May 10th, 2022 | David Bloom, General Manager, Gig, Volunteer and Consumer

Cannabis Companies Utilize Background Checks to Maintain Safe Work Environments Amidst Legalization Status Changes

Cannabis legislation is a trending topic across many industries, but what exactly do cannabis companies need to know about the latest legislative and regulatory developments? As individual states are beginning to enact laws to legalize marijuana or are working to maintain its legalized status, the fact is that by now, 17 states have legalized cannabis for adult use, while another 21 allow it to be used for medical purposes. If the rest of the US joins the 17 states that have already legalized recreational marijuana, the cannabis industry is projected to grow exponentially, reaching $30.6 billion dollars by 2025 (1).

While legalization of medicinal and recreational marijuana is still in its infancy in the US, other countries have reported outstanding success from their established cannabis companies. In 2018, Canada legalized adult use of marijuana and in just 4 years, cannabis has contributed $43.5 billion to Canada’s National GDP (2), which has projected the expected US annual market growth to be 33% between 2021-2024. If fully realized, this dramatic increase in demand will bring a huge surge to the US job market. With cannabis companies proliferating across the US, HR teams working in the gig space are asking how they can safely (but quickly) onboard new hires. In turn this issue brings up additional questions as companies strive to recruit the next generation of candidates:

  • “How should we background check all these candidates?”
  • “Will state regulations impact our onboarding process with additional requirements?”
  • “If the government leaves onboarding decisions to the company, how should we handle it?”

While all the answers surrounding these key questions are still unknown, cannabis companies are relying on background screening vendors to assist during the onboarding process for both gig workers and full-time employees.

How to Handle Background Screenings

Unfortunately, there is no one answer that satisfies all state legislation on how to handle criminal background checks for candidates. However, companies everywhere are tasking their HR teams to identify best practices in order to maintain a safe work environment for all employees and customers.

Drug & Health Screenings

Workplace safety is a huge concern for employers who have candidates working in states that have legalized the adult use of recreational marijuana, which plays a big role as to how companies should handle drug and health screenings of their workforce. For gig economy businesses, especially those providing services requiring transportation of products or people, there is an added dilemma as to how to treat contingent workers without discriminating them based on marijuana use. To avoid legal repercussions, most local and state governments have left that decision solely up to the companies themselves to resolve.

Criminal Records

Along with legalizing the use of cannabis, decriminalizing marijuana has been addressed by many states and has even been passed on a federal level by the House of Representatives. However, this tentative, piecemeal approach is also causing companies to question exactly how to best handle candidates with a criminal marijuana record.

Sterling’s Senior Vice President of Drug & Health Screenings, John Mallios, provides useful tips from his recent article, “Employment Screening Policies Adapt to Meet Changing Marijuana Laws” to help companies navigate steps they should consider implementing when onboarding their workforce, how to best handle drug and health screenings, and how to address criminal records involving marijuana.

Incorporate Licensing or Badging

Regardless of individual state regulations, HR professionals are beginning to establish a trusted workforce just how any other industry would do: by calling in the background experts and incorporating onboarding protocols such as licensing and badging. Is your HR team fully aware of the differences between the two?

Depending on which state a cannabis company is operating in, effects of licensing, badging, or both certifications are required for their locations. The easiest way to differentiate between the two is that licenses are necessary for the business to operate, whereas badging refers to the licensing of an individual with a physical identifier such as a key badge. For example, a doctor’s office needs licensed professionals in order to legally see patients, but their facilities may require each employee to use a unique badge to enter the building for a more secure environment. The same applies to the cannabis industry; however states are able to license businesses based on their state laws.

Let’s use California as our example. As of April 6, 2022 in California, licenses are issued by the Department of Cannabis Control (DCC) based on the type of cannabis activity your business performs. These include cultivation, distribution, manufacturing, testing, retail, and event organizers. After businesses submit applications, the DCC issues licenses allowing businesses to sell their product or service. Unlike other states, the Bureau of Cannabis Control in California does not require employees to carry badges.

Again, because of the varying state requirements, these regulatory matters are issued on a state-by-state basis. Be sure to look up your state’s regulation requirements here.

Sterling’s Services Support Our Cannabis Clients

Similar to our client support in other industries, Sterling offers a wide range of services to help equip cannabis companies to screen new hires during the onboarding process. Our gig cannabis clients are able to efficiently onboard candidates by integrating our customized workflows that help improve trust and safety. Our compliance tools proactively monitor legislative changes on the local, state, and federal levels to help companies avoid accidental risk. In addition to compliance guidance, Sterling offers identity verification tools partnered with criminal background checks that can be tailored for your specific gig economy platforms. Additionally, we also help our clients to onboard qualified gig economy workers, both quickly and safely.


The US cannabis industry is booming owing to recent legalization of medical and recreational uses of marijuana, but the federal government’s choice to leave the decisions up to local and state governments has caused a lot of confusion for many businesses. In order to maintain a high standard of trust and safety, companies are partnering with background screening vendors to provide guidance and solutions. With all these business-critical issues in mind, Sterling offers an extensive suite of services to help your cannabis company quickly onboard a quality workforce without sacrificing workforce safety.

(1) – 13 New U.S. Cannabis Markets Could Push Legal Revenues (

(2) – Canada’s Legalization Of Cannabis Has Contributed $43.5 Billion To National GDP (

(2) – 15 Largest Cannabis Companies In The World – Zippia

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.