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Run the Payroll Fee Auditor →Blog · Payroll Management · Cannabis
Cannabis Businesses: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a cannabis business is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and cannabis businesses have industry-specific exemptions on top. Retail salespersons at the national median earn $681 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a cannabis business can be salaried and exempt
The FLSA overtime exemption for agriculture applies only to work within the Act's definition of agriculture, which includes the cultivation, growing and harvesting of agricultural or horticultural commodities. Employees whose jobs relate to agriculture but fall outside that definition, such as packing commodities produced on a different farm, must be paid overtime, and agricultural employees must still receive at least the federal minimum wage.
The FLSA requires no particular form for payroll records, but for each non-exempt employee the employer must record hours worked each day and each workweek, the basis on which wages are paid, total wages paid each pay period, and the date of payment and pay period covered. Payroll records must be preserved for at least three years and time cards for two years.
The salary math for cannabis businesses
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for retail salespersons at $35,410, which is $681 a week, below the floor, so that role is non-exempt regardless of duties. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.
What changes when a role moves between the two
Moving budtenders and growers from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- The FLSA overtime exemption for agriculture applies only to work within the Act's definition of agriculture, which includes the cultivation, growing and harvesting of agricultural or horticultural commodities. Employees whose jobs relate to agriculture but fall outside that definition, such as packing commodities produced on a different farm, must be paid overtime, and agricultural employees must still receive at least the federal minimum wage. [DOL Fact Sheet #12]
- The FLSA requires no particular form for payroll records, but for each non-exempt employee the employer must record hours worked each day and each workweek, the basis on which wages are paid, total wages paid each pay period, and the date of payment and pay period covered. Payroll records must be preserved for at least three years and time cards for two years. [DOL Fact Sheet #21]
Read the full guide to FLSA overtime rules for employers, and the rest of the cannabis business payroll library.
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Frequently Asked Questions
Can a cannabis business pay budtenders a salary and skip overtime?
Only if the role meets an exemption: the $684 weekly salary floor plus the duties test, or an industry-specific exemption. The FLSA overtime exemption for agriculture applies only to work within the Act's definition of agriculture, which includes the cultivation, growing and harvesting of agricultural or horticultural commodities.
Does the $35,410 national median for retail salespersons clear the salary test?
$681 a week is below the $684 floor, so a role paid at that level is non-exempt on salary alone. BLS OEWS, May 2025.
What does managed payroll cost for a cannabis business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. 280E tax code payroll deductions, cash payroll documentation and state cannabis board reporting are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Cannabis Businesses. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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