Within the past few years, the cannabis industry has grown exponentially with the legalization of marijuana for medicinal and recreational use in many states across the country. Recreational marijuana is legal in more than 20 states, with additional states legalizing medicinal marijuana. However, despite the legalization, cannabis businesses still face several operational challenges. A main challenge is finding financial institutions that are willing to work with them. This issue has been intensified by a recent decision by Paychex, a provider of payroll and HR services, to stop offering direct deposit services to cannabis firms.
On March 29th, 2023, Paychex announced that they would no longer process direct deposit payments or offer services for marijuana-related businesses, beginning May 1st, 2023. Paychex will begin suspending the following services:
- Automatic payroll tax administration
- Direct deposit
- Time and attendance services
What This Means For Small Business Owners
The decision by Paychex to terminate direct deposit services to cannabis firms will significantly impact the industry. Direct deposits are crucial for employers to pay their employees quickly and efficiently. Without this convenient service, cannabis businesses may suffer in attracting and retaining employees and managing their cash flow effectively. Ultimately, this change can lead to difficulty in finding banks and financial institutions that are willing to work with cannabis businesses. This, on top of the numerous other issues cannabis industries, are already fighting – banking, tax codes, compliance, HR - could have a detrimental impact on many of the firms.
What Happens Now?
If you’re a business owner in the cannabis industry who used Paychex for their services and are unsure of what to do now, you’ve come to the right place. Group Management Services (GMS) is a professional employer organization (PEO) that partners with businesses similar to yours. We have experience working with businesses in the cannabis industry, so we understand the unique challenges your business faces daily. Fortunately, our team of HR experts works diligently with you to provide payroll and HR services designed specifically for your business and is compliant with applicable laws and regulations.
Our goal at GMS is to help your cannabis business thrive in these challenging times. The last thing we want is for your business to go under because you can’t manage your employees’ payroll. We take that off your shoulders so you can focus on more important aspects of your business. Get a quote today so we can get your employees paid!