their associated work hours and earnings.
  • The first report is due on March 31, 2021, and the DFEH has prepared an online portal to assist employers in submitting this information. These reports can be complex and address highly sensitive information, so employers are strongly advised to contact counsel for assistance in preparing and submitting their first report.

Washington

  • Increased pay requirements: Washington’s inflation-based minimum wage system has increased the minimum wage to $13.69 per hour in 2021. Employers with 50 or fewer employees must also pay salaried employees at least $827 per week (or $43,004 per year) and employers with more than 50 employees must pay at least $965 per week (or $50,180 per year) starting January 1st.

Colorado

  • Equal Pay for Equal Work Act: Beginning in 2021, all employers with at least one employee must: (1) provide formal notice to Colorado employees of promotional opportunities; and (2) disclose pay rates or ranges in job postings that could be performed in Colorado (this includes virtual or remote work positions).
  • The Equal Pay for Equal Work Act generally requires employers to take reasonable efforts to promptly announce, post, or otherwise communicate all opportunities to all current employees prior to making a promotion decision. An employer must communicate promotional opportunities when it has or anticipates a vacancy or a new position that could be considered a promotion for current employees in light of pay, benefits, status, duties or further potential promotions.
  • Under the law, job postings must also include: (1) the rate of pay or pay range for the position; (2) a general description of bonuses, commissions or other forms of compensation offered with the job; and (3) a description of the employment benefits associated with the position.

Cannabis industry employers face a range of new laws, even absent the continued legal burden of managing employees during the COVID 19 pandemic. Employers should consider carefully reviewing all applicable laws and seeking guidance from counsel when needed.

A Joint Problem: How Cannabis Testing Policies Affect Applicants’ Attraction Toward an Organization

By Prachi
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Employees with substance abuse issues could cause problems for their employers. Recent legalization of cannabis has prompted organization to re-evaluate their drug testing policies in anticipation of increased usage among employees and potential hires (Rotermann, 2020). Cannabis use has increased from 14.9% to 16.8% post-legalization in Canada. Policies that enable routine cannabis-testing of employees, though beneficial in some cases, might negatively affect the perceptions of individuals toward the organizations that hold these policies. Specifically, job applicants may perceive the administration of such policies as unfair. I investigated the influence of cannabis testing policy and its perceived fairness on job applicants’ perception of organizational attractiveness and their intention to apply to a job vacancy.

A recruitment notice was presented to potential participants, which included a link to the survey. After reading and signing the consent form, participants were randomly assigned one of the three drug testing conditions (severe, moderate, none). Severe drug testing policies include testing pre-employment, randomly during the employment period, and in response to suspicious behavior. Moderate drug testing policies include administering drug testing pre-employment and in cases of suspicion. None is the control (i.e., no testing policy in place). The corresponding vignette was presented, followed by the survey questionnaire (measures on organizational attractiveness, intention to apply, perceived fairness, and perceived stigma), demographic questions, and questions on cannabis usage.

Cannabis user’s perceived fairness of cannabis testing was higher within organizations with no compared to severe testing situations (Figure 1). However, for individuals who do not ingest cannabis, the perceived fairness was higher for organizations with severe compared to no cannabis testing policy. This suggests that cannabis users deem cannabis testing as unfair regardless of the type of policy. This supports previous research findings on recreational use of cannabis and job seekers’ perception of drug testing (Paronto et al., 2002). Based on Gilliland’s (1993) model of organizational justice and perceived fairness, there are 10 procedural rules categorized into three categories: formal characteristics of selection system, explanations offered during the selection process, and interpersonal treatments that help form the applicants’ perceived fairness. In the current study, the no-cannabis testing job advertisement was seen as valid (one of Gilliland’s procedural rules is selection information) and honest (one of Gilliland’s procedural rules is honesty) by the cannabis users; however, moderate and severe testing was not seen in the same light, which might explain why we see decreased perceived fairness for cannabis testing. Those two procedural rules violate reasonableness leading to decreased perception of organizational fairness among cannabis users for cannabis testing.

