Miss part 1? Check it out right here to get a bigger picture of whats going on.
The cannabis industry generates $30 billion in annual legal retail sales in the United States and employs more than 425,000 people. Millennials and Gen Z together account for nearly 63% of all US cannabis purchases, with Gen Z showing 11.3% year-over-year growth in market share; the fastest of any demographic.
Gen Z is not just buying cannabis. They are also the ones growing it, packaging it, and selling it to you at the register. They are the workforce. And they are entering that workforce at a moment when both the industry and their generation share the same structural problem: almost no one taught them how money works.
The retirement gap: 7% vs. 52%
Only 7% of cannabis workers are currently enrolled in a retirement plan, against a 52% participation rate in comparable industries. That gap does not exist because cannabis workers do not want to save. It exists because of three converging structural problems.
First, banking restrictions tied to federal illegality have kept most mainstream 401(k) custodians out of the cannabis space. In mid-2024, several major custodians exited the industry entirely with little warning, leaving thousands of workers scrambling to find replacement providers.
Second, Section 280E of the Internal Revenue Code prevents plant-touching cannabis businesses from deducting employer retirement contributions, removing the tax incentive that motivates matching programs in most industries. 280E prohibits cannabis businesses from deducting ordinary business expenses at the federal level, which includes employer retirement contributions.
Third, when plans do exist, workers opt out at nearly 32% – one of the highest auto-enrollment opt-out rates documented across any industry.
That opt-out rate connects directly back to the financial literacy data. Bank of America found that 43% of Gen Z say they are not on track to save for retirement in the next five years. Workers opting out of cannabis retirement plans are not making an informed choice to prioritize other investments. They are making the decision most financially under-equipped young people make when presented with a complex financial product they were never trained to evaluate: they decline it and move on.
The average cannabis 401(k) participant is 33 years old with a balance of just $6,547. That represents the minority who have an account at all. For the majority without one, every year of foregone contributions is a year of compound growth that will never be recovered. A single year of $2,000 in retirement contributions at age 24, compounded at a conservative 7% annual return, is worth more than $32,000 by age 65. Workers opting out at 24 are not saving $2,000. They are losing $32,000 – they just cannot see it yet.
Why the employment relationship needs help
The most common response to this problem is that workers should ask their HR departments, their payroll administrators, their accounting staff. And those people should be forthcoming with information.
That response reflects a fundamental misunderstanding of what those roles can legally do. HR generalists, payroll administrators, and accounting staff at cannabis companies are not CPAs. They are not financial advisors. They cannot legally give tax advice, explain the long-term cost of an opt-out decision, or tell a worker whether their 1099 classification is legally defensible. Doing so without licensure exposes both the individual and the company to liability. So the people closest to a worker’s financial situation – processing their paycheck, handing them forms to sign, running their benefits enrollment – are structurally prohibited from providing the information that would make those interactions meaningful.
This is not a failure of any individual company. It is a design flaw built into the employment relationship itself, and it falls hardest on the workers who have the least access to outside financial guidance. Financial education researchers have found that adults who took a personal finance class in high school are five times more likely to say they graduated feeling prepared to handle money in the real world. Most cannabis workers did not take that class. Most of their states did not require it. And their employers cannot compensate for that gap from within the employment relationship.
What compounding actually looks like over time
Gen Z entered the workforce into an economy shaped by pandemic disruption, declining entry-level job availability, and wages that have not kept pace with cost of living. Entry-level job postings have declined 29% since January 2024, with junior roles disappearing across finance, tech, and logistics simultaneously. Cannabis has remained one of the accessible entry points – low barrier to hire, geographically distributed, no degree required.
That is not a criticism. It is a description of why the cannabis workforce skews young and why the financial literacy gap in cannabis is inseparable from the financial literacy gap in Gen Z broadly.
A cannabis worker who enters the industry at 22 and spends three years cycling through two or three dispensary jobs has, in that time, potentially overpaid thousands in self-employment taxes without realizing it, missed quarterly tax filings and accrued IRS underpayment penalties, opted out of or been ineligible for a retirement account, and spent the years of highest compound growth opportunity with no savings and no guidance. Each of these outcomes is more likely than not given what the research tells us about this workforce and this generation.
The industry generated $30.1 billion in sales last year. It employs more than 425,000 people around the country, and has created hundreds of millions in state tax revenue. Its safe to say it has positioned itself as a social good and a job creator. All of that can be true and still be incomplete if the workers generating that revenue are leaving the industry in worse financial shape than they entered it. Its already happening to the operators; why sink the whole boat?
That is the gap CWR is working to close. In development is our financial literacy program for cannabis workers, which covers tax filing for W-2 and 1099 workers, credit building on modest wages, retirement investing, healthcare navigation, opening a bank account and so much more. If you are a cannabis worker with questions about your finances, or an operator who wants to build something better for your workforce, contact CWR.
Sources: Cannabis Business Times — Vangst 2025 Jobs Report · CannabisMD TeleMed — Gen Z cannabis market share · PSCA / TIAA-GFLEC P-Fin Index 2025 · Carry — Financial literacy by generation 2025 · Bank of America — Better Money Habits 2025 study · Ramsey Solutions — Financial Literacy Crisis 2025 · CivicScience — Gen Z financial confidence 2025 · NIRS — Debunking the Job-Hopping Myth 2025 · Randstad — Gen Z Workplace Blueprint 2025 · Fortune — Gen Z job tenure and entry-level decline · Salary.com — Budtender salary 2025 · ZipRecruiter — Dispensary budtender salary · ZipRecruiter — Cannabis grower salary · MJBizDaily — Budtender turnover 2026 · NCIA — Cannabis employee turnover · SDO CPA — 1099 vs W-2 tax comparison 2026 · IRS — Worker classification 101 · Miller Shah — Misclassified worker IRS risk · Found — 1099 vs W-2 tax planning · UpCounsel — Misclassification rate estimates · UZIO — Cannabis 401(k) access · MG Magazine — Cannabis 401(k) study 2026
CWR is building a financial literacy program for cannabis workers, covering tax filing for W-2 and 1099 workers, credit building, retirement investing, and so much more. Contact CWR to get involved.
