Why Cannabis Businesses Break: Payroll, People, and Poor Infrastructure | Shawn Worth

Most cannabis businesses don’t fail because of product.

They fail because of what’s underneath it.

The systems.
 The people.
 The infrastructure.

Live from Lucky Leaf in Minneapolis, we sat down with Shawn Wirth from Paragon Payroll to talk about the side of cannabis that doesn’t always get attention, but affects everything.

From payroll disruption to employee experience, this conversation is really about what happens when businesses grow faster than their foundation.

Shawn shares his path into cannabis, what drew him to Paragon, and why he believes most operators are still too reactive when it comes to HR and payroll.

Learn more about Shawn in our Community Spotlight

We get into:

• Why payroll issues impact real people, not just operations 
 • How poor infrastructure can cause businesses to collapse under growth
 • What Human Capital Management actually looks like in practice
 • Why most cannabis operators wait too long to fix internal systems
 • The importance of building proactively instead of reacting to problems

One of the biggest takeaways?

The businesses that last are the ones that invest in their people and their systems early.

Everything else builds on top of that.

Transcript

SPEAKER_00 0:01

The thoughts, views, and opinions expressed on the Canic Connect Show belong solely to the individuals and do not reflect those of Canaconnect and its affiliates, sponsors, or partners. Caniconnect does not promote or facilitate any activity that violates state or federal regulations. Everything you hear here is strictly for educational and entertainment purposes. It is not legal advice. It is not financial guidance, and it's definitely not medical direction. Seriously, don't take our word for it. Even if someone on the mic sounds like they know what they're talking about, and they're probably crazy smart too. Regardless of how legit our guests may be, you should always do your own homework, consult with your attorney, and understand the risk you're taking before you do anything when it comes to cannabis. Our intention is to keep it real. If you've got a problem with anything we've said, take us to court.

SPEAKER_01 0:48

So tell me a little bit about yourself. How did you get into well what what industry do you consider yourself in? We could say how did you get into cannabis? Maybe that's a good place to start, but then how did you get into HR and payroll as a as an industry? Um, great question.

SPEAKER_02 1:04

So I uh started off in high school. I liked the product. And maybe a little bit too much at times. Um made some friends around that. Some are good friends, some are bad friends, and some of them are still great friends at heart today where we can have really real conversations with each other that you can't always have with people. It's hard to find. So those relationships I've always carried with me. So I had always had a place in my heart for the product as well. And I always use it for my my pre-workout in college too. It's like, you know, go hit some of that up and go to the gym. Yeah, where'd you have to Winona State University? Yeah, that's great. Great training facility. So that was my routine every day, sometimes twice a day, and uh a little too much. But yeah, I am with you.

SPEAKER_01 1:45

Hey, we're here. Yeah, we're live on the Canada Connect Show, live from Lucky Leap with Sean Wirth from Paragon Payroll. You know, not all decisions are good decisions, not all decisions are bad decisions. They they all over time lead us to where we are ultimately going to end up. Oh, that's right.

SPEAKER_02 2:01

Yeah, and um, I found my way to Paragon actually because I I believe that people leave organizations because not because of the company itself, but because of the manager. So when I found a good manager here at Parag at my last company I worked at, and he got into Paragon. Oh, and he was brought in to help revamp the organization, make sure like they're already doing really good things since 2016 for the Canvas community. Right. And we needed some traction. And so they brought him in there because he had a track record of performing and making sure that we're serving the people that we are offering our services to to the best of our abilities. So I was on the client-facing side previously. He wanted me to come in here and he said, Sean, can you work with our cannabis clients to help them optimize their infrastructure, help them understand what is HCM, what is human capital management, what is what are these pieces that all these other successful businesses are putting into place to be able to have a stone foundation so their houses don't get swept out when they built them on sand. Yep. You know, and we've seen that with a lot of people who have the valley of death in a lot of businesses. You know, you got the small mom and pop, the bloated companies, there's ones that don't build the right infrastructure that end up getting washed away. Okay. And so for me, I want to make sure that my clients know what they're getting, know how to optimize what they're getting, and then help them understand what are your operational constraints and how can you plan ahead for those bottlenecks so that way we can have something in place that doesn't feel like a bottleneck, that it becomes something more strategic than reactive. Okay.

SPEAKER_01 3:26

And what kind of solutions does Paragon Payroll provide?

