Did leading cannabis track-and-trace software provider Metrc just take over the government compliance business nationwide?
That’s one analysis of the “strategic partnership” announced earlier this week between Metrc and its competitor BioTrack.
But with exact details still sparse, state marijuana regulators and licensed operators alike were left guessing on Wednesday. With the uncertainty around the deal pausing efforts to finally monitor New York’s $1.5 billion market with a working track-and-trace system, there are already consequences.
For the past year, two Florida-based companies have dominated the seed-to-sale tracking space for the $32 billion U.S. marijuana industry.
Tagging cannabis plants and products with unique identifiers is meant to allow regulators to monitor the supply chain and – in theory – cut down on illegal inversion and diversion, or when the legal and illegal markets bleed into one another.
‘Partnership’ between cannabis tracking software leaders
The industry leader, Metrc, based in Lakeland, Florida, has contracts with 29 states that require licensed operators to use its software and individual radio-frequency ID tags (RFID) to track the flow of product.
Its closest competitor, Fort Lauderale, Florida-based BioTrack, has contracts with eight states but has been losing ground despite acquiring a smaller competitor MJFreeway last year.
Going forward, the two companies will combine certain functions via a third firm.
Under a strategic partnership announced Tuesday:
A new entity called BT Government will take over “BioTrack’s government-facing operations and will operate independently from Metrc and BioTrack.”
BT Government will be led by BioTrack Chief Operating Office Moe Afaneh and will be independent of Metrc LLC and BioTrack, according to the announcement.
BioTrack will continue to run point-of-sale and other business software services.
Terms of the deal were not disclosed.
Records show Metrc LLC is distinct from its parent company, Metrc Inc.
According to Florida state business records, Metrc Inc.’s principals include Karan Wadhera, a managing partner at Casa Verde Capital, a fund associated with rap mogul Snoop Dogg that helped Metrc raise $50 million in 2018.
Stephen Jaeb and company co-founder Jeff Wells are listed as directors, with Metrc LLC CEO Michael Johnson serving as Metrc Inc’s president and CEO.
Deal could mean end to marijuana software patchwork
In a statement, Emily Paxhia, managing director of cannabis-focused equity fund Poseidon, noted that operators currently must deal with “patchwork regulation and track-and-trace systems across states.”
That creates particular headaches for marijuana multistate operators who must deal with whichever software platform the state they’re in chooses.
Paxhia added that the BioTrack-Metrc “combination could be a harbinger of a future with streamlined operational experiences for the operating companies, as this industry matures.”
But it’s still not entirely clear if the strategic partnership equates to yet another consolidation of cannabis software providers.
BioTrack trailed Metrc as marijuana track-and-trace provider
According to the company, Biotrack is the selected seed-to-sale tracking provider in nine states:
Arkansas
Connecticut
Delaware
Hawaii
Florida
New York
New Mexico
North Dakota
Virginia
Recently, Metrc had been clawing market share away from its competitor.
Illinois replaced BioTrack with Metrc in February, the same month the company renewed a contract with Massachusetts.
In the case of New York, regulators selected BioTrack as its track-and-trace provider under a five-year deal worth $1.2 million in November 2022.
That’s significantly lower than most contracts between states and Metrc, which signed a four-year deal with California that began July 1, 2024 for $113 million.
BioTrack costs were higher for marijuana operators
However, operators say the cost – and potential revenue for the company – was passed onto them.
In New York’s case, BioTrack informed operators that they would be required to purchase unique identifying tags for 10 cents – and that these must be on products, including individual pre-rolls.
Critics pointed out the “sublot” requirement is not in state law. They also claim it would also increase costs to unsustainable levels.
That dispute contributed to an overall feeling among some licensees that the state simply was not ready.
By Chris Roberts with MJBizDaily