The current study also supported past research by confirming that the individuals who ingest cannabis demonstrated increased levels of organizational attractiveness and intention to apply to organizations that had none compared to severe cannabis testing policies. If the organization is testing for cannabis use pre-employment or randomly, in addition to post-accident/suspicious behavior (i.e., severe policy), cannabis users’ level of organization attractiveness and intention to apply is much lower. This could be due to the fact that cannabis has been legalized in Canada and 11 states in the US  (Leafly, 2020). Individuals might feel that severe testing is an invasion of their privacy given that they are not doing anything illegal. Furthermore, job applicants perceived drug-testing as harassment toward individuals and claimed it represents a repressive work environment. Given that, this feeling could prevent an applicant from applying or considering the available job.

Implications: This study has important implications for employers and organizations in general. Even though it is important to have cannabis testing policies in place, it is equally important to consider the impact of cannabis testing on the potential talent pool. Such perceptions of drug testing may lead talented applicants to self-select out of the job pool. This would lead to a decreased number of applicants for a job available to the employer. Therefore, knowing the attitudes and intentions of individuals who ingest cannabis toward moderate and severe testing policies will provide employers with solid research-based evidence from which to design programs and policies surrounding cannabis testing.

Best Practices for Workforce Reduction

By Conor Dale
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Due to anticipated contractions in the industry and concerns over a potential nationwide recession, cannabis industry employers may be planning on implementing large scale reduction in force (RIF) layoffs or employee furloughs to reduce payroll. While RIFs can provide business-saving cost reductions, they can subject an employer to substantial potential legal liability, including but not limited to class action lawsuits and enforcement actions from state and federal agencies. Understanding and addressing potential legal pitfalls before implementing an RIF can help in materially limiting an employer’s potential legal exposure.

Employers should first consider potential cost saving alternatives to implementing mass employee layoffs. Such steps can include reducing the salaries and/or work hours for current employees, temporarily freezing company operations for limited periods, or placing non-critical positions in a limited paid leave of absence at reduced wages. While each of these steps bear their own risks, they may assist in avoiding mass employee layoffs.

Next, federal law and the laws of certain states require employers to provide written notice to employees and local governments at least 60 days before implementing mass layoffs. For example, under the federal Work Adjustment and Retraining Notification (WARN) Act, an employer must generally provide a written notice to employees regarding an impending reduction in force when it: (1) permanently or temporarily shuts down a worksite which results in an employment loss of 50 or more employees; (2) lays off between 50 to 499 workers at a single worksite when such layoffs constitute at least 33% of the employer’s workforce; (3) lays off at least 500 employees within a 30 day period; (4) implements a wide scale temporary layoff of more than 6 months; or (5) reduces the work hours of 50 or more employees by at least 50% during each month of any six month period. Please note that the WARN Act aggregates layoffs over 90 days; thus, an employer conducting a series of smaller layoffs may still need to provide employees with a WARN notice. An employer who fails to provide a required notice could owe each impacted employee up to 60 days’ back pay, which includes but is not limited to the cost of potential employment benefits.

An employer should also take steps to limit potential discrimination claims based on an RIF. It is illegal for an employer to select an employee for layoff because of their protected characteristics, including but not limited to race, religion, gender or age. The primary defense to such a discrimination lawsuit is to prove the legitimate, nondiscriminatory reason for the layoff decision. As a result, employers are strongly encouraged to create a formal RIF plan which documents the legitimate reasons for layoff decisions. The RIF plan should expressly articulate the cost-saving grounds for the RIF and the goals to be achieved by its implementation; these grounds and goals should be the sole reason for any subsequent layoff decision.

