The Quiet Law That’s About to Shake Every Cannabis Payroll

There’s a law sweeping across America that no one in cannabis is really talking about.
Not a headline-grabber like legalization or 280E reform — but one that could quietly trip up thousands of dispensaries, cultivators, and labs overnight.

It’s called state-mandated retirement.

Sounds simple, right? A government program that makes sure employees have access to retirement savings. But here’s the twist: it’s not optional. And if you run a cannabis business, it applies to you, too.

For years, cannabis employers fought battles on familiar fronts — payroll, taxes, banking. But a new compliance fight is emerging, one that doesn’t care about federal gray zones or cash-only realities. Every state that passes these laws expects you to follow them, even if your bank won’t.

So, while other industries can set and forget their 401(k)s, cannabis owners are again forced to innovate under pressure — balancing financial contradictions that most lawmakers have never experienced firsthand.

If you’ve got employees, payroll, and a cannabis license, this one’s for you.

West Coast: Where It All Started

The West has always been the testing ground for progress — and cannabis has lived that story firsthand. But along with legal weed came another type of legislation creeping up on small business owners: mandatory retirement.

California — CalSavers
California’s CalSavers program is one of the most aggressive retirement initiatives in the country. It’s designed to make sure every worker — regardless of industry — has access to a retirement savings plan. Every employer with just one California employee must register by December 31, 2025 if they don’t already have a qualified plan.
• Penalties: $250 per eligible employee after 90 days, then $500 after 180 days.
• Employer cost: None directly — but you handle payroll integration and employee education.

For cannabis operators, this adds another layer to an already complex system of compliance and payroll management. You can’t just “opt out” because your business deals with restricted funds. The state doesn’t care that your payroll provider might — it only cares that your employees have retirement access.

Oregon — OregonSaves
Oregon was the first to make waves with its auto-enrollment program. Employers without a qualified plan must register or face $100 per employee per year (capped at $5,000).

In Oregon, cannabis employers have been quietly leading the way — forced to figure out creative, compliant ways to pay people, track deductions, and now, fund retirement accounts despite limited banking options. It’s the same story repeating everywhere: innovation under pressure.

Colorado — SecureSavings
Colorado’s SecureSavings program launched in 2023, targeting employers with five or more workers who’ve been in operation for at least two years. The message was simple: get compliant or pay the price.
The state has already started issuing fines for missed registrations — and cannabis businesses are treated just like everyone else.

So if your dispensary, cultivation, or distribution company has five employees or more, you’re in the crosshairs. And “I didn’t know” won’t save you from penalties.

Midwest: Quiet Rules, Loud Penalties

Out in the Midwest, these laws arrived with less noise — but don’t mistake that for leniency.

Illinois — Secure Choice
Illinois was one of the earliest adopters, passing its Secure Choice mandate back in 2015. That means nearly a decade of enforcement, with real-world lessons and fines to match.
• Penalties: $250 per eligible employee for the first year and $500 each year after.

It’s not uncommon for smaller businesses — especially cash-heavy ones — to get caught off guard. One missed letter, one unregistered payroll report, and suddenly you’re on the hook for thousands. For cannabis operators juggling 280E taxes, fluctuating compliance rules, and banking restrictions, these fines hit especially hard.

Northeast: A Growing Cluster of Mandates

As legalization spreads, so do the laws meant to mirror traditional employment protections. Retirement inclusion is one of them — and the Northeast is moving fast.

Connecticut — MyCTSavings
Employers with 5+ employees and no qualified plan fall under MyCTSavings. Starting July 1, 2025, fines escalate with company size: $500 for 5–24 employees, $1,000 for 25–99, and $1,500 for 100+.

That may not sound catastrophic, but when you add in payroll complexity, compliance audits, and lost employee trust, those numbers grow exponentially. Connecticut is signaling what other states will follow: “No more waiting — every worker deserves access to retirement savings.”

Maryland — MarylandSaves
Maryland flipped the script by swapping punishment for incentive. Instead of slapping employers with fines, they offer a $300 annual report fee waiver for those who register and participate. Skip it, and you lose the credit.

