In many states with legal cannabis programs, seed-to-sale tracking systems are legally mandatory to prevent illegal cannabis from leaking into the state’s program, and to prevent regulated marijuana from diversion into the underground market. (Though sometimes, it doesn’t work out that way.)
In the U.S., 50% of states with legal cannabis and the District of Columbia use Metrc; and 23% use BioTrackTHC. Of the 16 states in the New England, Mid-Atlantic, and Midwest regions, nine states – or 56% – use Metrc.
All seed-to-sale cannabis tracking systems are based on software that uses serialized plant tags and labels attached to packages from wholesale to retail point of sale. Tags are attached to every plant to track them through different stages of seed to sale, including the curing process. These tags have RFID chips that render the plastic unrecyclable – a sticking point for people in the industry who want to make it more sustainable.
Metrc tags are one time use only, a caveat that resulted in a class-action lawsuit against the company for creating a monopoly and an unfair burden on businesses.
Michael Johnson, CFO of Metrc, responding to emailed questions about accusations of Metrc forming a monopoly swatted those claims away. “Metrc was the first track-and-trace solution for the legal cannabis market and provides the most effective and efficient option for the cannabis and regulatory communities in a way that its competitors have not been able to match, which includes the use of RFID technology,” he said. “Metrc’s robust infrastructure and expansive API platform allow for the most robust supply chain visibility solution currently available in any industry.”
In the Midwest region, all states use either Metrc or BioTrackTHC, the latter of which is in use in five of the 16 states – or 31%. Ohio, Missouri, Michigan, Minnesota, and South Dakota use Metrc; Illinois and North Dakota use BioTrackTHC.
Gabriel Mendoza, executive vice president of retail operations of Mission Dispensaries, said working with BioTrack, like accurately tracking inventory, requires constant manual fixes, which are required to stay compliant with state rules.
“It has to report to the state and our point of sale is layered on top of that, and so what happens at times is the BioTrack inventory tracking will give us one number that it says we have in inventory, for example, 100 prerolls. Our seed-to-sale tracking system will give us another number which will say maybe 99 prerolls,” Mendoza said. ”What we have to do is constantly make sure that what the BioTrack system says is correct, even though at times, it can take up to a day or even longer for BioTrack to accurately reflect what we have on inventory. That causes issues, right? If the state comes in and they do an audit and BioTrack isn't up to date, we could be dinged. That's one of the biggest ones because obviously the sanctity of the license is the most important thing.”
In the Mid-Atlantic region, there is a tie between use of Metrc and BioTrackTHC, broken by Pennsylvania using MJ Freeway.
“This contract serves two important functions for the program: tracking medical marijuana from seed-to-sale; and creating a registry for patients, caregivers, and practitioners to participate in the program,” said then-Pennsylvania Secretary of Health Karen Murphy in 2017.
The widest variety of seed-to-sale tracking systems is in New England, where Metrc is used in just two out of six states, or 33%. New Hampshire employs BioTrack for its small medical use program, but Connecticut’s Cannabis Analytic Tracking System is also a product of The Consultants Consortium, Inc., and their partner, Forian, which owns BioTrack.
New Hampshire’s contract with BioTrackTHC in 2019 cost $400,000, according to public documents. There were seven Alternative Treatment Centers in the state as of December 2021.
BioTrack became a part of Forian in 2021, which is in itself a corporation created by Helix Technologies and Medical Outcomes Research Analytics, according to BioTrack.
Still, find an operator using a seed to sale tracking system, and they’ll have a complaint.
“Oftentimes you're gonna see issues accessing your user interface connection with APIs, trouble with support, just a whole wide array of issues that make it extremely complicated for operators to do their jobs and stay compliant,” said Gary Strahle, vice chair of the National Cannabis Industry Association’s retail committee and CEO of Cannabis Cloud Solution.
One issue that may become apparent in the future is if federal legalization happens and interstate commerce is allowed, states with different seed-to-sale tracking systems will have issues tracing all of the plants and products across state lines and softwares.
“In addition, there's things that these companies, if they were to remain as the compliance platform, they would need to make significant upgrades to their user experience, their customer support, and APIs in order for business to run more smoothly,” said Strahle.
“There's many redundant activities and non-sustainable practices across all compliance platforms that are just not going to enable the cannabis industry to grow at the pace that it could. And in order to do so they need to get their systems up to par using higher technologies, less expensive technologies, less complicated technologies, recyclable technologies, scalable technologies. We see server timeouts and restricted access to these various systems, and essentially it is throwing a wrench in the spokes and preventing businesses from doing their daily operations sometimes.”
Metrc is used by Massachusetts and Maine, though the latter is fighting to keep the medical program free from seed-to-sale tracking. Originally, Maine was to use BioTrackTHC for its adult-use program, however the contract was terminated in 2019 when the company agreed it was unable to deliver its contract.
“Despite [BioTrackTHC’s] best efforts, it became clear they could not meet the short- and long-term requirements of our office, at which point we decided that it was best to mutually terminate the contract,” said Office of Marijuana Policy Director Erik Gundersen.
Rhode Island uses Kind Agrisoft, which is partnered with Microsoft Corp. Kind Financial acquired Agrisoft Development Group, a seed-to-sale compliance software company, in 2015.
Vermont’s Cannabis Control Board (CCB) does not have a seed-to-sale tracking system but is expected to place bids once licenses are awarded, sometime in May, said James Pepper, Chair of the CCB.
“We are looking at all possibilities. All options are on the table,” said Pepper, including blockchain technologies, which are currently used by the state’s hemp program.
Pepper said, “When you think about seed to sale tracking and inventory tracking, it's hard not to consider Metrc or have that name be thrown around. But really what we're thinking about is what do we need out of the inventory tracking system and how do we achieve that in the least burdensome way?”
As to whether or not Metrc is considering blockchain technologies, Johnson, the company’s CFO said, “The variability generated in a fully transparent seed-to-sale lifecycle is frequently nonlinear, which presents challenges to the application of blockchain technology.”
But not everyone agrees.
“I strongly believe that there will be a new compliance platform and leader in the future as federal legalization rolls out. In reference to all of the issues I mentioned earlier with interstate commerce, there will need to be a single standardized solution which features technologies like blockchain that can render things like smart contracts and automated compliance through the use of those blockchain technologies,” Strahle said.
“There's a major use case for blockchain in point of sale and in cannabis in general, and it is such a brand new concept. If you know anything about cannabis, we're almost in the dark ages when it comes to a lot of technologies because most of the softwares and hardwares that we use aren’t backed by large companies that have federal contracts,” said Mission’s Mendoza.
“We see that we move at a slower pace. We're not using the same point of sale that Apple is using, because of the fact that the Apple’s point of sale is run by a company that does not want to touch cannabis. So, I think that there's a big use case for blockchain.”