Green Market report….
Human resources titan Paychex (Nasdaq: PAYX) essentially announced its exit from the legal cannabis industry via an email sent last week to its marijuana company clients that used it for payroll and other services, leaving potentially hundreds of operators in the lurch.
According to the email, a copy of which was obtained by Green Market Report, Paychex told cannabis clients that it would be drastically scaling back its services, to the point that is tantamount to an exit, two industry insiders said.
Paychex wrote, “Unfortunately, we can no longer provide you with some of the services you are currently receiving from Paychex.”
The pullback could affect upwards of 300 cannabis businesses across the country, said Chris Lagana, a New York-based marijuana industry consultant and former executive at cannabis payroll firm Wurk. He said Paychex’s footprint dates back roughly four years.
Lagana said Paychex had already begun scaling back its footprint in January when it notified clients that it would be phasing out its Taxpay service for marijuana businesses, and the most recent announcement basically completed Paychex’s withdrawal from the cannabis sector altogether.
The Paychex notification said that as of May 1, it would cease offering not only Taxpay services but also direct deposit payroll services and recordkeeping for employee time and attendance. As part of a transition, the company will provide check-signing services, for instance, but it didn’t have much of an exit plan laid out for its cannabis clients, Lagana said.