New delays in OK lawsuit over Metrc and weed tracking leave industry in lurch
Eighty percent of this post was ready to publish by Sunday night with the headline: “Dispute over Metrc and cannabis tracking in Oklahoma goes before judge.”
My plan was to drive up to the Okmulgee County courthouse early this morning, shoot some photos of the inevitable Oklahoma cannabis riff-raff protesting outside, capture some tit-for-tat color between the lawyers in the courtroom, and then post from a nearby hotel lobby with free wifi.
I was even looking forward to scooping the local TV stations for old time’s sake on behalf of my 150 email subscribers. I trained student reporters in local TV broadcast news during grad school at UT Austin. I know how precious little they grasp. Saw one twenty-nothing at a local station this morning that shall go unnamed mightily struggle live on-air to sound authoritative on weed policy.
Fake it ‘til you make it.
Oklahoma cannabiz woke up this morning in the meantime with no promised hearing and virtually no official insight into how to proceed from state regulators on electronic inventory tracking. By the afternoon, I had little to add to the 80 percent I’d already written other than splashes of newsy snarkiness in my lede grafs.
After months of planning and deadlines for the inventory-tracking system first mandated by Oklahoma legislators in 2019, the ongoing court dispute over its implementation has left the state’s $1.5 billion cannabis industry still unsure of what the future holds.
It’s making my head hurt just thinking about how to explain this accurately and concisely without being a lawyer. But let’s try. Fundamentally, the Oklahoma Attorney General’s Office, state cannabis regulators, and a private company selected by those regulators here to implement a system for seed-to-sale surveillance want a legal challenge to it tossed.
But Metrc and Oklahoma state officials realize at this early of a stage that the entire case can’t be so readily dismissed. Like him or not, Ron Durbin has a bar license. Once he filed suit, a court protocol had to be followed to ensure due process.
In separate pleadings, Florida-based compliance company Metrc and Oklahoma weed regulators make similar arguments for why the lawsuit from Durbin, cannabis operator Dr Z Leaf, and other medical-marijuana businesses should not be allowed to impede the progress of real-time cannabis surveillance in Oklahoma.
Metrc and state officials are asking an Okmulgee County judge to dismiss several of the claims made by Dr Z Leaf and to deny a temporary injunction that would further delay the monitoring program’s rollout until the underlying legal matters were resolved.
The Okmulgee County judge agreed to continue the case until a later date, but seemingly the last people to find that out today were cannabis licensees.
Durbin just went on vacation, and state cannabis regulators appear terrified to utter anything on social media or online anywhere, lest it be used against them as part of one of Durbin’s central legal arguments, which is that the state never formally articulated agency rules for the implementation of seed-to-sale tracking.
State officials had hoped the cannabis industry would be using Metrc’s proprietary software and tracking tags by April to meet demands from lawmakers that medical marijuana be monitored in real time statewide to ensure public safety and keep bad actors out.
Until now, those plans have been on hold under an agreed-upon temporary restraining order between the parties in the suit and the Oklahoma Cannabis Industry Association. The suit was filed shortly before a crucial industry deadline in April when Oklahoma cannabis licensees were expected to have fully adopted the new tracking system.
During the restraining-order period, however, attorneys for Metrc began accusing Durbin of boasting in a public interview that he’d strategically filed the lawsuit in Okmulgee County intending for an upper hand.
Assistant Solicitor General Randall Yates from the Oklahoma Attorney General’s Office piled on by blasting Durbin in one motion for “impugning the judiciary” and “bringing into question the integrity of this court” as a result of comments Durbin made during an interview with the cannabis advocacy group OK4U Approved.
This morning’s hearing was scheduled to occur just one day before the restraining order on seed-to-sale tracking in Oklahoma was set to expire.
That left the state’s cannabis industry largely lost at sea about how to proceed and stay fully compliant at the same time. Some 7,000 operators have already integrated Metrc’s software and tags into their operations in anticipation of the April implementation deadline.
The tracking program, Oklahoma regulators say, “hinges” on the use of Metrc’s proprietary radio-frequency identification tags. A temporary injunction, let alone a permanent one, would frustrate and disrupt years of work in Oklahoma toward real-time cannabis tracking.
Many cannabis licensees have embraced Metrc’s system for streamlining their operations and are continuing to use it despite the lawsuit. LeeAnn Wiebe, CEO of Apothecary Extracts in Beggs, Oklahoma, says that Metrc is a small fraction of her business costs, according to High Times:
“Any time you have a new system, it can be overwhelming or cumbersome, and it’s a bit fearful because you don’t know it. But shortly after it was implemented, everyone could see the value in transparency and everyone using the same system. … Based on working with hundreds of growers at this point and our challenge in getting license verification, test results, or batch information, nine of 10 places we can’t work with because they can’t provide us that information.”
(Edit: High Times appears to have actually plucked from an Oklahoma Watch story without giving them credit. -G.W. Schulz)
Metrc is arguing in its own pleadings that Oklahoma in the first place intended to hire “a single provider of a complete solution” to meet the expectations of the state legislature. The goal was for the system to verify compliance with state cannabis laws and to spot and remove poorly or illegally made cannabis that could pose a threat to public health.
