Cannabis isn’t the problem. The people who said you couldn’t have 401(k)s are.
Let’s have a little pow wow, shall we? Time to unpack the truth nobody wanted to say out loud.
You’ve probably heard it before: “Cannabis businesses can’t offer retirement plans.”
Maybe it came from your accountant. Maybe it was a friend in the industry. Maybe it was some janky vendor who didn’t want to admit they were just scared of high-risk clients. But here’s the truth:
I’m gonna hold your hand when I say this... Lean in. whispers “They were wrong.”
And worse? You’ve probably been making decisions based on their bad info.
Here’s what happened. Most retirement plan providers—especially the big-box names—got spooked by cannabis. Federal illegality. Banking headaches. The usual suspects. So instead of figuring out how to serve you, they ghosted the entire industry.
And that ghosting created a vacuum. No 401(k)s. No matching. No long-term wealth-building tools for cannabis workers. Just a giant question mark that made it look like retirement planning was off-limits.
Enter Paragon + LRS's union.
We saw the BS. And we weren’t having it.
Paragon has been committed to cannabis since 2016. We’ve built compliant payroll systems that work specifically for this space. We know the hurdles—and we clear them daily. LRS (Leading Retirement Solutions) brings deep ERISA compliance expertise and fiduciary protections that keep your plan tight, audit-ready, and rock-solid.
Together? We made it work. Fully compliant. Fully integrated. Fully legit.
So yes—your cannabis business absolutely CAN offer a 401(k).
And here’s what you get when you do:
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Retention: Workers stick around longer when they’re invested in. A 401(k) is more than a benefit—it’s a signal that this job isn’t just a short-term hustle. When team members see you’re investing in their future, they invest in yours. They’re more loyal, more productive, and less likely to bounce for a tiny raise down the street. In a high-turnover industry like cannabis, that stability pays for itself over and over.
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Recruitment: Good people want more than just hourly pay—they want a future. With competition for talent fiercer than ever, offering a 401(k) shows that you're not just offering a paycheck—you’re offering a career path. That matters to experienced candidates who’ve been burned before and are now looking for a place to grow. When you put retirement on the table, you attract people who are thinking long-term—and that’s exactly who you want.
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Reputation: Offering a 401(k) signals to banks, boards, and buyers that you’re building a real company. It tells the outside world that you’re not some fly-by-night grow or corner dispensary—you’re a stable, mature, growth-minded operation. That’s the kind of signal that helps with financing, banking, vendor trust, and even acquisition conversations. Retirement plans show you care about compliance, governance, and infrastructure—all the things that separate great operators from hobbyists.
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Owner Benefits: Yes, YOU can build wealth too—strategically, tax-efficiently, and legally. Retirement plans aren’t just for your staff. With the right structure, owners can use a 401(k), Solo(k), or Safe Harbor plan to defer income, reduce taxes, and build long-term personal wealth outside of their business. This is especially critical in cannabis, where traditional wealth-building routes can be harder to access. With LRS, you get plan design that protects the people and the person leading the charge.
What About Federal Law and 280E?
We hear this all the time: “Doesn’t 280E make this impossible?” No. 280E disallows deductions for businesses trafficking in Schedule I substances—but retirement contributions, when structured properly, aren’t “trafficking expenses.” They’re part of your compensation strategy, not your cost of goods sold. LRS designs retirement plans that keep you compliant, minimize your audit risk, and maximize your tax advantages—within the letter of the law.
This is why partnering with a cannabis-savvy provider matters. You can’t just slap a mainstream 401(k) onto a cannabis company and hope for the best. It has to be intentionally designed to fit your structure, cash flow, and risk exposure. We’ve done it. We’re doing it now. And we’ll walk you through every step.
Why 401(k)s Are Actually Simpler Than You Think
A lot of folks think 401(k)s are hard to administer. And with the wrong provider? They can be. But Paragon and LRS simplify everything. Your payroll data syncs directly with your retirement contributions. Employee enrollments? Streamlined. Employer reporting? Automated. Compliance audits? Handled.
You’re not managing another vendor—you’re getting a full-service, plug-and-play system that lives inside your existing Paragon dashboard. It’s not just easy—it’s a relief.
What’s the ROI of Offering Retirement Benefits?
Let’s talk numbers. Studies show that replacing just one employee can cost up to 33% of their annual salary. In cannabis, it’s worse because of licensing, training, and compliance risk. A retirement plan helps reduce turnover—and that alone can pay for the plan several times over.
Then there’s recruiting. Employers offering retirement plans fill open positions faster and with better candidates. The ROI? More stable operations, lower training costs, and higher productivity. Don’t think of it as a perk. Think of it as insurance against churn.
Your First Step Is a Simple Conversation
You don’t have to decide everything today. The first step is just getting the facts. What kind of plan fits your structure? What do you want to offer employees? What’s your budget? What are your goals as an owner? We’ll walk through all of that together.
There’s no one-size-fits-all retirement plan. But there is a smart-fit option for every cannabis company. Let’s figure yours out.
Relevant Industry Stats Cannabis Operators Shouldn’t Ignore:
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52% of mainstream employers offer retirement benefits, yet fewer than 15% of cannabis companies currently do.
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The average cost of turnover in the cannabis industry is estimated at $3,500 to $5,000 per dispensary role.
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71% of cannabis workers surveyed said they would stay longer at a job if it offered retirement benefits.
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401(k) access is the second most-requested benefit among cannabis employees, after healthcare.
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The U.S. cannabis market hit a record $32 billion annual run rate in mid-2024, up 25% from 2023.
These aren’t just numbers—they’re signs that the industry is growing up. And offering retirement is part of growing up with it.
Common Cannabis 401(k) FAQs:
Q: Aren’t 401(k)s too expensive for a small operation like ours?
A: Not at all. LRS offers flexible plan design that works for businesses of all sizes. Even basic plans cost far less than one turnover cycle.
Q: Can we offer this if we’re still operating cash-heavy?
A: Yes—LRS helps you create plans that align with your pay structure, whether it’s banked, hybrid, or cash-managed.
Q: What if my employees don’t care about retirement?
A: Studies show that many do, especially younger workers. But it’s also about brand, reputation, and building a stable culture—not just what’s asked for.
Q: What if I’ve been told cannabis businesses can’t legally offer retirement?
A: You’ve been misinformed. While many providers won’t work with cannabis, Paragon + LRS do, and have proven compliant models in place.
Q: Is there a Solo 401(k) option for owners without W-2 employees?
A: Yes. Solo(k) plans are perfect for founders who want to shelter income and plan for the long-term.
Best Next Steps:
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Schedule a call with Paragon to talk through your current payroll + benefits setup.
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Get a free retirement readiness check from LRS, tailored to your org size, entity type, and goals.
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Review a sample plan design—no obligation, no fine print.
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Launch with support: Our shared teams walk you through employee education, onboarding, and compliance from day one.
Don’t let misinformation dictate your benefits strategy. You can offer a 401(k) with confidence—and you should.
Ready to get your 401(k) lit the right way? Let’s Talk
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