Employers are strongly encouraged to consult with legal counsel before implementing an RIFFor example, an employer should identify all necessary positions and employee skills needed for a company’s current and future business operations in order to identify non-essential positions that may be subject to position eliminations or layoffs. Similarly, employers should create standards to select employees for a RIF when multiple employees hold the same or similar jobs. These standards commonly include considering employees’ education, skills, unique knowledge, previous job performance and seniority. Most importantly, an employer should make actual layoff decisions that are consistent with its articulated RIF plans; under both state and federal law, a termination decision that is inconsistent with or contradictory to the articulated reasons for a layoff decision may provide an employee with considerable evidence that that his or her termination was at least partly motivated by their protected characteristics.

Even when making and implementing a reduction in force plan based solely on legitimate business reasons, employers must be aware of the adverse impact those decisions have on certain groups of employees. It is illegal for an employer to implement policies and practices that are facially neutral but have an unintentional discriminatory effect on protected groups of employees if those policies and practices are not job related or required by business necessity. Before implementing an RIF, employers are strongly encouraged to perform a statistical analysis of the protected characteristics of individuals selected for layoffs to determine whether they are being selected for layoffs at a significantly higher rate than other employees. If an employer does discover that certain groups are being selected for layoffs at a disproportionate rate, an employer should review its layoff decisions to confirm that these decisions are in fact required by business necessity.

Finally, employers will commonly provide severance packages to laid off employees to assist in their transition to other employment. A key factor in these packages is an employee providing an employer with a full release of potential legal claims in exchange for a severance payment. Employers are strongly encouraged to ensure that they obtain full and complete legal releases in any severance agreements they provide. For example, under California law, an employee can only provide a full and complete release of legal claims when a separation agreement specifically cites and waives a specific provision of California’s civil code. Additionally, an employer cannot obtain a legal release of federal age discrimination claims when it offers a separation package to multiple employees over 40 during an RIF program unless it provides specific information regarding the job positions and ages of employees who were and were not selected for layoffs.

While a reduction in force layoff program may help ensure a business’ survival, employers are strongly encouraged to consult with legal counsel before implementing an RIF to detect and avoid potential future legal claims.

Soapbox

Destination Cannabis Europe: Employment in the Industry

By Marguerite Arnold
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It is obviously not just at conferences but now on the ground in Germany and across Europe that Americans are heading to the industry here. And it is not just the “new” cultivation guys at Demecan in Berlin (currently hiring), or in Guernsey, but in truth, throughout the industry.

Wish you were here? Here is the broad skinny to actually getting (and keeping) a job in the industry in Europe.

Get A Job Before You Come

By far, the easiest and safest way to come to a new country, like Germany (or the UK for that matter) is to have pre-arranged employment. That is also beginning to happen, as large companies set up grow and manufacturing facilities throughout Europe. That said, these are hard to come by (there are many Germans and other natives vying for the same jobs). However so far, certain kinds of experience in the U.S. (or Canada) beats anything that has gotten going here so far from the cultivation side and many other aspects of the biz.

But – and this is a big one – you have to have the kind of experience that counts. Regulated industry participation is a must on your CV if this is your preferred route of travel. Pharmacists in particular, could have a fascinating career path here not open in the United States at all yet. So will doctors – but that certification has to be earned here to practice.

It is also far easier to deal with the paperwork that is required than it used to be ironically – in that there are new qualifications being set out for the same in both the UK and Germany at the moment. Understanding them, however is another matter, and interpretation at the immigration office is not something you want to sign yourself up for. In any language.

european union states
Member states of the EU, pre-Brexit

However, immigration law is just the beginning on the regulation front. Regulations across the cannabis industry are also changing fast – and not just under the heading “cannabis.”

Nothing, really is “easy” about being an expat. You have to want to do this.

There are now starting to be numerous European job postings in the industry on Linked In. It is a great place to start. Having B1 Deutsch (third level, very hard to pass, intensive German language certification) is usually a must for employment (not to mention getting around in the country).

Disclosure: This journalist failed A1 German in Germany (introductory level) twice. Starting from scratch is not recommended, because the rest of your class (usually with previous German training) will kick your butt in numbers bingo by the end of the first week. Learning – including punctuation and spelling 50 new vocabulary words a week is pretty standard. And that is before the grammar. All taught in German too! Four hours a day, five days a week.

