Judge Says Metrc Can Withhold Tags From Colorado Licensee

Metrc didn't send invoices for nine years, but wants unpaid fees.

A Colorado licensee has been fighting Metrc over unpaid support fees, and in the latest round a judge said Metrc could withhold tags – potentially shutting down the business.

Natalie Romolt is the Chief Executive Officer and owner of Colorado-based National Green Source (Green), which she acquired in 2018. Metrc is the vendor chosen by the state of Colorado to issue seed-to-sale tracking devices for the regulation of legal cannabis plants. Licensees in the state must use Metrc’s RFID tags in order to remain in good standing with the state.

Unpaid Fees

Metrc claims it has been authorized by the state to charge a $40 monthly fee and that this fee is mentioned in its training. Romolt received the training, but her class was held before the fee was stated in the training. The court stated that it wasn’t clear if Romolt received the information in training and that it also wasn’t clear if she received a Program Update in 2014 that also mentioned the fee when she worked for another company prior to Green. When she bought Green in 2018, she did not have to re-do her training with Metrc.

The court stated in its order,

From 2018 to in or around February 2022, METRC did not invoice, or attempt to collect from, Green any “associated vendor fees” to order RFID tags. The sole stated cost of RFID tags from METRC was $0.45 per plant tag and $0.25 per package tag.

In February 2022, Metrc contacted Romolt and said she owed $28,000 in unpaid fees. The company also reached out to other non-paying customers as well. Metrc didn’t send any invoices to Romolt until March 2023. Instead, the company relied upon a banner in the Metrc account stating there was an unpaid balance. Green decided to fight the fees claiming some of the unpaid bills occurred before Romolt bought the company. The court order also noted that the invoice statements sent to Green actually totaled $26,640 and that Metrc didn’t account for the difference in amounts.

Also during this court battle, Metrc changed its terms of service saying if customers don’t pay the fees, Metrc can withhold tags.

Judge’s Ruling

In June, the judge ordered Green to pay for the tags and for Metrc to issue the tags but didn’t order Green to pay the monthly fees. Instead, the judge asked Green to set aside some money for the fees. Green says it has about six weeks before it will run out of tags.

The Court Order stated,

METRC argues that the monthly charges are not new because they have been authorized by Colorado and they are mentioned in METRC’s contracts with Colorado. Again, the Court disagrees. The question here is not whether METRC could have charged Green a $40 monthly fee, the question is whether METRC provided proper notice to the licensees that they were required to pay the monthly fee given the absence of any mention of the fees in the contracts between METRC and the licensees and the complete absence of any invoices between 2014 and 2023.

The judge also suggested that Green pay the disputed fees in order to remain in business and sue Metrc after the fact. If Romolt doesn’t pay the fees and goes out of business, she can still sue Metrc for damages.

Romolt told the court she was worried if she paid the fees to remain in business, that she would not be able to recover those fees in court. The judge disagreed with that fear.

Green ultimately worries that when its next crop of plants matures they will need to be tagged. Without the new tags, Romolt said she will have to destroy her plants and eventually stop selling products.

This article has been updated to clarify that the disputed fees were for support functions, not plant tags.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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