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Cannabis seed-to-sale software giant Metrc pivots focus to companies


If you call seed-to-sale tracking provider Metrc’s customer service line on a Friday, there’s a chance you’ll be speaking directly to the company’s CEO, Michael Johnson.

Johnson, who was appointed CEO of the Florida-based software company in 2022, said during an interview with MJBizDaily that he started taking customer calls because understanding the issues facing Metrc’s 300,000-plus users helps to improve the overall customer experience.

“There was one person that called and said, ‘I want to talk to your supervisor,’” Johnson recalled to MJBizDaily.

His response to the caller: “I don’t really know how to answer that the right way. I report directly to the board – I’m actually the CEO.

“So what is the problem? Why do you want to be escalated?”

Previously, Metrc thought of its primary customer as state governments, which meant recognizing each market’s unique compliance requirements and seed-to-sale tracking regulations.

More recently, however, as users complained about slow service and outages – as well as a clunky user interface or an onerous experience – Metrc’s focus has shifted to the 39,000 licensed cannabis companies that, more often than not, are obligated to use the software, according to Johnson.

“What we’re doing now, and what I’m very proud of, is an emphasis on usability for the licensees,” he said, referring to state-licensed cannabis businesses.

“How are we making Metrc more intuitive, easier to use, run faster and really produce something that provides value to the licensees?”

Since 2020, Metrc’s footprint has grown from 16 to 23 state government contracts.

It’s two main rivals are:

  • BioTrack, which was sold to cannabis tech company Alleaves in February for $30 million.
  • MJ Freeway, whose software was sold this past spring by then-parent Akerna Corp. for $5 million to MJ Acquisition Corp.

Not every legal cannabis jurisdiction, however, has a contract with a commercial seed-to-sale software company such as Metrc, BioTrack or MJ Freeway.

Washington, for example, developed an in-house system called the Cannabis Central Reporting System after complaints about the state’s previous contracts with software providers.

The new system allows Washington marijuana operators to continue conducting business and submit reports even if there are technical issues, according to Brian Smith, director of communications for the state’s Liquor and Cannabis Board (LCB).

Companies report their total inventory on hand as well as accepted and rejected lots, created and “converted” product, transfers, plus destroyed merchandise and sales, according to Smith.

“This greatly reduces the amount of available data for public partners and industry data miners, but provides the agency insight into key risk points within the product lifecycle,” Smith told MJBizDaily via email.

The LCB is investigating its options to improve the system, he added.

Arizona’s Department of Health Services, meanwhile, did not sign a contract with a track-and-trace software company.

Instead, retailers are required to have their own track-and-trace systems so if issues arise – such as suspicions of diversion to the illicit market – there is some accountability.

Demitri Downing, CEO of the Arizona Marijuana Industry Trade Association, rejected the notion that a statewide track-and-trace system would benefit the industry.

He told MJBizDaily that further regulation and policing of industry players seems like regressing to pre-legalization policy.

“For me, supporting the themes that perpetuate the Drug War 2.0 or Prohibition 2.0 are disingenuous,” he said.

“Honor matters at some point.”

Is Metrc a monopoly?

Metrc’s notable growth has spurred accusations that the company has a monopoly on state government contracts.

“The thing to remember is that our contract lies with the state,” Johnson said, adding that competitors BioTrack and MJ Freeway also have state contracts, albeit fewer of them.

“And so the state is going to have one system, right? It’s not a monopoly.”

Johnson attributes the company’s growth to being solely focused on track and trace, rather than also having a point-of-sale system or marketing tools.

“This is it – we do track and trace, and we do it for cannabis,” Johnson said.

To offset its costs, Metrc sells plastic radio-frequency identification (RFID) tags, which track products with electronic chips, to licensed operators in some states – a practice that is currently up for debate in states such as California and Colorado.

Moe Afaneh, the CEO of Florida-based BioTrack, said price is a major consideration for state governments.

“We’re pretty much neck and neck from our technical capabilities,” Afaneh told MJBizDaily in an interview.

“Usually, cost is the biggest driver in who wins the contract.”

Afaneh said BioTrack also aims to serve both its state government customers and the cannabis companies using its system.

But it does so with an expanded suite of products and services, such as medical cannabis patient registries (which it has set up in New Hampshire and Virginia) and a point-of-sale system.

“We cook all of that in the same pot, so there’s a constant kind of feedback loop to achieve the goals of compliance and transparency for the state,” Afaneh said.

Remaining challenges

Metrc’s Johnson said he’s proud of the work the company has done to improve the software’s performance – and that there are no longer the kinds of service disruptions users experienced previously.

The company’s more transparent and accessible to users, too, he said.

But problems remain.

Oklahoma cannabis regulators, for example, implemented Metrc’s track-and-trace system after its medical cannabis market was already established.

Some operators have been resistant to the new layer of compliance.

One operator even filed a lawsuit in 2021 fighting the new rule on the grounds that Oklahoma’s contract was creating a monopoly.

The lawsuit wasn’t successful, but it shows that not all operators are eager to learn and use track-and-trace software.

Oklahoma regulators, however, are committed to cracking down on illicit cannabis.

In September, five businesses were shuttered and regulators seized thousands of pounds of untraceable cannabis.

“There’s definitely a desire for the regulator to get their hands around that market, and they really have done an exceptional job,” Johnson said.

The system also relies on industry players to follow the state’s rules, he added.

In Montana, for example, a cannabis testing lab shut down after its owners complained that producers were approving larger-than-legal batches of marijuana through the Metrc system.

Johnson said the software is working exactly the way it was designed to but that it relies on people following the law and, when rules are broken, for regulators to enforce them.

“The system is not a forcing mechanism to make you follow every rule and regulation,” he said.

“It’s a tool for compliance, but it’s not going to force you to do things that you otherwise wouldn’t do.”

Kate Robertson can be reached at kate.robertson@mjbizdaily.com.



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