Not every cannabis business in America can afford a full-time compliance officer for keeping the company out of trouble with government regulators. It’s safe to say that’s the case for the majority of Oklahoma’s thousands of licensed cannabis businesses.
So complying with the head-spinning number of government rules on legal cannabis in Oklahoma falls to you. The latest such rule is integrating Metrc’s mandated cannabis-monitoring technology into your business by a deadline of April 30. Fail to meet the deadline and you lose the privilege of being a cannabis business in Oklahoma.
As you toil to meet that deadline, cannabis operators in California say Florida-based Metrc’s proprietary monitoring technology is suffering intermittent outages and disruptions that are costing businesses valuable time and money as they scramble to stay compliant with state regulations.
Metrc is among the most experienced companies offering such technology with now 16 state-and-local governments as clients. The company grew by an impressive 60 percent in 2020. The Snoop-backed venture firm that pumped $50 million into Metrc two years ago has called compliance “the backbone of the cannabis industry.” The company’s COO, Lewis Koski, was a top cannabis-compliance enforcer in Colorado where adult-use has been legal since 2012.
Like other states, Oklahoma lawmakers and the Oklahoma Medical Marijuana Authority are mandating the use of cannabis-monitoring technology to enforce quality and safety standards for consumers and prevent unauthorized diversion. Oklahoma picked Metrc’s software and radio-frequency tracking tags in September of last year to deploy here. For Oklahoma cannabis businesses, that means shelling out to Metrc $40 per month, plus $0.45 for each cannabis plant and $0.25 for each cannabis product.
The company’s technology has been in place for two years in California. Metrc’s online software there is experiencing disruptions that are “causing a lot of heartburn,” as one cannabis tech CEO, Colton Griffin of Flourish Software, described it to Marijuana Business Daily:
“License holders use Flourish to manage inventory and track purchasing, among other functions. When the [Metrc] system is down, cannabis companies’ employees are forced to input traceability data manually -- for example, a grower selling pounds of flower to an extractor. That requires a dedicated worker who is specifically trained in data entry for Metrc software. [Colton] Griffin estimates the impact in the thousands of dollars per company, more or less depending on the amount of business a company does.”
The problems are interfering with everyday business functions like invoicing and making product transfers from one business to the next. A California-based compliance expert at the Nevada company Blackbird named Jennifer Gallerani has trained people on Metrc. She said to the Daily in December:
“It’s very hard to learn. There’s not an easy undo button. So, when you make a mistake, it’s very hard to correct that mistake and find it and undo it. And so the learning curve is incredibly steep.”
Among her, Metrc, and state regulators, there seems to be little disagreement about what’s causing the outages and disruptions. Metrc uses a so-called application programming interface, or API, for connecting with outside digital products. Think of the “get directions” buttons in Weedmaps and Leafly that automatically pop out Apple Maps, Google Maps, or Waze for directions to a dispensary.
In this case, Metrc’s intent is for its regulatory API to integrate as seamlessly as achievable with third-party business software (e.g. Cova POS, Canix, or Flourish mentioned above) you already use for things like product inventory and recording transactions.
California regulators now say a “small number of integrators” are creating problems for Metrc’s API and slowing down its overall performance. Gallerani told the Daily that the Metrc API “wasn’t working for two to nine hours every day” in early March. An Oakland dispensary reported orders taking as long as 15 minutes to enter. But the dispensary’s CEO also said they had not lost any material business as a result of the slowdowns.
Gallerani said one solution would be requiring Metrc to report the status of its API in real time online, so that cannabis licensees could see when it was underperforming. That way cannabis licensees wouldn’t be too readily blamed for noncompliance when it was the mandated compliance technology itself not working.
Metrc, for its part, serves two masters. One hires Metrc for compliance enforcement and the other pays for the privilege of integrating it. The company has taken great pains to assure both its regulator clients and the cannabis industry itself that commonly used third-party business software would integrate smoothly with Metrc’s products.
Said Metrc COO Koski at a Feb 24 media roundtable with Oklahoma reporters:
“Metrc is the most trusted and experienced track-and-trace system in the United States … There are over 150,000 users in the system, which is more than any other track-and-trace vendor. … Since we track so many different events -- from immature plant to finished product -- regulators are able to really quickly identify products that may be dangerous to public health.”
California regulators and Metrc emphasized to the Daily that neither Metrc nor its API were ever offline during the most recent reported interruptions. They say the system is continuously being optimized for better performance and point to the small number of outside integrators who are overwhelming Metrc’s API with redundant requests.
Nonetheless, in the case of California, Nevada, Oklahoma, and neighboring Missouri, cannabis businesses cannot choose the software and radio-frequency tags they purchase for complying with each state’s track-and-trace programs.
In fact, one Oklahoma lawmaker attempted earlier in the 2021 legislative session to allow cannabis businesses to select their preferred software and radio-frequency tags for meeting compliance requirements. OMMA and Metrc reportedly didn’t like the idea and it was removed.
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