Marijuana Business Magazine April 2020

April 2020 | 41 how and whom they hire, they are hiring nonetheless. “The fervor of 2017-18 has calmed down a little bit, but companies are going to grow very strategically and be focused on upgrading their talent as they continue to grow,” said Liesl Bernard, CEO of CannabizTeam, an executive staffing firm in San Diego. HOW TO WIN Competitive salaries are critical to luring top-notch talent, but compensation packages that are too high are not only money recklessly spent but likely a turnoff for investors. Still, crafting a compensation package that is reasonable yet compelling enough to attract talent from well-paying, stable, mainstream jobs is possible. The keys are: • Identifying your company’s needs. • Identifying the skill sets needed to fulfill those needs. • Using internal and external recruiters. • Structuring compensation packages so that base bay, bonus pay and equity are tailored to candidates’ individual needs—but without busting the budget. • Understanding that health plans are expected, while 401(k) plans and similar benefits are also increasingly the norm. If a cannabis company can follow these principles, they will be able to build management teams with skill sets well-suited to the challenges of 2020 and beyond—but at a price that satisfies both the executive being hired and the one doing the hiring. “We look at where we are today and where we want to be in the next 24 months. We look at the growth of the industry and then look at candidates that don’t just fit in our model today but would have the capabilities to lead the charge 24 months from now, when we’ve reached a certain size and more complexity in our operations,” said Peter Bilodeau, who was appointed interim CEO at Oakland, California-based Harborside in October. “We can offer wages that are pretty competitive within the mainstream industry and the cannabis industry. … Between base pay, bonuses and stock options, there’s an attractive plate of income for somebody to come in and help build us into a bigger company.” MONEY MATTERS After finding good potential recruits for your company, persuading them to leave a stable and lucrative post doesn’t always require a higher salary than their previous position—at least in terms of base pay. “Every situation is unique. You could certainly find situations where we have paid less, equal to and more” than a new hire’s previous employer, Wells said. Determining how much to offer—and how to offer it—requires research into each candidate’s salary history, market salaries for similar positions and understanding what combination of base pay, bonus and equity is best for the candidate yet doable for the company. “You first look at the comparable sala- ries for this job. You want to know if this person was making X at their company, and they are probably interviewing at other companies that pay Y. So we have to ask: Are we close to that? Are we com- petitive?” Schmults said. “It’s tough to get this information, but you can get it.” Larger cannabis companies typically offer some combination of base pay, bonus and equity. “On base salary, you have to be competitive. The thought that you can convince somebody to take significantly less money and base if you give them a big equity grant that provides them with longer-term (compensation) … that may have been the case earlier in the industry, but that’s not a sustainable model,” said Steve Hardardt, senior vice president and chief people officer at New York-based multistate operator Acreage Holdings. (See “Weighing Your Options” on page 44.) Acreage, Hardardt said, pays “competitive” base salaries but also offers annual bonus opportunities that get paid in cash. “It starts as a target, which is a percentage of their base salary,” Hardardt said. “Someone can make $80,000 base and have a 10% bonus target. And at the end of the year, that bonus target would be based on how the company performs against targets and how the individual performs against targets.” He added: “I don’t think we consciously reduce those in any such way and say, ‘Oh, if we (reduce) that, we can make up for that with more equity.’ We really take a more measured approach and say we want to pay competitively around cash, which is base and an annual incentive. And then we give people equity awards that are reasonable and meaningful for the level that they’re at.” Wells agreed that cannabis companies are decreasingly in positions where they offer executive candidates compensation packages long on equity but short on base. “The Greg Butlers of the world don’t pick up and make a move for nothing,” Wells said, referring to Cresco’s new chief commercial officer, hired from Molson Coors in February (see page 100). “You have to show some level of competitiveness with the CPG or with the adult beverage environment or industry from which you’re recruiting.” LESS IS MORE But other executives said ideal candidates need to understand that they are joining young companies with limited cash but Ed Schmults Courtesy Photo Scott Wells Courtesy Photo Peter Bilodeau Courtesy Photo