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Cannabis PEO vs. HRIS: The Fundamental Differences

Admin 11/3/21 9:00 AM
Cannabis PEO vs. HRIS: The Fundamental Differences

As a cannabusiness owner looking to continue your growth, there are operational hurdles you face. Overcoming these challenges may require partnership with an outside resource. Two options that frequently appear are a professional employer organization (PEO) and human resource information software (HRIS).

You see the growth potential ahead, but want to make sure you make the right decision for your business. Vetting HR outsourcing options is tough, but with the right guidance, you can decide between a PEO and HRIS.

Download the PEO or HRIS guide to understand what solution is best for your cannabusiness.


A PEO manages HR needs for your cannabusiness. With a PEO, the vendor becomes the employer of record for your employees, giving you access to better cost-saving measures and benefits than you could get on your own. Designed to operate in lieu of an in-house HR team or an expanded internal team, a PEO handles your company's HR duties like payroll, benefits administration, and compliance management. 

HRIS gives businesses the tools necessary to meet their core HR needs. It can also help improve the productivity of both managers and employees by helping to improve your overall employee management process and experience. Unlike a PEO, HRIS is not a service — it is a tool used to help your internal HR team be more effective by streamlining manual processes and providing a single place for all of your HR needs.

Capabilities of a Cannabis PEO

A PEO that specializes in cannabis provides small cannabusinesses with many benefits, both for cost savings and to help increase employee engagement. Here are some of the many features that growing cannabusinesses can take advantage of with a PEO:

Workers' Compensation

For many small businesses, it is budget-busting to get workers' compensation insurance. However, with few exceptions, all companies must carry workers' comp. This no-fault insurance provides benefits to employees who suffer on-the-job injuries. 

Unfortunately for small businesses, getting affordable workers' comp insurance can be challenging. Especially if a company has a history of employee claims, this insurance can be hard to come by. With a PEO, you gain access to their workers' compensation rates, potentially giving you instant savings on your workers' compensation insurance. 


Payroll is extremely important to your employees. Nearly half of all U.S. workers are one missed paycheck away from not being able to pay their bills. While you want to do everything in your power to make sure that payroll is correct every time, mistakes happen.

Cannabusinesses face additional payroll challenges due to the federal regulations placed on the industry, ultimately preventing many businesses from partnering with reliable national banks.

But even innocent mistakes can have costly consequences. Not only could you lose employees, but you may also face costly employee lawsuits and government fines. Working with a PEO gives you access to payroll experts who understand the need to be absolutely accurate with payroll. They work hard to ensure there are no mistakes and your payroll goes smoothly every single time.


Many small businesses are unable to provide benefits to their employees because they simply cannot afford them. While some benefits are mandatory, like those under the Affordable Care Act, others are at your sole discretion. But you may not offer additional benefits like retirement or time off because you simply cannot afford to.

With a PEO, however, you can gain access to their benefits package, which can provide you with instant access to a best-in-class benefits package. Offering benefits to your employees can give you a competitive advantage over other cannabusinesses. When you offer benefits that your competitors don't, you can gain access to a larger applicant pool and even attract high-quality employees away from your competitors.

Labor Relations

Managing labor relations and compliance can be a full-time job, especially in this industry. Dealing with differences between state and federal laws can create extreme confusion.

When you partner with a PEO, you gain access to compliance experts who already know about the cannabis industry and the challenges you face as a small business. Together, they can help you navigate legally complex situations.

Benefits of Partnering With a PEO

There are many benefits to outsourcing your cannabusiness HR needs. The biggest of which can provide you the freedom to run your business your way. With a PEO, they take on the mundane and complex HR tasks that you and your team don’t have the bandwidth to complete. But that doesn't mean a PEO runs your business. A PEO gives you the tools you need to operate effectively.

With a PEO, you also get compliance assistance. Especially in this industry, compliance is important. Knowing that you have compliance experts standing by to help you can give you extra peace of mind.

Capabilities of an HRIS

An HRIS can help your business manage your employees. Solutions offered by an HRIS include:

  • Data entry
  • Data tracking
  • Data analysis
  • Document retention
  • Benefits information
  • Applicant tracking
  • Payroll information
  • Performance management
  • Accounting functions

An HRIS gives your cannabusiness one location to retain all of this company information. However, you won't get any guidance or compliance assistance, which may be key for your company.

Benefits of Implementing an HRIS

While a PEO provides your company with services and support, an HRIS provides you with cannabis-specific software instead. This software is intended to help your in-house HR team better manage your employees and the compliance and benefits administration.

Because an HRIS doesn't provide you with any support or services, however, it also means that you retain ownership over all of your processes and the benefits you offer. If you're a larger cannabusiness with a functioning internal HR team, this can be appealing. You don't have to deal with another company filing taxes on your behalf or handling your company's payroll.

However, if you don't have adequately trained staff, it could lead to trouble. An HRIS may only be the right solution if you have HR experts on staff you can trust to manage your cannabusiness needs correctly.

Trust Teamployer for Your HR Needs

Depending on your needs, software and service are equally important. As a growing cannabusiness focused on business development opportunities, fully outsourcing your cannabis HR to a PEO may be the solution. However, if your internal team is firing on all cylinders, they can benefit largely from an HRIS.

Luckily at Teamployer, we offer both. Our team will help you select the best solution for your specific needs, so reach out today to get started!