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Cannabis Regulators, Software Poised to Track and Trace

The new software will monitor a cannabis plant's every move, assuring officials it isn't leaving state borders.

Cannabis plants will soon enter California’s elaborate new “Track and Trace” program, providing the same information you’d find on a pack of gum or box of copy paper.

For the first time, the state will know where and how much licensed marijuana is being grown, sold and produced. Software will monitor a plant’s every move — and measure its weight along the way until it’s sold — assuring officials that licensed crops of cannabis grown for dispensaries aren’t crossing state lines or going into the black market.

The program, to be launched in July, strengthens the case against federal intervention by taking steps to ensure that California’s licensed pot isn’t sold in other states.

The growing regulation of cannabis came under Proposition 64, passed in 2016, requiring technical expertise for growers seeking to come out of the shadows — and who are already struggling to comply with other new rules.

Under the program created and mandated by the state Department of Food and Agriculture, serial numbers and RFID (Radio Frequency Identification) tags will be assigned to each batch of seedlings, called “clones.” Individual plants are tagged later in the process. A scanner reads the encoded information and translates it to a database, giving the state real-time visibility into the inventory at all locations.

Each number holds product information. It is linked to an online file that contains information such as strain, propagation method, location, intended use and number of plants at each stage of its life cycle — nursery, vegetation, flower, harvest and sold. Also included in the track-and-trace system are the product purity results from testing labs, which screen for pesticides and toxins.

The main thing the new tracking and tracing system won’t do is measure and monitor the vast acreage grown by unlicensed growers. Although dispensaries cannot control what retail customers do with their cannabis products once they buy them, industry insiders say the real diversion problem is created by black-market growers who supply the majority of cannabis shipped out of state.

After four months of searching, California recently selected a Florida-based cannabis track-and-trace vendor, Franwell METRC (Marijuana Enforcement Tracking Reporting Compliance), which already has contracts in Nevada, Colorado and Alaska.

Already, many growers such as Utopia Farms are using commercial software for internal purposes, with serial numbers and barcodes, to track their products, train their staff and work out the bugs before a computer-based system becomes mandatory. Both big and small tech companies have jumped into the business. Hewlett-Packard offers FlowHub; Microsoft, Kind; SAP, Viridian Sciences.

The two systems — the state’s METRC and the growers’ internal software — will work together in a hybrid fashion, with the grower’s data flowing into the state’s central reporting system. This allows the state to manage a large amount of information, but also enables suppliers to use the tools of their choice. At any point, the state can visit farms or manufacturing facilities to do audits.

“We are trying to comply now, so there won’t be such a huge learning curve,” said Kaiya Bercow, co-founder and CEO of Utopia Farms. It has taken months for the company to implement it.

Monthly licensing fees for internal software range from $250 to $20,000 a month, depending on the size of the facility. Each METRC tag costs about 80 cents per plant.

“There is a lot of pressure here,” said Mark McMillan of Harborside, a large marijuana grower and dispensary business. “It’s tracking cannabis as if it were uranium. There will be ‘Track and Trace’ stickers on everything.” McMillan is a 25-year software veteran with experience at Oracle and other tech companies. 

In a world of horticultural techniques long cherished for their art, not science, he said, “It requires a level of operational precision and attention to detail that, if not right, can get ugly really fast.”

©2018 the San Jose Mercury News (San Jose, Calif.). Distributed by Tribune Content Agency, LLC.