Cali Canna-Companies Must Participate in Retirement Plan Mandate
Within just two weeks, large canna-companies employing more than 100 people in Cali will need to implement a retirement plan for their workers or enroll in the state’s CalSavers program by September 30th, CannaBizCentral reported.
Cannabis employers employing more than 50 employees must offer a retirement plan by June 30, 2021, while those with five or more employees will need to implement a plan by June 30, 2022.
The CalSavers Retirement Savings Board is the independent government agency responsible for overseeing the program. It also selects the investment options, including the default. Using an open bidding process, the Board selected State Street Global Advisors for assistance with fund management. The CalSavers platform will also offer employees access to an ESG (Environmental, Social, and Governance) fund.
Through this individual retirement account (“IRA”) program, cannabis companies will be unable to match employee contributions or provide any profit sharing contribution. For employees, they can contribute up to $6,000 during 2020. This is intended to equal the IRS’s allowance for contributing to an IRA.
Why Aren’t Canna-Companies Exempt from Cali’s Mandatory Retirement Law?
According to the text of law, cannabis companies are not exempt from participating in the facilitation of the CalSavers IRA program. If these companies refuse to register with CalSavers, they could face significant penalties.
The state says that noncompliance by a cannabis company can result in up to $750 per eligible employee. These penalties start at $250 per eligible employee for the first official penalty notice from Cali. But continued noncompliance 90 days following the first penalty notice translates to an additional $500 per eligible employee.
To comply with the California mandate, cannabis companies must adopt a 401(k) plan before their deadline.