For cannabis employers, that small amount can still matter — but it’s more about the signal. Maryland wants participation, not excuses.

Maine, New Jersey, New York, Rhode Island, and Vermont
Each state has its own spin, but they all share one goal: make retirement savings a universal employee right. Auto-IRAs, Roth structures, and payroll deductions are spreading across the map — and none of these laws exclude cannabis operators.

South & Mid-Atlantic

Traditionally slower to adopt progressive financial programs, southern and mid-Atlantic states are now catching up — fast.

Delaware — EARNS
Launched in 2024, Delaware EARNS applies to employers with 5+ employees. Like others, the program automates payroll deductions and removes excuses for inaction.

Virginia — RetirePath VA
Another straightforward mandate: register your business, facilitate contributions, and don’t fall behind. For cannabis companies expanding eastward, these rules can sneak up. The programs are easy to use — but easy to ignore until the first penalty hits your inbox.

Fees: The Fine Print

Here’s what most employers miss: yes, these programs are technically free, but “free” never really means without cost.

Your time, payroll labor, and potential disruptions count. You’ll spend hours registering, uploading rosters, and processing remittances. That’s time your HR or payroll lead isn’t focusing on more pressing compliance issues — like verifying badges, tracking cash tips, or balancing 280E.

Meanwhile, your employees shoulder the actual investment fees — typically 0.25% to 1% annually, depending on the fund lineup. Over years, that eats into returns. And if your team’s income fluctuates, missed deposits or low balances can amplify the hit.

And let’s be honest — for an industry that’s still fighting for basic banking, every percentage point matters.

For Cannabis Employers: The Hidden Layer of Risk

This is where it gets tricky. Federal illegality still means most traditional financial institutions won’t touch cannabis money — even for something as routine as a 401(k) or IRA.

That means your “state-mandated retirement plan” could exist in theory, but in practice, the provider may ghost you once they realize what kind of business you run. It’s happening everywhere: compliant cannabis operators sign up, only to have accounts frozen, transactions rejected, or partnerships terminated with zero notice.

And let’s not forget 280E, the notorious IRS rule that denies cannabis businesses the ability to deduct ordinary expenses. Employer contributions to retirement plans? Usually not deductible. That means even when you try to do the right thing — paying employees fairly, offering benefits, and building retention — you’re penalized for it.

It’s one of the most frustrating paradoxes in cannabis finance: state law forces your hand, but federal law ties it behind your back.

Why It Matters

At its core, this isn’t just about compliance. It’s about legitimacy. Every cannabis business that plays by the rules — even when the rules are stacked against them — pushes the industry closer to normalization.

Ignoring these mandates isn’t just risky; it sends the wrong message to your employees and regulators alike. Fines stack fast, but reputational damage lingers longer. In an industry where turnover is already high, offering something as simple as a retirement option can be a quiet but powerful statement: We’re building a future here.

You’re not just paying people to clock in. You’re showing them they can grow with you — that this isn’t a “gig economy” hustle, it’s a career worth staying for.

Need a Cannabis-Friendly Payroll Partner?

Paragon Payroll’s systems integrate seamlessly with state-mandated retirement programs while navigating the unique financial barriers of cannabis. We handle payroll deductions, reporting, and compliance — without the runaround or fear of being dropped mid-cycle.

Because in an industry constantly tested by legislation and stigma, you deserve a partner who doesn’t flinch when the rules change.

Heroic Relief: The Future Is Still Yours to Build

If you’re tired of carrying the weight alone — of being the HR director who has to Google “state retirement penalties” at midnight or the owner trying to explain why your bank froze your payroll — take a breath. You’re not failing. You’re fighting through a system built without you in mind.

And that makes what you’re doing nothing short of heroic.

Because this industry doesn’t need perfect players — it needs brave ones. The ones who keep showing up, even when the rules change mid-game.

Let’s build something future-proof, together.
Talk to our team → Let's Talk!