The implementation of a seed-to-sale tracking system for medical marijuana products in Oklahoma has been delayed by a lawsuit that seeks to transfer the costs of the program to the state. In April, the rollout of the program was postponed until the end of June by a Okmulgee County judge in the case brought by a group of medical marijuana businesses.
Oklahoma voters approved a ballot initiative to legalize the use and sale of cannabis for medicinal use in 2018. The following year, the state legislature passed legislation, House Bill 2612, which included requirements for a system to track cannabis products from cultivation through the manufacturing process, distribution and final sale.
State regulators with the Oklahoma Medical Marijuana Authority (OMMA) issued a contract to METRC LLC to provide seed-to-sale tracking through its system. The METRC program is used by at least a dozen other states including California, the nation’s largest legal cannabis market.
Attorney Ron Durbin filed suit against OMMA’s implementation of the system on behalf of several medical marijuana dispensaries, arguing that licensed business should not be required to purchase identification tags for plants and products or have to pay a fee to use the system. Under current rules, marijuana business must pay a $40-per-month licensing fee and identification tags, which cost 45 cents for plants and 25 cents for products. METRC’s contract with the state estimates annual costs of the program for marijuana businesses would total $705.
In an interview with local media, Durbin said that the fees constitute an illegal tax not authorized by the legislature. Durbin also characterized OMMA’s communications about implementation of the METRC program through press releases and social media posts as “backdoor rulemaking.”
“I’m arguing those are not the way you adopt regulations, and the regulations don’t require any of this,” Durbin said. “If that’s the case, we’re back to where I said we should be, which is: Go adopt some lawfully appropriate regulations to implement your seed-to-sale tracking program. OMMA has way over complicated this. Quite frankly, they dropped the ball and didn’t do their job in getting regulations done.”
Oklahoma is Fighting Illicit Cannabis
Seed-to-sale tracking systems are put into place to help prevent unlicensed cannabis products from entering the state market and to ensure that legally produced products are not illegally diverted out of state. In the past two months, the Oklahoma Bureau of Narcotics has shut down unlicensed cultivation operations growing nearly 30,000 illicit marijuana plants.
“We are working a lot of investigations statewide on growers illegally shipping out of state and a few stores selling product brought in from out of state,” said Mark Woodward, a spokesman for the agency. “Black-market growers are thriving in Oklahoma. Regarding seed-to-sale, tracking would be helpful in some of our investigations, but it hasn’t hampered our ability to build solid cases on those we’ve already shut down.”
LeeAnn Wiebe, the CEO of vertically integrated cannabis company Apothecary Extracts in Beggs, Oklahoma, said that her company had implemented METRC before the original April 30 deadline and continues to use the system despite the delay. Using the system is less than 1 percent of her business costs and is worth the expense and effort, she said.
“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,” Wiebe said. “But shortly after it was implemented, everyone could see the value in transparency and everyone using the same system.”
Wiebe added that the vast majority of her wholesale clients were not yet using METRC. She believes that many of those reluctant to use the program may be manipulating the current manual 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,” she said. “I think most people who don’t want Metrc don’t want it because it eliminates those loopholes or that ability to easily get unregulated product into the market.”