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Company tracking marijuana from seed-to-sale files suit to charge industry for tags

  

JEFFERSON CITY, Mo. — The company set to handle seed-to-sale tracking of medical marijuana in Missouri has sued the state to be able to charge fees beyond what was specified in the contract.

Metrc, a Florida-based company, filed in Cole County a lawsuit against the Office of Administration (OA) for determining the contract does not allow variable costs. Metrc is one of the top companies nationwide for seed-to-sale tracking, with 11 states, not including Missouri, contracting their services. According to Marijuana Business Daily, Metrc won four seed-to-sale contracts awarded in 2018.

An integral part of Metrc’s tracking system is radio frequency identification (RFID) tags. The cost of the RFID tags in other states are shouldered by the user, but Metrc’s ability to charge the Missouri industry for the cost is up for debate. 

In April, Missouri awarded Metrc the contract to oversee three medical marijuana programs: seed-to-sale, patient registry, and facility licensing application. BioTrackTHC — the second-place bid — protested the state’s decision, alleging Metrc failed to include its RFID tag charges in the bid application

In rejecting the bid protest, Karen Boeger, director of the division of purchasing and materials management for OA, argued there would be no variable costs.

“Its [best and final offer] converted the previously-variable pricing of industry-paid subscriptions for access to the seed-to-sale solution’s software component into firm and fixed State-paid pricing for subscriptions to the same. Metrc’s [best and final offer] replaced, with zero dollar figures, its previously-variable industry-paid pricing for the seed-to-sale solution’s equipment in the form of RFID tags,” Boeger said in a 14-page rejection letter

The lawsuit alleged Boeger interpreted “the Contract awarded to Metrc that would incorrectly limit Metrc’s rights.” And Metrc pointed to a regulation from the Department of Health and Senior Services (DHSS) as contradictory to OA’s position.

“Unless otherwise addressed or prohibited by contract or law, an entity holding a contract with the state of Missouri for a statewide track and trace system and any affiliates of that entity may charge a price to a licensed or certified facility for plant/product tracking labels, but no such price shall exceed the cost of producing the label in an amount that would create more than thirty percent (30%) net profit on each label,” DHSS’s rule, subsection (B) of Emergency Rule 19 CSR 30-95.025(7), said.

The regulation was effective June 3 and expires Feb. 27, 2020. It was published in the Missouri Register on July 1.

“The Office of Administration continues to stand by its position as to the pricing for this contract, as set forth in the May 20, 2019 protest response letter from the OA Division of Purchasing (more specifically, pages 8-11),” an OA spokesperson told The Missouri Times. 

This is not the first time Metrc has filed a legal challenge: When the issue came to a head in Washington, Metrc ultimately withdrew from the contract.