Need-To-Knows About METRC & Cannabis Business Compliance
METRC stands for Marijuana Enforcement Tracking Reporting Compliance – and it’s the inventory tracking software you can’t afford to misunderstand. METRC is your ultimate tool to checking many of the boxes with regard to cannabis business compliance and regulatory laws. METRC has become the leading choice of 12 state governments and the District of Columbia for the electronic ritual of keeping tabs on your product. In order to build, maintain, and scale a successful cannabis business, one of your utmost priorities as a business owner must be cannabis business compliance. Without understanding and properly utilizing METRC, your business could fold faster than a house of cards in the Parkinson’s ward.
How METRC Came Into Our LivesThe go-to tracking software was born out of panic and necessity to get a grip on the booming cannabis industry and, with it, the expanding potential for misuse. In 2013, Colorado was faced with a giant regulatory boondoggle as it stared down the dawn of adult cannabis sales. The state contracted with Franwell, a provider of supply chain track-and-trace technology, for an online oversight tool for its burgeoning industry. As a result of the Colorado + Franwell partnership, a cloud-hosted inventory tracking software – now known as METRC; originally called Marijuana Inventory Tracking Solutions (MITS) – was created. In January 2014, concurrent with the roll-out of recreational sales, Colorado became the first state to mandate the use of METRC. Today, METRC is still quietly going about its business tracking millions of plants from cultivation to consumer. The developers of METRC refer to the tool as “Government’s trusted cannabis legalization partner.” A lack of METRC proficiency and cannabis business compliance can rattle your nerves, and even shatter your business with fines and shutdowns.
How Does METRC Work?It’s 11:00 o’clock on a Saturday night. Do you know where your plants are? METRC does. Now that cannabis has gone mainstream, your ladies have no privacy. They’ve gone from grow light to spotlight as cannabis business compliance has become as critical as hybridizing the latest strain. In METRC’s model, each plant must wear a Radio Frequency Identification (RFID) tag. These tags each have a unique identifier and, unlike barcodes, may be scanned in multiples at a distance of 10 to 15 feet. The plants’ RFID tags are the keys to the engine that, when fueled with the correct data, serves businesses and regulators in the following ways:
- Inventory Tracking – Reported cannabis inventories are monitored in real-time as they move through your queue, with each status being recorded from seed, immature plant, vegetative, flowering, harvest, package, transfer, processed, tested, to sold.
- Tracing – Allows a product to be followed back to its origin and alert licensees if a health concern arises.
- Data Trends – Allow business owners and compliance agencies to analyze inventory data to assess risk and identify any non-compliant behaviors such as product diversion (aka, stealing or otherwise misusing product).
- Reports – Use trended data to brief stakeholders, outline regulatory or criminal cases, and share certain data with the public.
Weights, Measures, Taxes & OutlawsWith each plant’s chain of custody accounted for from seed to sale, states ensure that every sold product passes through the tax turnstile and product diversion to the black market is mitigated. States must remain alert to avoid federal repercussions that could arise if your Golden Goat jumps the fence and winds up in a non-legal state. For businesses, METRC can also serve as a loss mitigation tool. It even has built-in equivalency rules, like 1 ounce of retail marijuana flower is equal to 8 grams of retail marijuana concentrate. It requires a lot of data to feed METRC’s appetite. Depending on the size of your business, you may require staff exclusively dedicated to the task.
Advice for METRC ImplementationAccording to Kyle Sherman, the CEO of Flowhub, “One of the most unnerving aspects of operating in a METRC state is the potential to be audited for missing data.” Sherman references a 2017 case in which a Colorado retailer was suspended 90 days and fined $75,000 for failing to maintain accurate tracking records. To avoid hefty fines or shutdowns, we recommend that you maintain the four pillars of a happy METRC system:
- Make certain that any employees who will be using METRC – even minimally – have received formal training classes.
- Allow as few individuals in METRC as possible. Typically, these should be managers and those in supervisory roles.
- Make sure you’re reconciling your inventory daily. If your state allows it and you have a small, manageable inventory, you can consider weekly reconciliation.
- Don’t wing it. If you are uncertain whether or not you’re doing something correctly, get help from cannabis business compliance experts.