SPEAKER_02 3:29

We provide payroll, just like the name suggests. Yep. Um, but anything that is inside of the employee lifecycle. So we're a single source technology tech stack. We use iSolve technology, or we're the Service Bureau to that technology specifically for cannabis, 100% of our marketing dollars for cannabis. But those solutions follow the employee lifecycle from hire, they're sending out your recruiting web, getting those candidates in, turning them into a new hire, getting them to the HR software, your payroll, your time in attendance, benefits administration, your performance management, training and development, and making sure that all those pieces are as seamless as possible to optimize your employees' experience and then also to effectively manage them so that way you're not spending your time caught up in that minutiae that's not really protecting your growth model or your desired goals and dreams. Okay. And making sure you're also protecting the people that are your most valuable asset. Absolutely. And what has your experience been like working at Paragon Payroll? At Paragon, it's been awesome. It's a great company, great core values. And I think from the top down of our company, we we live and breathe our core values, and we like to be able to show that to our clients as well by showing up for them, not just by being here, but then also showing up for them when they call. We pick up the phone. Yes, and we don't outsource that. 87% of our calls are answered within the first 30 seconds by real in-house people. So they know that Tim and Tun are on time and attendance. They know that Amy Bergstrom and Angie Winter are gonna be the ones that help them with their benefits administration. Sure. They know these people and these people are investing in their futures.

SPEAKER_01 5:02

Absolutely. So, um, how large of a bundle does Paragon Payroll provide? Is it are there small bundles, medium bundles, larger bundles? Like when if a dispensary operator in Minnesota wants to get started with Paragon Payroll, like where do you like to start them at? Good question. I'm glad you asked about pricing.

SPEAKER_02 5:19

So we believe that pricing should be transparent and it should be equal across all industries, whether you're cannabis or not. So when you go onto our website, we have a pricing model right there. We can quickly reference what our average prices are gonna be. And they usually fall between nine and fifteen dollars per employee per month. Okay. Um is our base uh pepum is what we call it. Otherwise, if you're looking for something more tiered and structured with additional add-ons, because it's very modular, the solutions we have, so you pay for what you need. Yeah, you can run through a calculator and find out.

SPEAKER_01 5:46

Right, right. Transparency is important.

SPEAKER_02 5:49

Yeah, it's that's what um a lot of people they get a little gun shy when you talk to them about that pricing.

SPEAKER_01 5:55

So, but we're not so you know, for me as somebody who doesn't really understand human capital management at this point, like take me through some of the basics. What does it really mean in practice and and tell me a little more about what what what drives you as within as an individual within this industry?

SPEAKER_02 6:13

Um, I think from the idea of HCM solutions and then how it actually affects your operations, making sure that you have the appropriate infrastructure for getting that employee onboarded, getting them into your system, making sure that they're managed, trained, developed, supported, they have the tools and access they need to succeed. I see. Yeah. Right? Because if you all of a sudden, let's say you have an unfriendly provider, we we're cannabis committed, we take it the next step above cannabis friendly. Yep. We're in it to win it with our with our clients. Yes. So with that said, when you work with clients with other partners that are less than committed to this industry, and all of a sudden their banking relationship falls out from underneath their feet, and they're like, hey, too bad. You know, we didn't build in banking redundancies, you know, make sure that we have it tiered so that way if one bank goes, we're we're not no disruption for our clients. Because that disruption could mean interruptions to their operations, their outputs, their vendors, their trust, their brand. Yeah, and that all gets affected because those employees who have stopped getting paid because they had disruption, right? Right? As payroll and HR is an example. Yep. Right? Yeah, that disruption is uh affecting real people's lives. Of course. You know, and they could be looking at other places to work, you know, yeah, absolutely.

SPEAKER_01 7:23

All adds up. So, how do cannabis businesses typically approach payroll and HR infrastructure? Um, I is it that much different than than other businesses, or or what do you typically see? Where do they tend to fall short and what should leaders actually prioritize if they want scalable, compliant operations?

SPEAKER_02 7:40

You know, I think any industry that gets inundated with a lot of change can have a tendency to be reactive. Okay. Right? When it comes to the things that aren't always the most fun, like payroll and HR is not always fun to do, but it's it's a necessity. Yeah. It's a necessity to make sure your employees are getting paid. Right. That you're able to manage them. They know what to expect when they show up and when they're scheduled to work. I see. You know, those type of things are really important. Right. Um, and I think that gets kind of lost in that minutia across all industries, but cannabis specifically, we have it's been a wild ride for a number of us who've been in this space for a while. Yeah. And um, I think that's not lost in people. So I think being proactive and making sure that you are putting these pieces into place before they become an issue is where a lot of operators aren't putting enough weight. You know, they're like, okay, now all of a sudden I'm getting dropped and I need to look for a new provider. Or, you know what, I've had disparate systems for time in attendance and for my payroll and for my benefits administration. Now all of a sudden I'm switching a broker, now I don't have access to benefits, my time attendance solution is not working for me. Now it's kind of a shuffle.

