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Run the Payroll Fee Auditor →Blog · Payroll Management · Cannabis
Cannabis Businesses: Payroll Software vs. Managed Payroll Service (2026)
Payroll software gives a cannabis business the fields; managed payroll gives it someone accountable for filling them correctly, which for cannabis businesses means 280E tax code payroll deductions, cash payroll documentation and state cannabis board reporting configured against the rules cited here rather than left at defaults. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
What software leaves to a cannabis business to get right
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.
An employee who customarily and regularly receives more than $30 a month in tips is a tipped employee under the FLSA. An employer may pay a cash wage of at least $2.13 per hour and take a tip credit of up to $5.12 per hour toward the $7.25 minimum wage, must give the employee notice before taking the credit, and may never keep any portion of employee tips.
The honest comparison
Software at roughly $40 to $150 a month plus $5 to $12 per employee handles a single-state, all-W-2, hourly-and-salary payroll well, and the customer owns every configuration decision, every deposit and every notice. Managed payroll at $45 per employee per month, with no monthly minimum, owns the configuration, the deposits, the filings and the corrections. For cannabis businesses the deciding question is who documents the exemption status of budtenders and growers and who rebuilds the pay codes when the rule changes.
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]
- An employee who customarily and regularly receives more than $30 a month in tips is a tipped employee under the FLSA. An employer may pay a cash wage of at least $2.13 per hour and take a tip credit of up to $5.12 per hour toward the $7.25 minimum wage, must give the employee notice before taking the credit, and may never keep any portion of employee tips. [DOL Fact Sheet #15]
Read the full guide to fully managed versus self-service payroll, and the rest of the cannabis business payroll library.
Managed Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
What does payroll software get wrong for cannabis businesses?
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.
When is software the right answer for a cannabis business?
A single state, all W-2, hourly and salary pay, no 280E tax code payroll deductions, and under about 20 employees, where software's lower per-employee cost outweighs what a managed service adds.
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: Wage and Hour Division
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