Yes, your class will laugh at you, even if they think you are otherwise cool as a North American.

It also helps if you have taken at least one German language course (as in college semester level) before you come. Otherwise you will hit unbelievably intimidating compound words that take up a great deal of space on a page and four different tenses that even native Germans do not really understand by the end of the second week (and it is mind-blowing). You learn to appreciate Mark Twain’s humour about the dratted language very quickly, not to mention that the umlaut is really the only thing you have any freedom of expression with.

Be prepared to sign up for language courses when you land with the local VHS (Volkshochschule) – which is sort of like German community college for anything you want to take classes in. It is also the cheapest deal on language courses around. The private ones are pricey.

That said, master the lingo, even passably, and Germans are super pleased about the same. No matter how badly you mangle the language, they are just happy to hear you try.

Student Visas and the Educational Path

By far, the easiest path to starting your journey overseas, is luck. The second one however, is actually one way to go if you are prepared to work yourself to the bone, and do it while learning German intensively. Plus get a university level or graduate degree along the way.

If Cannabis Europe is your dream job and vocation, you will make it happen. Just don’t expect it to be easy, or just like anywhere else.Go first as a language student. That gets you two years, fairly easily, as long as you have €8k in your bank account at all times, and do not work at a German job. That is verboten. However, as an American, particularly in Germany, you still have the right to come here and learn.

There is also about to be a fairly ground-breaking immigration law that comes into effect as of March in Germany that allows highly skilled foreigners to earn their way to citizenship. There is a list of requirements that go along with this, of course. The path to being able to stay includes getting a higher German degree or special German training. Expect pretty much the same thing from post-Brexit Britain too – just in the same language.

You also have to have health insurance and a lot of other things taken care of. It is not a sudden move or jump. For all the amazing things that come with this, also be prepared to think about looking in the mirror at least a few times and thinking “am I stupid, what on earth have I done?”

Then there is location. A Kreuzburg address may impress the folks back home, but those are not cheap these days, and extremely hard to come by. Rent, in general, and not just in Berlin, is beginning to be a real issue in every German city. Finding an accommodation that you can afford in “starting out” circumstances – is not easy right now anywhere.

But it’s not just about rent or the buzz you might have heard. Don’t just put Berlin on the map (or even Munich, also a growing professional scene). Both cities are far from the center of the cannabis scene in Europe, much less Germany although there is a lot going on all the time there. Dortmund, and the Ruhrgebeit in the former “Rust Belt” of Germany are much cheaper, full of students, and popping with cannabis reform all over. Cologne is also a very interesting city right now. So are Bremen and Stuttgart.

The Differences Are Large Besides the Language

No matter what you think you can expect, the only thing you can rely on is that just about everything will not be the same. Yes, German beer fests and bratwurst are comfortingly familiar to be accepted easily. But when it comes to really immersing yourself in a country well enough to think of it as “home”, let alone understanding the vagaries of this business in particular? Just about everything is different. This ain’t Kansas, (or Colorado, for that matter) Dorothy.

Bottom line? If Cannabis Europe is your dream job and vocation, you will make it happen. Just don’t expect it to be easy, or just like anywhere else.

Human Resources and the Cannabis Workforce

By Aaron G. Biros
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Cannabis businesses encounter a variety of problems when hiring and managing employees. Some of those are issues that every business runs into and some of them are quite specific to the cannabis industry. Chris Cassese, co-founder and managing director of Faces Human Capital Management, has some solutions for cannabis businesses facing seemingly daunting workforce management issues.

Cassese co-founded Faces HCM with Caela Bintner after two decades of working in the human resources and sales strategy across a variety of financial institutions. He oversees software platform development, daily operations, sales, and business development for their organization. Before co-founding the company, Cassese held a variety of operational and product development roles during his ten-year tenure at Merrill Lynch, worked in marketing at HSBC and was a sales and performance advisor at Insperity, a professional employment organization. Faces HCM is a professional employment organization that handles workforce compliance, education, and other HR needs for cannabis companies. They work with companies like Dixie Elixirs, LivWell and Women Grow, among other cannabis businesses.

