Metrc, the Florida-based nationwide leader in cannabis track-and-trace software, isn’t meeting the needs of Missouri cannabis regulators and, with the state contract up to bid, could be replaced with another company.
If a competitor is awarded the Missouri Department of Health and Senior Services’ (DHSS) contract to monitor the flow of product in the $1.5 billion market, it would be the first known instance of a state cannabis regulator ditching Metrc for another firm.
But with Metrc having bought out its closest competitors, it’s hard to identify a readily available viable alternative, observers told MJBizDaily.
Lakeland, Florida-based Metrc has contracts with 29 states to run seed-to-sale tracking, a requirement imposed on adult-use cannabis markets meant to stop the flow of legal cannabis to illicit markets.
These include Missouri, which awarded Metrc a $7.3 million and counting contract in 2019, according to The St. Louis Post Dispatch. The current deal expires on July 30.
But the state “needs an IT solution to replace the current systems,” according to bidding documents provided to MJBizDaily.
That’s in part because Metrc’s current setup leads to “scattered communications, lost information and significant delays in response time,” the documents add in part.
Metrc did not immediately respond to a request for comment. A spokesperson for DHSS did not respond to a request for comment Tuesday.
Could Oracle or Salesforce enter the cannabis track-and-trace industry?
With Metrc the undisputed industry leader, it’s still unclear who may be second choice. However, some major mainstream business software providers attended a March 24 pre-bid conference, according to documents.
These include Oracle and Salesforce.
Neither company immediately responded to a request for comment.
Missouri operators are “happy to work with any vendor DCR selects,” said Andrew Mullins, the executive direct of MoCannTrade, a statewide cannabis industry trade group.
Other states are using additional Metrc functions Missouri does not currently use, he added.
“We would encourage DCR to select vendors that help meet the goals of the program with as little disruptions to customers and small businesses as possible,” he added.
Does cannabis track-and-trace work to stem diversion and inversion?
Across the country, many industry operators have questioned the ability of existing track-and-trace systems to perform their promised duties. Critics point out how easy the software is to fool.
At the least, the many allegations of routine cannabis diversion and inversion that go on despite track-and-trace seem to suggest that improvements can be made.
And scrutiny seems to be heating up in recent months.
In December, a California judge found that the state Department of Cannabis Control’s reliance on Metrc “does not comply” with state law requiring the rapid identification of problems such as the so-called “burner distros” used to smuggle product out of the state.
And a February audit in Missouri found that Metrc “does not currently have the capability to identify purchases over the legal transaction quantity limits in real time.”
“As a result, marijuana customers are able to purchase more cannabis than what is allowed by the Constitution, and there is an increased risk of diversion and a public safety concern,” State Auditor Scott Fitzpatrick wrote.
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‘Growing national scrutiny’ of cannabis track-and-trace leader Metrc
Some states have also struggled to implement track-and-trace systems, with operators blaming poor communication as a cause.
In New York, where Biotrack was the selected vendor before Metrc purchased that company’s government-facing assets last summer, operators claimed seed-to-sale tracking was rushed without necessary support – claims later made in a lawsuit that’s still pending.
“That growing national scrutiny may be part of what is motivating Missouri to explore alternatives,” said Hirsh Jain, a Los Angeles-based consultant and founder of Ananda Strategy.
“Still, it’s somewhat surprising given how entrenched METRC is at this point, especially following its acquisition of BioTrack, which has effectively consolidated the track-and-trace vendor landscape.”
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
