Understanding the Landscape of Background Checks in the Cannabis Industry

Our white paper on the subject explores why screening is so important for growers and dispensaries. With a patchwork of different hiring regulations from state to state, employers should understand the obligations they face in their area of operations. Learn more about screening in this industry and explore some examples of how states regulate cannabis dispensary employers today.

The landscape of cannabis use in the United States has undergone a dramatic shift over the last several decades. California passed the first medical marijuana law in 1996. That year marked a turning point and the beginning of a significant change in cultural attitudes. Once a substance whose use carried a heavy social stigma, cannabis today enjoys a surprisingly broad level of acceptance. Such acceptance has led to the creation of a booming new industry—and brought with it questions about using background checks in the cannabis industry.

Today, medical marijuana is legal in 38 states. Recreational adult use is legal in 24 states—almost half the nation. Advocates continue to push for more ballot measures or legislation to expand that number. These changes haven’t just created shifts in culture. With nearly nationwide demand for legal cannabis, someone has to do the growing and selling. There are now tens of thousands of jobs focused on cannabis.

With so much money flowing around a controlled substance, hiring isn’t always as straightforward as in other industries. Legislators scrutinize this industry heavily. Some want it to include elements of restorative justice by offering more opportunities to those previously convicted of marijuana offenses. Others simply want to prevent drug trafficking or ensure that consumers only access quality products.

Ultimately, some scrutiny falls on how a cannabis company does due diligence. How can you hire effectively if you operate in this space? With a patchwork of state laws and some conflicts on the federal level, it’s not always easy to know.

In this white paper, we’ll examine the importance of proper screening for jobs in this industry. We’ll consider some examples of common approaches in state law while also addressing what cannabis companies should explore in applicant backgrounds. As the industry continues to evolve, attracting and hiring talent is more important than ever—and so, too, is accomplishing that goal safely.

The Importance of Screening Employees Working With Cannabis

For any business, due diligence usually involves some form of pre-employment vetting. Background checks aren’t uncommon, from fast food restaurants and retail shops to government work. For cannabis industry employers, the reasons for using them are the same as they are for others. Proper vetting helps manage and reduce risks to your business and the public. However, there are other reasons for the cannabis sector to use criminal record checks, too.

Some states, in the process of legalizing cannabis, have tried to address fears about legitimizing crime. Legislators do not want to hand the keys to a lucrative marijuana business to someone with a history of high-level drug trafficking. The potential risk for possible links to organized crime is too great. Background checks help reveal when individuals have serious drug-related convictions beyond simple possession. Ideally, this step will ensure that licenses and job opportunities go to those who deserve them—not career criminals.

Compliance is another key reason for pursuing rigorous marijuana industry background checks. Failure to screen properly could lead to fines or even the suspension of a business license. A lack of due diligence could also lead to crimes against the company, such as the theft of products or embezzlement. For all these reasons, examining applicants closely is important.

The Many Types of Cannabis Industry Employees

Should the recreational or medical marijuana industry do background investigations on every single employee? Some states may require that. Others may not. What’s key to understanding here is that some employees may represent a greater potential risk than others. Screening everyone is the smart solution—but from a compliance standpoint, it may not be a strict requirement. Knowing the different types of employees helps.

Employees who most likely will need a background check or a special license include:

• Dispensary owners/operators
• Grow facility directors and managers
• “Budtenders,” or retail sales staff in dispensaries
• Grow facility staff, including those responsible for cultivating, trimming, drying, and packaging products.
• Individuals preparing non-flower products, such as edibles, concentrates, and tinctures
• Delivery drivers

Some employees may not meet the same licensing requirements or mandatory background checks. These may include:

• Dispensary receptionists
• Back office staff, such as accountants, IT, or HR personnel
• Marketing teams
• Sales professionals

Screening everyone who comes to work in your business is a smart move. From a compliance standpoint, you should understand where extra care or more diligence is necessary.

The Law in Conflict: Federal vs. State Regulations

Federally, marijuana remains a “Schedule I” drug, which classifies it alongside substances as serious as opiate medication. Marijuana is still illegal at the federal level. This creates a challenging mismatch between state governments and the federal government. Today, the Drug Enforcement Agency (DEA) rarely conducts the dispensary raids that were common when the industry was young. However, the entire sector continues to operate in a strange legal gray area.

There are no federal laws about employment in the marijuana sector because of its illegality. State laws are, therefore, always the deciding factor on how these companies screen and hire. Nonetheless, other federal employment laws still apply—even in this quasi-legal state of things.

Employers must still abide by the rules of the Fair Credit Reporting Act, including gaining applicant consent before screening. Non-discrimination and equal opportunity laws such as Title VII of the Civil Rights Act also apply. Operating in the cannabis sector does not discharge an employer’s responsibilities towards fair and equitable hiring practices.

What Screening Requirements Are Common in the Industry?

For those operating a marijuana business, pre-employment screening may be a matter of both due diligence and following the law. Across the states, there are varying requirements in place for the type of screening employers must undertake. It is essential to understand these specific requirements and what they entail. As some companies continue to grow and operate across multiple states, they may face different employee requirements in various locations.

