Yikes! Who knew?! Soon, ALMOST ALL California cannabis companies will have to offer a retirement plan of sorts (for ease of reference, the author refers to a 401(k) plan, but there are other types of plans). Cal. Code Regs. Tit. 10 § 10001. In fact, the deadline for cannabis companies with more than 100 employees is September 30, 2020.

For cannabis employers with more than 50 employees, the deadline is June 30, 2021; for cannabis employers with five or more employees, June 30, 2022.

To help its employers comply with this mandate, the state of California has its CalSavers program. The program is a retirement vehicle, allowing employees — through their employer — to direct automatically a portion of their pay into investments

The CalSavers Retirement Savings Board, an independent government agency that oversees the program, selects the investment options, including the default investment options. Through an open bidding process, the Board selected State Street Global Advisors to help manage the funds. Employees will also have access to an ESG (Environmental, Social, and Governance) fund on the CalSavers platform.

Under this individual retirement account (“IRA”) program, a cannabis company won’t be able to match employee contributions or give any profit sharing contribution. As for employees, the contribution limit is $6,000 (in 2020), which is intended to equal the limit of what the Internal Revenue Service allows one to contribute to an IRA (irrespective of and without the California mandate on employers).

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