Chris Cassese, co-founder and managing director of Faces Human Capital Management

According to Cassese, the cannabis industry faces a roughly 60% turnover rate, which is on par with the turnover rates in retail and call centers. Those are industries that typically have high turnover rates simply because the nature of the business. However, Cassese says it doesn’t have to be so high for the cannabis industry. “It is easy to say it is just high turnover by nature, but we found there are some steps that we can put in place that seem relatively easy, but are key tenants of Fortune 500 companies’ hiring strategies,” says Cassese. “Engaging in a needs-based analysis with companies will help us figure out exactly what’s going on.” They start by looking at the onboarding process, or what happens immediately after an employee is hired. “We start by looking at their pay rate, employee handbook and the paid time off policy, which are some of the points that a lot of the owners are familiar with coming from other high-end industries outside of cannabis.” He says things like swag bags, free ski passes after reaching quotas and other perks can keep employees engaged on the team. “Things like that go a long way and can reduce turnover by up to 20 or 30 percent,” says Cassese. “Sometimes [business owners] are so stressed with regulatory compliance that they don’t have time to tackle these issues so employee dissatisfaction often starts with onboarding procedures.” That can include anything from analyzing the overall compensation structure to making a video displaying the company’s vision, mission and values. “There is no panacea for reducing turnover. It requires conducting a needs-based assessment, taking pieces of what we know works well in other companies and bringing that to the cannabis industry.” Making an employee feel like they are part of the team can help boost retention and keep turnover low.

One area they often help companies with is performance reviews. “Performance reviews are a big part of any business,” says Cassese. “You can’t make progress if you don’t know where you’re going. If you don’t know how you’re doing you can’t get better.” Looking at the supervisor level, they have often found employees have never given a performance review before. “We implement processes to teach them how to deliver positive or negative performance reviews and help make them feel comfortable delivering that,” says Cassese. They might have employees perform a DISC analysis (dominance, influence, steadiness and conscientiousness), a personality test akin to the Meyers-Briggs test. “From this we can help figure out the stressors and motivators of people and create effective teams,” says Cassese. “If an employee might be more outgoing or humble, high-spirited, results-oriented, analytical or good working on teams.” These are approaches to workforce management that have been adopted from Fortune 500 companies.

Caela Bintner, Co-Founder and Managing Director of Faces Human Capital Management

Cassese says one of the most overlooked items for companies are proper I-9 verification forms. This goes back to basic record keeping and documentation, but if overlooked, companies can get hefty fines for improper record keeping. “You are supposed to have a separate binder, in a separate locked drawer where your I-9 forms are housed, but a lot of people don’t know about that, which could come back to bite them in the form of large fines” says Cassese. “Businesses can’t afford to have sloppy record keeping. We help businesses take a look at their process and how they put their files in the cloud or physical locations, which is an area where companies often need guidance.” Civil fines can reach up to $20,000 for mistakes on I-9 forms.

Employee education is another crucial aspect of managing the workforce. Faces HCM has a learning management system that gives companies the ability to push education to their employees. Education is of course a broad term and can cover a wide variety of needs for employees. “We can help them take leadership, teamwork, excel, OSHA, safety classes and more,” says Cassese. “Training that shows you active listening, empathy skills and other types of training can really help budtenders deal with customers appropriately.” They have developed customized training programs for cannabis companies expanding beyond their own state too. “As you find certain cannabis companies growing in different states they want to create a repeatable, consistent and predictable experience,” says Cassese. “Putting those standard operating procedures online is important to streamline the process and ensures that you are creating a learning or education plan to meet your employees’ needs.” That can look like requiring employees to take an online course once every quarter, or offering them books on subjects pertaining to their specific job function.

Little things like improving the employee experience, implementing an education program and keeping up with employee records can make or break a business. They all add up to solid workforce management, which if done correctly, can enhance a business’ bottom line and keep employees working for you.