Industry report
A deep dive into the Arizona cannabis market
March 7, 2023
An analysis of employee turnover in cannabis retail
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July 13, 2022
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A lot has changed in recent years in the cannabis industry. One thing that remains the same is the importance of cannabis retail sales employees. Also known as ‘budtenders’, these employees still remain as the primary ambassadors of cannabis and the most critical sales conduit for the vast majority of retail sales transactions. The purchase decisions that cannabis customers make are heavily influenced by the employee they interact with, which makes these staff members the heart and soul of the industry.
Because of their extreme importance, budtender hiring, onboarding, and management is one of the most crucial tasks in any cannabis retail operation. One of the great challenges of managing budtenders, or staff in any business, is employee turnover. Turnover is often unavoidable and always costly, so it’s essential to optimize the employee hiring and managing process wherever possible. In this report, we explore budtender turnover in the US and Canada to get an understanding of what is and isn’t normal when it comes to budtender turnover.
The onboarding and training of cannabis employees is a significant part of cannabis retail business and the data backs that up. In both the US and Canada, approximately 55% of budtenders who worked at any point over the previous 12 months had departed by the end of that time period. Nearly a full third (32.5%) of all Canadian budtenders who worked at some point in the past 12 months were both hired and then left within that same time period. When we break down turnover rates by states and provinces, we find that retailers in Illinois are better than average at retaining employees. Retailers in Colorado and Oregon tend to have far lower retention however, with more than one-third of budtenders starting and ending their employment in the past 12 months. In both countries nearly a quarter of all budtenders hired in the past year did not complete a full month of work. It does seem, however, that the budtenders with the best performance are the ones that continue working.
Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked with Headset’s business intelligence software. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.
In this report we examine employee and sales data from Headset Insights markets across a 12 month time period (June 2021 through May 2022). This includes data from AZ, CA, CO, IL, MA, MI, NV, OR, and WA in the US and AB, ON, BC, SK in Canada.
The terms ‘employee’ and ‘budtender’ are used interchangeably as only employees associated with retail transactions were considered. Employees contributing greater than 50% of a store’s total sales over the selected time period were excluded with the assumption that these were likely shared POS employee accounts and cannot be associated with a single distinct employee.
Employee turnover was determined by the end of sales data for a particular employee at a particular store. Employees moving from one location to another within a multi-store chain would be considered ‘turnover’ under this definition.
Let’s begin by taking a broad look at when current or recent cannabis retail employees were were hired. Here we see that in both the US and Canada, the majority of budtenders that worked within the past year were also hired within the past year. Only about 40% of employees in both countries were hired more than 12 months ago. This indicates that the onboarding and training of new staff members is a critical business function of any cannabis retail operator.
In this graph, we look at the top-level average turnover rates of budtenders in US and Canadian cannabis markets over the past year. In both the US and Canada, approximately 55% of budtenders who worked at any point over the previous 12 months had departed by the end of that time period. There is a slight difference between the US and Canada with Canadian stores seeing a slightly higher turnover rate than their US counterparts. To put this into context, in 2021 the US Bureau of Labor Statistics reported a turnover of 47.2% across all industries.
Now let’s look at the turnover data in combination with the hire date data we saw earlier. Prior Employees are those who were hired more than 12 months ago. We can see that these employees had nearly identical turnover rates in both the US and Canada. About 60% of these employees left last year. On the other hand, there was some more difference between the two markets among recently hired employees with about 54% of Canadian new hires and 50% of American new hires turning over.
One interesting thing to note here is that nearly a full third (32.5%) of all Canadian budtenders who worked at some point in the past 12 months were both hired and then left within that same time period.
Here we see the same data as in the previous graph, but broken out by individual market. While these metrics are fairly similar across markets, there are a few standouts. Retailers in Illinois, for example, seem to be better than average at retaining more experienced staff members for more than one year with 55% of employees hired more than one year ago. Conversely, retailers in Colorado and Oregon tend have far lower retention, both with more than one-third of budtenders starting and ending their employment in the past 12 months. In Canada, Alberta is a bit of an enigma with retailers tending to have slightly better retention among new employees but having lost a larger amount of more tenured employees than in other Canadian provinces.
As we saw earlier, across all stores, the average turnover rate over the past 12 months was about 55%. However, we can see here that there are plenty of stores with lower turnover rates than that average, and plenty more with higher. In both the US and Canada approximately 20% of stores had annual turnover rates lower than 40%. On the other hand, more than 30% of stores in both countries had greater than 60% turnover! Clearly, employee retention is a challenge across the cannabis retail space.
These charts compare the various employment outcomes of newly hired budtenders in both the US and Canada. Of employees hired within the last twelve months, 49% were still working at the end of May in the US, and only 46% in Canada. The most staggering statistic here is that nearly a quarter (23% in the US and 24% in Canada), of all budtenders hired in the past year did not even complete their first full month on the job. This emphasizes how critical it is to have an efficient and effective new hire onboarding process, because it will be reused frequently.
For our final analysis, let’s compare budtender turnover with sales performance. This graph shows the average turnover rate of employees grouped by their best-ever monthly sales rank within a store. For example, if budtender Willie N was the third highest grossing budtender at his store in December, but fifth highest in all other months, he would appear in the ‘3’ bucket on this graph.
This shows a significant trend that is not at all surprising. The better performing the budtender is, the more likely they are to continue working. This could be simply because it feels good to do well at a job and so it’s natural to want to continue. However, budtending is still a tip-driven position in many markets and being a top performer could also mean an employee might be bringing home more total income than his or her coworkers. Whatever the cause, this should be welcome news for retail hiring managers as they are more likely to retain their staff at the top of their sales charts than at the bottom.
If you’re running a retail operation, you’re likely spending too much time managing your employees. Especially if half of your staff finds different places to work within the next year. The Employee Management Module in Retailer Premium can significantly reduce the time you spend managing your employees by helping you understand how your sales staff are working and identify areas of opportunities for improvement. Want to learn how? Sign up for a demo.
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