State cannabis regulators selected Metrc over several other bidders in September, and it performs similar services for numerous states with variations of legal cannabis. The company says Dr Z Leaf and the other plaintiffs have no standing under the state’s public health code to bring the lawsuit and that state agencies are immune from charges of enabling business monopolies.
Dr Z Leaf and the other plaintiffs counter that Oklahoma created a “financial windfall” for Metrc by mandating that the entire industry exclusively utilize Metrc’s software and radio-frequency tracking tags at their own expense. They want cannabis licensing fees and tax revenues to be used for financing the tracking program instead.
Metrc was not initially named by Durbin as a defendant in the case, but a judge granted the company’s request to intervene. It’s now asking the judge to move the case entirely from Okmulgee County to Oklahoma City. Their lawyers accuse Durbin of “venue shopping,” or selectively filing the lawsuit in a court district he believed would be most favorable.
Included in Metrc’s filing is a transcript of the interview Durbin gave to OK4U in which he says a county was “picked out” for where the suit would be filed. Durbin also seemed to say he knew what judge would hear the case.
Elsewhere in the transcript, Durbin throws a not-small amount of shade on elected judges generally for being unable to “hack it” as lawyers.
From the Metrc motion:
“This is a case of significant public importance. To have a lawyer choose this forum and then deliberately communicate to the general public that this forum was hand-selected to afford some type of advantage raises the specter of judicial partiality. … These factors are amplified by the uniquely public nature of this litigation.”
Durbin is less-than-apologetic about his abrasive style. In a live June 24 Facebook video, Durbin said he was unafraid of even his own clients firing him as long as he still felt his cause was just.
He frequently takes to Instagram and Facebook to make his case to the public. Last week, he posted photos and videos of the director of the Oklahoma Medical Marijuana Authority, Kelly Williams, being served with a witness subpoena in the lawsuit.
While mildly amusing, I can honestly say I’ve never seen anything like that before as a reporter, and I’ve covered some true wildcat ambulance-chasers. Durbin said in the later Facebook video that he once had a good relationship with senior state cannabis regulators. That diplomacy had soured:
“I had no protest to [seed-to-sale tracking] and the plan. But as more and more time went by, no OMMA regulations came about. The Department of Health didn’t pass any regulations related to Metrc and the implementation of the seed-to-sale tracking program. So I started reaching out. I’ve had lunch with Kelly Williams many times. I’ve had evenings where I had a drink with Kelly Williams and [former OMMA director] Travis Kirkpatrick. We talked regularly, and quite honestly, [I] thought we worked well together. So I’m not really sure where things went off the rail[s].”
Durbin’s tone had noticeably cooled by the time of a shorter Facebook video posted yesterday. He and the cannabis plaintiffs are seeking to make the suit a class action. In their own court filings, they do not dispute that the 2019 “Unity bill,” which established a legislative and regulatory infrastructure for medical marijuana in Oklahoma, required eventual cannabis inventory tracking roughly from “seed to sale.”
They also acknowledge that state officials are generally free to contract with private companies to meet their own needs, which is what cannabis regulators did when they chose Metrc to meet their own tracking obligations under the Unity bill.
Yet cannabis businesses don’t have to be the ones to pay for it, Dr Z Leaf and Durbin argue. The state can’t mandate that cannabis businesses exclusively utilize only products sold by Metrc to achieve compliance with the Unity bill.
Durbin and the plaintiffs say a temporary injunction is necessary in part because seed-to-sale tracking can’t be implemented until the state marijuana authority has formally crafted rules for it in a process that includes outside scrutiny.
Without a temporary injunction, Dr Z Leaf and the rest of the industry will suffer “irreparable harm” that is “nearly impossible to calculate” by having to pay for Metrc’s software and tags, as well as the cost of hiring workers to deploy the technology.
They’ve estimated that Metrc could make as much as $20 million during the first year alone in licensing fees along with per-tag costs of $0.45 for each plant and $0.25 for each packaged product. Cannabis businesses would have to slow or cease operations to dedicate existing staff to complying with Metrc or train new workers to do it:
“Plaintiffs cannot calculate the extent of these damages with a reasonable degree of certainty but do anticipate that these costs would be substantial. … Without the injunction, plaintiffs will be forced to incur these exorbitant costs, and because of the state’s immunity, will not ever be able to recover those damages.”
For their part, state officials respond in pleadings from the attorney general’s office that Oklahoma had always envisioned inventory tracking since voters authorized medical cannabis. Attorneys for the state argue that the technology being deployed by Metrc in Oklahoma integrates with over 200 other systems used by cannabis companies. Several dozen of those programs are being used here in Oklahoma.
Setting Metrc aside, the state says, cannabis businesses must already use a tracking system, either the one chosen by the state or another that smoothly interfaces with it.
Licensees are fundamentally required either way to “keep records for every transaction with another medical marijuana business, patient, or caregiver” and to report inventory changes “after each individual sale.”
Appended to the state’s request to deny the temporary injunction from Durbin and the cannabis plaintiffs is an affidavit from marijuana-authority Director Williams:
“A seed-to-sale system gives OMMA the ability to track where potentially dangerous medical marijuana or medical-marijuana products came from and to whom it was sold. … Currently, the only way to obtain this information is from records of the commercial licensee, which are often hard to obtain and incomplete. … It is only once a commercial licensee’s data makes its way into Metrc that the OMMA can view and track that inventory.”
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