Even with Auto-Enrollment, Cannabis Workers Reject 401(k)s
Key Takeaways
- Participation is low: Only about 39% of cannabis workers are enrolled in workplace retirement plans.
- Auto-enrollment isn’t enough: Nearly one-third of auto-enrolled employees opt out.
- Plan features are strong: Many cannabis 401(k)s already include QDIAs, Roth options, loans, and auto-escalation.
- The biggest gaps are education and admin: Fewer than one-third offer advisory guidance, and payroll integration remains limited.
SEATTLE – Only about 39 percent of cannabis industry employees are enrolled in a workplace retirement plan — roughly 18 percentage points below the national average — and even workers who are automatically signed up are opting out at rates approaching one in three.
So says what is believed to be the first comprehensive retirement plan study focused exclusively on the cannabis industry. Released this month by Leading Retirement Solutions, a Seattle-based 401(k) provider with more than a decade of experience serving cannabis businesses, the report analyzed 140 cannabis 401(k) plans spanning more than 420 entities, 17,000-plus participants, and $71 million in assets.
The participation gap in one chart-worthy set of numbers
The participation gap is stark. According to the Bureau of Labor Statistics, 56 percent of civilian workers in the United States are enrolled in a workplace retirement plan. In cannabis, that figure sits at 38.8 percent — and among employees placed into auto-enrollment, 31.7 percent choose to opt out entirely.
The finding is notable because auto-enrollment — which signs up workers automatically unless they actively decline — is widely considered the single most effective tool for boosting retirement plan participation. The fact that nearly a third of cannabis workers are rejecting even that nudge points to deeper challenges, including financial precarity, workforce demographics, and a historically limited culture of retirement planning in the industry.
Auto-enrollment usually works. So why not here?
The average participant in cannabis-industry plans is just 33 years old, and the average account balance stands at $6,547 — figures that reflect both the youth of the workforce and the relative newness of retirement plan adoption across cannabis businesses. Plan adoption itself, however, has surged: from 2021 to 2025, the number of cannabis 401(k) plans grew 800 percent, representing a roughly ninefold increase and an average annual growth rate of 73.21 percent.
Plan design is ahead of the participation curve
Perhaps the most counterintuitive finding in the report is how sophisticated these plans already are. Despite lagging participation rates, cannabis 401(k) plans have adopted features at rates that compare favorably to more established industries.
Nearly all plans — 99 percent — allow in-service distributions, and 98 percent include a Qualified Default Investment Alternative, an option that helps participants invest appropriately without requiring them to make complex allocation decisions. In-plan Roth conversions are available in 91 percent of plans, and 89 percent offer participant loans. Three-quarters of plans (74 percent) use auto-enrollment, and 57 percent automatically escalate contributions over time.
Employer generosity is also notable: 64 percent of plans offer a non-safe-harbor match, 31 percent use a safe-harbor design, and employers contribute an average of 4 percent, which represents meaningful support for workers who are actively saving. Among those who stay enrolled, savings rates are encouraging: Employees defer an average of 3.4 percent of pay to pre-tax contributions and 5 percent to Roth accounts, suggesting workers who engage with these plans do so with intention.
Loan activity, meanwhile, is minimal. Only 0.65 percent of participants carry an outstanding loan — a sign, the report notes, of strong plan design and low leakage.
Where plans still fall short
Where the plans show clear room for improvement is in participant education and back-office integration. Only 29 percent of plans provide advisory education or guidance to employees, and payroll integration — which reduces administrative errors and simplifies deferrals — is present in just 36 percent of plans.
Regulatory tailwinds could change the equation
The report arrives at a moment of potential regulatory transformation for the cannabis industry. Federal efforts to reschedule cannabis are expected to effectively eliminate Internal Revenue Code Section 280E, which currently bars cannabis businesses from deducting ordinary business expenses. That restriction has long squeezed margins and limited employers’ capacity to invest in benefits. Whether and when rescheduling may happen remain open questions, but if 280E is removed, operators would gain access to standard tax deductions and credits, potentially freeing up capital that could flow toward expanded retirement offerings.
That shift, combined with the SECURE 2.0 Act’s requirement that most new 401(k) and 403(b) plans auto-enroll employees beginning with the 2025 plan year and the accelerating spread of state-mandated retirement programs, creates what the report describes as a convergence of pressure and opportunity.
As of January 2026, twenty states have enacted state-facilitated retirement programs, and seventeen are fully open to eligible employers and workers, according to Georgetown University’s Center for Retirement Initiatives. States including California, Colorado, Illinois, New York, Oregon, and Washington already enforce or are launching “auto-IRA” programs that require employers to either enroll workers in the state program or offer a qualifying private plan. Cannabis employers are subject to the same mandates as other businesses, and non-compliance carries fines and potential regulatory scrutiny of operating licenses.
A benchmark for an industry coming of age
Leading Retirement Solutions Chief Executive Officer Kirsten Curry framed the findings as a turning point. “Retirement benefits are no longer out of reach for this industry,” she said. “They’re becoming a competitive advantage.”
The data suggests the infrastructure for that advantage is largely in place. The harder work — closing the gap between plan availability and actual worker participation — remains.
Curious about cannabis 401(k)s? Here’s what you need to know.
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What percentage of cannabis workers are enrolled in a retirement plan?
About 39 percent of cannabis industry employees are currently enrolled in a workplace retirement plan, according to a 2026 study by Leading Retirement Solutions. That compares to 56 percent of civilian workers nationally, according to the Bureau of Labor Statistics — a gap of roughly 18 percentage points.
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How fast is retirement plan adoption growing in the cannabis industry?
Rapidly. The number of cannabis 401(k) plans grew 800 percent between 2021 and 2025 — a ninefold increase — at an average annual growth rate of 73.21 percent, according to the study.
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Do cannabis employers offer matching contributions?
Yes. Employers in the study contributed an average of 4 percent, and 64 percent of plans offer a non-safe-harbor match. An additional 31 percent use a safe-harbor plan design.
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How much do cannabis industry employees contribute to their 401(k)?
Among enrolled participants, employees defer an average of 3.4 percent of pay to pre-tax contributions and 5 percent to Roth accounts.
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What is the average retirement account balance for cannabis industry workers?
The average account balance is $6,547, reflecting both a young workforce — average participant age is 33 — and the relative newness of retirement plan adoption in the industry.
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Are cannabis employers subject to state-mandated retirement programs?
Yes. Cannabis employers are subject to the same state-mandated retirement requirements as any other business. As of January 2026, twenty states have enacted programs, with seventeen fully open to eligible employers and workers. Non-compliance can result in fines and regulatory scrutiny of operating licenses.
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What is IRC Section 280E and how does it affect cannabis retirement plans?
Section 280E of the Internal Revenue Code currently prohibits cannabis businesses from deducting ordinary business expenses, squeezing margins and limiting capacity to invest in employee benefits including retirement plans. Federal efforts to reschedule cannabis are expected to eliminate 280E, potentially freeing up capital for expanded retirement offerings.
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