SPEAKER_01 8:46

Uh-huh.

SPEAKER_02 8:47

Right.

SPEAKER_01 8:47

You know, they're on they're skating. They're skating.

SPEAKER_02 8:50

Yeah.

SPEAKER_01 8:50

Good and yeah, good visual. What inspires you inside of Paragon Payroll? I've gotten the chance to meet Clark, Nick, yourself. How is the team culture? Like, how would you describe it? Because you're in Minnesota, you're you're you're an individual, like you're remote. Say um, so you are Paragon Payroll in Minnesota, and what has it been like reaching out to these Minnesota cannabis operators, these prospective licensees? How are folks responding to you? And and and how does that affect the the greater system at Paragon? Oh, a multi-piece buzzing. I mean, I'm trying, I'm throwing a little much at you. So you're on your road out here, yeah, you're reaching out. How much how do people know Paragon? I mean, are they still are they starting to do it? Yes and no about it, yeah.

SPEAKER_02 9:37

Yes and no. I think that our our brand is definitely getting out there because we're taking the time to actually show up boots on ground to a lot of the shows across the country.

SPEAKER_01 9:44

But appreciate your support. Yeah.

SPEAKER_02 9:46

Yeah. And finding organizations like yourselves that are actually trying to make a palatable difference, right? And bring people together and bridge those and pick those stars, like you said, and try to make a constellation you can see. Yes, right. We got exactly shine bright. That's right. So um, I think that over time, trust is built, right? And trust comes with recognition and referrals, and slowly but surely, if in our market, as we continue to move towards, we're on the precipice of like actually rolling forward with everybody's hopes and dreams and plans, yeah, that they're like, oh, you know what? The people who kept showing up, the people who kept falling up and not asking for something in return. We provide resources, we provide blogs, we provide all sorts of things to help license these out, and we don't ask for anything in return. We want to give those educational resources.

SPEAKER_01 10:34

Yeah. So you know that that reminds me of the community spotlight that we just finished uh and that we debuted uh just the last week on the Canaverse newsletter. Okay. You know, uh feature it yourself. Yeah. Good, thank you. That was really fun to to go through and see all of the information about you and what brings you into the space. So if folks are checking this interview out, they want to learn a little bit more about Sean. We'll include a link to the the Canaverse blog post as well as the blog on our website that also features you on there. So like Yeah, thanks. It's uh it's been good getting to know Paragon, and obviously we got to know you quite a bit last year through Brainerd and some of our Duluth area events. Dunmyers, that was great, great job. Thank you. Yeah, we had a good time at Dunmyers. Um, it's been fun getting into Duluth and Brainerd, and we know we know that's where a lot of the operators are actually going to be, is the greater Minnesota area, you know. So we have to get out there.

SPEAKER_02 11:28

Well, those training lakes are beautiful, so it's a great excuse to go up there when you host another one. Yeah, people need to know it's beautiful up there, so come to one of these events.

SPEAKER_01 11:35

Absolutely. Yeah, we'll be doing more events the second half of the year in uh Duluth, Brainerd, and Moorhead. Uh, we're gonna take Canna Connect on the road and get out into the local markets. So we hope we hope Paragon can join us.

SPEAKER_02 11:46

I will. I get I'm only 30 minutes away from uh Dunmeyer's where my cabin is. So when I go up to the cabin, yeah, make a quick slick up there and uh come visit, all right?

SPEAKER_01 11:54

Amazing. Anything else you want to share with the people uh on the Canna Connect show?

SPEAKER_02 11:59

Um one thing I would say is rely on your community, ask questions, and uh don't take people at their word. There's a lot of uh predators in the grass, and we want to make sure that whether it's not Paragon, it's someone else that's a trusted partner. And people like uh Steven here and Spencer and Luke, the whole team, Natalie. Yeah, uh they do a great job on betting people out to make sure that they are they're standing up for what they actually believe in.

SPEAKER_01 12:24

So stay tuned, I guess. Thank you, Sean. It's great to have you on the show. Cheers. We'll be back on the Catakinette show.