Jeff Wu serves as the technical director at Xylem, applying his deep understanding of chemistry, electronics manufacturing, automation, and cannabis processing. As both an investor and entrepreneur, Jeff brings a unique blend of scientific knowledge and hands-on experience to the pharmaceutical, laboratory, manufacturing, and cannabis industries.

Q: What specific challenges do cannabis companies face in recruiting scientifically skilled personnel?

A: Early on, cannabis was attracting investors and operators who were interested in the “lifestyle” more than the actual work. Many investors thought it was really cool (myself included) to have a cannabis company. The reality on the ground was quite different. Many investors in the initial capital deployment waves didn’t understand that cannabis was just a consumer goods manufacturing business, halfway between food and pharmaceuticals. 

Many of these early companies went out of business—including most of the ones I personally invested in. These companies, along with the personnel involved, experienced a Darwinian shakeout. The people who are left now are a lot more serious about business and a lot less about lifestyle. 

Another challenge is the incredibly high employee turnover. Our company, Xylem Robotics, constantly trains new crews every six to nine months on our automated cart-filling equipment. This is especially the case in packaging operations because these companies haven’t figured out how to retain workers over longer periods of time by having them perform higher-value tasks like quality control. 

If you look at automotive manufacturing, the United Auto Workers Union assembly workers are really performing quality control tasks. While robots put the window panels on, the workers make sure all the gaps and fitment are correct. They also inspect the paint after the robot applies it to check for defects. These are all value-add positions. Right now, a lot of workers in the cannabis industry are in heavy labor cost positions, like filling functions, rather than value-add positions. These roles are not only costly but also tough on employees, leading to repetitive strain injuries like carpal tunnel or tennis elbow. This creates inefficiencies and drives up turnover. Automation really helps transform these roles into value-add positions. 

Q: How does the stigma associated with cannabis affect hiring?

A: When I first went to California, the market was transitioning from medicinal to recreational cannabis. There was a lot of stigma—even in LA—about working for cannabis companies. As an investor in Eaze, one of the biggest cannabis distributors in California, the company found it very difficult to find coders from diverse backgrounds. Even when diverse people expressed interest, their families would pressure them to prevent them from working at Eaze. There was a lot of unfair criticism directed at Eaze for being predominantly Caucasian, which was not their fault but a result of structural issues surrounding a negative industry perception. 

At the executive operator level, the stigma mainly does not exist. Ironically, as a C-suite executive, you’re seen as “bold” for taking on a challenge in a new industry. There are ways to spin the work positively, even if you fail. But for employees, it can raise eyebrows, especially if you’re trying to move to states like Texas or other parts of the South that are less accepting of cannabis on resumes. Ultimately, this stigma is what prevents many highly qualified people from getting into cannabis companies. 

Q: What strategies can be employed to train staff effectively in this evolving industry?

A: That’s a great question, but I'm not sure there's an answer right now. The training is actually already there, it's just in other industries. For example, people who work in confectionary plants already have the skills and processes to produce items like gummies. They know exactly how to do it and run production efficiently, but they’re just not willing to transition into the cannabis industry. So, I would say it’s not so much about improving training in this industry, but more about when people with these skills will feel comfortable enough to enter. However, I am seeing the first few people starting to come over from companies like Coca-Cola and Frito-Lay, which is a positive sign.

Q: How important is team composition in overcoming operational challenges faced in cannabis labs?

A: Extremely important. “Because of industry stigma and a lack of “accessible talent” losing team members can be crippling for companies.” The lack of automation in the industry means companies rely on personnel skill sets, which disappear when a worker leaves. 

It is not possible to train people up to a graduate student level of skill in a few months. For instance, a simple distillation process, which any chemistry graduate student could handle, is being run by high school graduates who break boiling flasks every other week, costing $1,000 per break. On top of the quality inconsistencies, problems just compounded on each other, including missing shipping windows.

Q: What changes do you foresee in the staffing landscape of the cannabis industry?

A: We might have to wait for a generational shift to see significant changes. Many of the older generation, who grew up with anti-cannabis sentiments like “Just Say No,” are very resistant to the industry. As newer generations, who are more accepting of cannabis, move into leadership positions, I think we will see a significant drop in the stigma, which will hopefully make it easy to recruit and retain skilled scientists.

Q: What needs to change in the industry to affect the staffing landscape?

A: The issue of hiring and retaining highly skilled and experienced talent, like synthetic chemists, requires the federal delisting of cannabis as a Schedule I material—which is the same category as cocaine and methamphetamines.  

It is normal to change jobs, but many professionals find that if they work in cannabis, it will be difficult to get an adjacent position in a different industry due to the cannabis stigma. I know people who worked at Mitsubishi and then went to work at Napa vineyards, testing wine in analytical labs. Just because you get hired at a Napa vineyard, doesn't mean you can’t get hired again at Mitsubishi—as there is no stigma surrounding working in the wine industry. 

If cannabis were de-scheduled at the national level, the staffing situation would change very quickly, probably within a year or two.

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