A cannabis store in Victoria, British Columbia is sharing profits with staff.
On December 1, Pineapple Victoria implemented a profit-sharing model with its employees, moving away from the traditional model where profits from the business primarily benefit shareholders.
Valuing and Retaining Staff
Acknowledging the impacts of the economic climate and rising costs of living, the owners wanted to implement this change to retain their staff, show them that a long-term career in cannabis retail is viable, and ensure their business is around for the long haul.
One of the owners, Aaron Gray, says, “Over the last two to three years, more cannabis stores have opened up than people anticipated. Your market share is your own neighbourhood, and we want to stay in the neighbourhood. We looked at other businesses that have been in Victoria for 20 to 30 years and have done a good job integrating into the neighbourhood. We looked at the cost of living and other factors. A profit-sharing model seemed like the best thing to do to incentivize and reward staff and demonstrate that our business cares about our staff and our community.”
Different Way to Increase Wages
Gray notes that as a small, independent store that is not part of a chain, they don’t have the option to close up stores that aren’t doing well. “We only have one shop and need to ensure that everything is done well. It is hard to increase wages because certain months are bigger than others. We want to pay staff more and want to retain them. We don’t want any turnover. Now our community knows that when you spend money with us, it is also going to our staff.”
Several staff members have been with Pineapple Victoria for up to five years. Prior to the profit-sharing model, the store had already implemented 4-day work weeks, sick days, and benefits.
Changing the Perception of Retail Work
Gray notes that often people view retail as a transient job, but Gray and fellow owner Amanda Wright want to change that perception.
“Having to assess a person when they walk in the shop, their energy level, cannabis knowledge, how they shop, etc. that is a degree in of itself,” Gray says. “It can take years of experience to be really good at customer service. But the customer service industry isn’t rewarded enough—the only exception is restaurants and tips, but it is the public that subsidizes the wage for the owner. But with profit-sharing, the owner pitches in. We want to reward staff for all their hard work. Pineapple wouldn’t exist without them.”
Wright adds, “Pineapple is known for our great customer service and cannabis knowledge. The knowledge is layered year after year. It would be a huge deal to have to build that knowledge back up if staff left.”
Pineapple Victoria already has high retention and low turnover, so why add in a profit-sharing model? Wright explains, “We know how important our staff are. It gives them autonomy and ownership. If you do well this month, you get rewarded.”
How the Model Works
Gray goes on to describe how the model works. “It is based on how long you’ve been with the company times the hours you put in at the shop divided by the total hours of labour at the shop that month. We wanted to find an equitable way to distribute it, but also wanted to reward people who have worked there, for instance, for only 8 months and part-time, that still gives them a big enough chunk. Staff are given the profits first, then the owners.”
The owners and their families each receive 35% and 30% goes to the staff. “It is sizable,” Wright says. “We wanted it to actually make sense for our staff. It is not just something we’re saying to make us look good.”
Advice for Other Retailers
Gray doesn’t know of any other cannabis businesses doing this, save for one store in the province that splits profits among management only and at a much lower percentage. He hopes this is a move with long-term gains. “It is a bet that we do better in the long run by sharing profit [rather] than just taking the profit for ourselves. Based on our neighbourhood, clientele, and industry, I think this is the only move for us that makes sense.”
Wright adds, “It would be great if others did follow our lead.” If stores are considering it, Gray urges, “You have to know your business and customer extremely well and know it for several years. It can’t be doing a survey over a few months or being open for a year or less. We’ve been in the same location for almost 10 years and had the same customer base who have been in the neighbourhood for close to a decade. They see us every day and we are aiming for that personal touch.”
Gray notes this likely wouldn’t work in other provinces or bigger cities. “Ethical shopping is part of Victoria’s culture. The customer cares where things are sourced from.” Wright adds, “Customers vote with their dollars in Victoria.”
Initial Feedback
The initial feedback from customers and staff alike has been positive. Wright makes clear, “We’re not raising our prices and there’s still merit-based raises and benefits. We’re not replacing the structure we already have in place.”
While there is not much information out there for small businesses on profit-sharing, Gray thinks this is the missing piece. “I think it can work under the right circumstances.”
Photo courtesy of Pineapple Victoria.