Fractional HR vs. Hiring Full-Time: A Cannabis Operator's Honest Guide

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The conventional advice for growing cannabis companies goes something like this: once you hit a certain headcount, hire a full-time HR person. Put someone on payroll. Get it in-house.

The data does not support that advice. And in cannabis, the structural problems with internal HR are worse, not better, than in other industries. This is the case for why separation is not just a cost play, it is a people strategy. And what it looks like when it is done right.

Internal HR Has a Trust Problem. The Numbers Are Blunt.

This is not a niche concern or an edge case. Research consistently shows that employees across industries do not trust internal HR, and the reasons are structural, not personal.

• 71% of employees say internal HR is too entangled in office politics (MyPerfectResume, 2024)

• 86% of workers say they are afraid to approach HR with work-related issues (MyPerfectResume, 2024)

• 90% of employees who brought a grievance to internal HR said it was not adequately addressed (MyPerfectResume, 2024)

• 45% do not believe internal HR acts impartially, and 43% believe senior staff are favored (Cezanne HR)

• Over a third of Americans do not trust their company's HR department, citing bias, favoritism, and inconsistency as the top reasons (Secure Data Recovery)

• 83% of Intel employees, 79% of Amazon employees, and 75% of eBay employees reported not trusting their internal HR departments (TeamBlind, 11,000+ respondents)

Even at LinkedIn, the best performer in that same study, 59% of employees still did not trust HR.

These are not outlier companies with bad HR teams. This is a systemic problem with how internal HR is structurally positioned. When HR reports up through the same leadership it is supposed to hold accountable, it gets drawn into the politics of the organization. It cannot be impartial because its job security depends on the people it is supposed to be checking.

In Cannabis, the Problem Is Compounded

Cannabis companies have strong cultures. That is one of the things that makes this industry worth working in. But strong culture and internal HR are a difficult combination.

In tight-knit operations, an internal HR person does not just know the policies. They know everyone's business. They have lunch with the managers. They hear the gossip. They get pulled into the drama. And over time, consciously or not, they start making HR decisions through the lens of those relationships rather than through the lens of what is right and what is legal.

This is not a character flaw. It is a predictable outcome of the structure. Put anyone inside a tight team long enough and their objectivity gets compromised. HR is supposed to be the function in your business that does not have that problem. Internal HR guarantees that it does.

Add to that the stakes. Cannabis HR is not low-risk work. Turnover in cannabis retail runs at 55% annually (Headset.io). Delinquent payments in the regulated industry surpassed $3 billion in 2024. Only 27% of cannabis companies reported profitability, down from 42% in 2022. The EEOC recovered a record $665 million for workers in 2023. Employment lawsuits cost small businesses an average of $160,000 to resolve.

In a department this consequential, objectivity is not a nice-to-have. It is a risk management requirement.

What Separation Makes Possible

When HR sits outside the organizational chart, the dynamic changes. Employees can raise concerns without calculating the political fallout. Leadership gets guidance that is not filtered through the HR person's need to stay on good terms with the management team. Investigations get conducted without the investigator having a stake in the outcome.

This is what fractional HR is designed to provide. Not cheaper HR. Better HR. The cost benefit is real, but it is a secondary advantage. The primary one is that structural independence makes HR function the way it is supposed to.

Fractional HR for cannabis operators typically covers:

• Employee handbooks and policy development, including cannabis-specific compliance across all operating states

• Hiring infrastructure: job descriptions, interview frameworks, onboarding processes

• Compliance training for managers and staff

• Employee relations: performance management, terminations, investigations, ADA and FMLA accommodation processes

• HR build-out during multi-location expansion

• Performance management systems and organizational structure

The engagement scales to what the business needs. A smaller operation might run on 10 hours a month. A company opening multiple locations across two states might run closer to full-time engagement during that build period. The point is that it flexes, rather than locking you into a fixed cost regardless of workload.

The Hybrid Model: An Internal Coordinator with External Leadership

For operators who want someone in-house handling day-to-day HR administration, there is a version of this that works well. It is not about choosing between internal and external. It is about being precise about what belongs where.

An internal HR coordinator or administrator handles operational tasks: scheduling, onboarding paperwork, benefits administration, and employee questions that are routine. The fractional HR partner handles the strategic and high-stakes work: compliance, complex employee relations, leadership coaching, investigations, and multi-state policy management.

In this model, the fractional partner functions as a Chief People Officer overseeing the internal coordinator's work. The internal person has clear scope and escalation paths. The external partner maintains the objectivity and expertise that an internal hire cannot sustain on their own.

This is where you get the relationship and consistency of in-house HR without surrendering the independence that makes HR trustworthy and legally defensible.

The Cost Reality

Most operators only look at the salary line when comparing options. The full picture looks different.

Full-time HR hire, fully loaded:

• HR Coordinator or Generalist: $55,000-$75,000 base (market-dependent)

• HR Manager: $75,000-$110,000 base

• Benefits and payroll taxes: 25-35% on top of base salary

• 60-90 day ramp time before they are effective

• Ongoing development cost to stay current on multi-state cannabis employment law

At the manager level, that is $110,000-$145,000 fully loaded. Fixed, every year, whether the workload justifies it or not.

Fractional HR typically runs:

• Project-based work (handbook, hiring build-out, compliance audit): $3,000-$15,000 depending on scope

• Ongoing fractional partnership: $1,000-$8,000 per month depending on engagement level and company size

• No benefits, no payroll taxes, no ramp time, no fixed overhead during slow periods

Common Questions

At what point does my cannabis company need a dedicated HR function?

From day one. The question is not whether you need HR support, it is what form it takes. With 55% annual turnover in cannabis retail and compliance requirements that apply regardless of company size, even small operators need HR infrastructure. A fractional partner can provide that from the start at a fraction of the cost of a full-time hire, and without the structural problems that come with internal HR.

Can fractional HR handle sensitive investigations and terminations?

Yes, and the structural independence makes these situations more defensible, not less. When HR is external, investigations carry more credibility. Employees are more likely to trust that the process was fair. That matters both for the people involved and for legal risk management. The key is that fractional HR needs to be embedded consistently, not only called in when something is already escalated.

Does fractional HR work across multiple states?

It is one of its strongest use cases. A fractional partner who specializes in cannabis works across multiple state markets daily. Keeping up with the compliance landscape in MA, CO, CA, IL, and VT is a core part of their practice. For a full-time internal hire, multi-state compliance expertise is hard to maintain and expensive to develop.

What does the hybrid model look like in practice?

An internal coordinator or administrator handles day-to-day operations: onboarding, scheduling, benefits questions, basic documentation. The fractional partner functions as Chief People Officer, overseeing that internal person and handling everything strategic and complex. The internal hire has a clear scope and someone to escalate to. The external partner maintains the objectivity the function requires. Both work better for the clear division.