Happy Friday.
In today’s, we’ve got a deeply reported story from Chris Casacchia on New York’s track-and-trace rollout, the lawsuit, and what happens next.
We’re also very sorry to hear that Curio Wellness CEO Michael Bronfein has passed away. Rest in peace and our sincere condolences to all his loved ones.
Let’s get to it.
-JB, JR, ZH
Today’s newsletter is words or about a -minute read.
💡 What’s the big deal?
NY, NY
New York’s Metrc rollout sparks lawsuit 🧑⚖️
metrc.com
More than a dozen companies are expected to join a lawsuit aiming to halt new track-and-trace requirements in New York’s growing regulated cannabis market, Cultivated has learned.
Meanwhile, the rollout of Metrc’s required seed-to-sale software is causing several license holders operational headaches, from integration glitches and inventory backlogs to added payroll and widespread delays in product availability, according to first-hand accounts.
Groversville-based Veterans Holdings Inc., which filed the lawsuit last month against several New York regulatory agencies, estimates the added processes and resources dedicated to Metrc implementation and upkeep, as well as product fulfillment challenges will cost the processor upwards of $2 million this year alone.
“It isn't even so much the cost of the tags, even though it's a tremendous cost,” Veterans founder and CEO Jason Ambrosino told Cultivated. “The labor and the workflows are really where it gets nasty.”
Companies line up to join lawsuit: Brooklyn-based Lucid Green, which sells QR tags and labels for cannabis products in 12 states, plans to join the lawsuit to contest Metrc’s new requirement to charge manufacturers and other suppliers 10 cents per tag on every single packaged item, a surcharge implemented solely in New York.
“I've chosen to be more proactive in this now because I think it's worth it,” CEO Larry Levy told Cultivated. “The regulations are very clear that there is no requirement to do item level tracking the way that the OCM has mandated this retail ID.”
Beyond Metrc and the state’s Office of Cannabis Management (OCM), other defendants in the lawsuit include:
OCM chief administrative officer Susan Filburn.
New York State Cannabis Control Board.
New York State Liquor Authority, division of alcoholic beverage control.
Levy on Nov. 1 sent a letter to then acting OCM director Felicia Reid objecting to the mandatory QR code labeling that creates an “impenetrable technical barrier to entry” for other service providers.
What they’re saying: “This action actively shuts out technology providers, including New York-headquartered Lucid Green, who have invested years and significant resources into developing open, multi-state compliant solutions that are superior in functionality,” the letter reads.
📣 Quotable
“I continue to have concerns about this measure,” Chicago Mayor Brandon Johnson said, of the city council’s decision to ban sales of hemp-derived THC gummies.
“When you make something illegal, you create a black market, making the sale completely unregulated and uncontrolled.”
We’re excited to officially announce something new we’ve been quietly building with our partners at Grown In.
Cultivated and Grown In are hosting the first-ever Midwest Cannabis Forum on March 12 in Chicago, and applications are now open.
This is not a traditional cannabis conference.
The Midwest Cannabis Forum is a curated, application-only gathering designed to bring together the people actually doing the work in the cannabis industry day in and day out — operators, investors, regulators, lenders, and service providers who are shaping the Midwest market in real time.
Our goal is simple: Create a high-signal room, with smart people, honest conversations, and zero fluff.
Event details: Salvage One, Chicago Wednesday, March 12. Application-only attendance
👉 Apply here: Midwest Cannabis Forum
We’ll be reviewing applications on a rolling basis and space is limited.
We hope to see you in Chicago.
Team Cultivated
⏩ Quick hits
A group of major alcohol retailers created the Beverage Alcohol Merchants Coalition’s (BAMCO), to lobby Congress to delay the ban on hemp-derived THC set to go into effect in November. The retailers include Total Wine & More, BevMo! by Gopuff, ABC Fine Wine & Spirits, Spec’s Wine and Spirits & Finer Foods, as well as hemp brands.
🤝 Deals, launches, partnerships
Chicago Atlantic closed a senior secured loan to S1 Enterprises, the parent of Illicit Brands, to help convert the cannabis operator into a 100% employee-owned company through an ESOP, giving more than 500 workers an ownership stake and unlocking major tax advantages to reinvest back into the business.
📰 What we’re reading