In general, legislation or regulatory rule-making that governs the cannabis industry concerns both operators and employees. Meeting these requirements is especially important for those who handle the product. Before digging into some examples of state-specific rules, consider what cannabis companies and their workers will most likely encounter. States may require:

• Special state-granted licenses. Licenses are usually a requirement for operating the cannabis business itself. In some states, every employee is also required to have a specific license. Others may only require licensing “budtenders,” or those that work directly with the product and interact with customers.
• A criminal background check. Some states may bundle this into the licensing process. Others leave the responsibility to the employer. States may lay out specific types of convictions that automatically disqualify applicants.
• Certain age limits on employees. Many states require all applicants or operators to be at least 21 years of age.
• Completion of cannabis-related classes on safe growing, handling, or sales.
• Some certifications, such as a HIPAA certification or even a “safe food handling” certificate for certain positions.
• Drug testing, though cannabis positives may not be relevant.
• Driving record checks for those that will transport products. This may include truck drivers moving products from grow facilities to dispensaries or local delivery drivers serving orders.

Ultimately, the licensing and background check procedures are most important. In states without specific licenses or cards, it is even more important for a cannabis company to do due diligence on those it hires.

What the States Require: An Overview of Key Regulations

With so many recreational and medicinal marijuana programs, it’s challenging to run down every single statute. What satisfies cannabis business regulatory compliance checks in one state might be unsuitable elsewhere. It’s essential to review the specific laws in your state to understand your obligations. However, a quick tour around the nation offers insight into legislators’ regulation strategies.

Let’s look at a few examples from across the United States that illustrate the different requirements facing businesses.

California

In 1996, California passed the nation’s first medical marijuana law. Twenty years later, the state legalized recreational adult use. One might think these conditions would create an advanced level of regulation in California. On the contrary, the state has no solid hiring requirements within the cannabis industry.

The state requires no special licenses and leaves background checks at the employer’s discretion. For those in the California cannabis industry, background screening may seem optional. However, businesses should remain mindful of their usefulness for managing risk and heading off future negligence claims.

New York

New York has had medical marijuana for some time, and as of 2024, recreational sales have commenced. This state represents a step up from the regulations of California. However, employers here still don’t face a particularly heavy regulatory burden. In California, there is no license required to work in a dispensary. However, the New York Office of Cannabis Management requires that companies submit registrations for all employees. Employees must be 18 or older.

The state does mandate that a cannabis business use employee screenings with a minimum lookback period of seven years. Can a felon work in a dispensary in New York? That depends on the facts of the case.

Felony convictions related to business operations disqualify candidates if they occurred within the last three years. Felony drug convictions related to supplying minors with illegal substances also disqualify candidates. However, felony convictions for the “sale or possession of drugs” aren’t considered disqualifying.

Colorado

With recreational marijuana laws that came into force in 2012, Colorado has a mature and well-developed regulatory ecosystem for this industry. The state requires special licensing to grow, transport, or sell marijuana. This license is better known as a “MED Badge,” after the Marijuana Enforcement Division.

In Colorado, cannabis employers aren’t the ones conducting background checks. Instead, the MED handles the procedure as part of the badging process. The MED requires a fingerprint background check. Applicants must disclose any unsealed criminal history during the application process, including felony arrests.

Felonies aren’t automatically disqualifying. The MED considers every application on a case-by-case basis. An individual with a MED badge can work in Colorado cannabis operations, while employers can hire them with confidence.

Illinois

Illinois is similar to Colorado in its requirement of a special license. Here, the state calls cannabis workers “agents.” Different agent classes require different identification cards. Someone growing marijuana at an indoor farm requires a different ID card than someone selling a product to the general public.

In Colorado, the individual is responsible for obtaining their badge. In Illinois, the state takes responsibility for marijuana business risk management checks. Cannabis employers themselves must submit applications on behalf of their agents. Workers must be over the age of 21 and must provide fingerprints to their employers, who then submit the application to the state. A regulatory agency in Illinois conducts and evaluates the background check results.

These four states illustrate the broad spectrum of regulations in the THC industry. Background verification may be a hard requirement by the state, or it may be optional for employers. With such a range of different legislation, it is vital to research the law in your area.

Ensuring Compliance by Relying on Today’s Best Practices

How can your business ensure it fully complies with requirements in the cannabis industry for background screening?

Step one: create a comprehensive written policy that aligns with the law. Consult with local attorneys to help set up a process that adheres to the letter of local regulation. Make your policy document clear and concise. HR should be able to refer back to this policy at all times to maintain compliance.

Develop an FCRA-compliant screening process. Always obtain an applicant’s written consent to submit to a background check. Provide the FCRA-required standalone disclosure of rights to all applicants. Create a paper trail to back up your decision making process, and always apply standards equally across all applicants.

Remember that specific laws about whom you can and cannot hire in your state may exist. Some convictions may automatically disqualify candidates. In other areas, you may need to overlook or ignore certain minor drug convictions. Plan to review your policy periodically and check for any law updates.

Wrapping Up: Making Your Process Compliant and Effective

As this industry continues to grow, understanding background screening for cannabis workers is key for business owners. States continue to march toward recreational legalization. The federal government keeps signaling that major changes are on the way to cannabis scheduling and legality. Though no one can predict the future, this industry looks set to grow and expand.

Background checks and pre-employment screening will play a critical role in that expansion. Protecting your business and your customers depends on these tools. While vetting can’t predict someone’s behavior, you can avoid risky hires that could otherwise lead to theft, mishandled products, and other problems. The right solutions are an essential element of hiring. In many states, screening matters for compliance, too.

For operators in the cannabis sector, now is the time to review your approach and ensure you’re aligned with the law. For those exploring an entry into this space, prepare to create a thorough and detailed policy. Research the requirements for background checks in the cannabis industry in your state. With support from backgroundchecks.com, building a smart and safe hiring process is simple. Together, let’s explore how you can navigate these concerns with confidence.