Michigan's Cannabis Sales Avoid Collapse Over Unpaid METRC Fees

Companies say the fees were a surprise.

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.

Michigan’s marijuana industry narrowly avoided a near-complete stoppage this week due to a miscommunication with its private tracking system service provider.

Surprise Fees

Florida-based METRC LLC, which holds the contract with the state to provide “seed-to-sale” tracking services which are monitored by regulators, recently instituted a new monthly service fee of $40 per month, which came as a surprise to those in the industry who say they never received an invoice.

Due to lack of payment, more than 85 percent of the state’s 800 licensees were expected to lose access to the METRC (Marijuana Enforcement, Reporting, Tracking and Compliance) system on Wednesday, effectively halting marijuana sales in the state.

The Michigan Cannabis Regulatory Agency sent notices Monday to those METRC said were under threat of having their accounts suspended.

Representatives from METRC did not immediately respond for comment.

“The Cannabis Regulatory Agency (CRA) has been notified that your business is at risk of having its statewide monitoring system (METRC) account suspended due to past due monthly reporting fees,” the bulletin read. “We recommend that you contact METRC as soon as possible to resolve the issue and avoid any interruption in your access to the system.”

Managers at Greenhouse of Walled Lake remained on hold with METRC on Tuesday afternoon with 18 other users ahead of them, said Jerry Millen, co-owner of Greenhouse. The Oakland County dispensary was notified of nonpayment late last week via the tracking system’s online interface. Millen said he paid the monthly fee and METRC made an error.

Lance Boldrey, partner and head of the cannabis practice for Detroit-based law firm Dykema Gossett PLLC, said clients began calling his firm immediately claiming the payment link didn’t work.

“It’s a mess,” Boldrey said. “We’ve been informing clients, most of which weren’t even aware of the issue. Now everyone is on hold because every licensee in the state is now trying to call METRC.”

Dykema issued a bulletin to its clients as well.

“We have heard reports of significant gaps in communications from METRC on this matter, including not invoicing companies,” the bulletin read. “Consequently, it is highly likely that many companies are not even aware that their account is seriously in arrears. All licensees should contact METRC customer support immediately to ensure that they are current on all subscription fees (or other fees) owed to METRC and to ensure that their METRC accounts are in good standing.”

Boldrey said CRA Executive Director Brian Hanna was directly reaching out to as many licensees as he could this week.

30-day Pause

CRA spokesperson David Harns confirmed to Crain’s that the CRA has negotiated a 30-day pause of account suspensions with METRC.

METRC is owned by supply chain software company Franwell Inc. and won the contract to provide tracking software to Michigan companies and regulators in 2017 among a pool of 11 competing companies. The system assigns unique identification numbers to marijuana products starting with the grower until they arrive at dispensaries for sale to consumers. The products are able to be traced back to the grower and the plant from which they are sourced.

Franwell was founded in 1993 and provides software and support services for the agriculture and air cargo industries; for supply chains that handle cold items for grocery stores, such as produce, meat and vegetables; for property and evidence tracking for police departments; and for government agencies that track marijuana, both medical and recreational. Several other states, including Colorado, Oregon and Alaska, use the system.

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