California's Medical Cannabis Regulation and Safety Act regulates marijuana plants more like painkillers than agriculture, requiring every plant in the state to have a unique identification number tagged to it. New laws require a "track and trace" system to monitor all plant material using these IDs, from the ground to final sale, by 2018. Now, local governments are getting involved and systems like Arcata's will be implemented at the county and city level all across California throughout the coming year. Do businesses and patients understand the implications? Are they prepared?
Hear that sound? It's a rumbling in the distance, gaining momentum. It's the sound of transformation. Into what, it is hard to say, but the velocity is undeniable. Two Friday mornings ago in Arcata the cadence reached a dull roar for a moment, as the town hosted Florida-based BioTrackTHC for an informational session on its software, which will be used to track any and all cannabis and cannabis-derived products into, within and out of Arcata city limits. Once initiated, every cannabis product must be inventoried for tracking by the system within 30 days.
Arcata is the first city in the state to implement a track and trace system. It's following closely on the heels of Humboldt, which recently contracted with the Swiss firm SICPA to pilot the first countywide track and trace system. Other cities and counties will follow suit. The implications of Arcata's decision will make themselves known over the course of the roll-out, but the economic consequences are potentially severe for a community that benefits greatly from cannabis. In attempting to get ahead of the curve, the city may instead be needlessly throwing itself under the fast-moving bus of regulated cannabis.
Last fall, California passed three bills collectively titled the Medical Cannabis Regulation and Safety Act, the result of months of bargaining and lobbying, with the lessons of other states informing how the largest producer of and market for cannabis should regulate and tax the plant. An exhaustive and exhausting law, MCRSA will heavily regulate cannabis, including through tracking systems like Arcata's. MCRSA maintains some stigma and won't regulate cannabis like a plant. Consequently, unlike any other agricultural product, the state will require every plant be tagged with a unique identifier.
The identifications will track all plant material from the ground through processing and manufacturing (into bud, concentrates, edibles and whatever else) and, ultimately, into the hands of patients. This means any medical cannabis product sold legally in the state will be traceable — through the identification numbers — back to the individual plant or plants from which it came. It's a "farm to flame" system that allows state regulators to track the exact location of any and all plants and products at any point in the production cycle.
Sacramento's stated goal is to guarantee public, environmental and consumer safety, ensuring products can be tracked to their source plants and farms. It aims to prevent diversion to (untaxed) black markets, which is one of eight priorities the federal government set in directing state regulation of medical or adult use marijuana. But tracing also helps ensure the state can collect maximum tax revenue. With Sacramento estimating a boost to the state budget of more than $1 billion in the first year of the new laws (2018), it's no surprise it is keen to watch over every aspect of the supply chain.
Does BioTrack's selection fit into those goals? What are the potential risks Arcata faces being a first-mover? The informational session provided some answers. Held in the large community center, it was woefully attended. Hundreds had turned out for the Bureau of Medical Marijuana Regulation sessions held there a couple months ago. Maybe the event wasn't well publicized, but this lack of participation of the hundreds who are connected to cannabis commerce in Arcata is likely a sign of resignation from most small operators as to the futility of compliance with the new system. Many expect their impending sentence is death by hanging, so why bother attending the demo showing how the gallows work?
Sparks flew once or twice during the low-key session as it became clear the system needed work and wasn't developed with Arcata's operators in mind. BioTrack demonstrated its software on a large screen, but the system shown was for Washington's Liquor and Cannabis Board. Was the system tailored to the state and local governments' specific requirements? That is a work in progress, and "soon" was the time frame. Arcata's contract offers users 30 minutes of free training and practice on a "sand box" version based on the Washington system, followed by a test users must pass .
How is the system being paid for? Initially, all costs will be paid by city-licensed businesses on the basis of unique IDs issued in the system, at a rate of 1 cent per ID. Those outside the city, such as the bulk of cultivators, will not be responsible for buying IDs. Unique IDs are issued to identify every individual plant, every batch of plants processed together, every step of transforming materials such as concentrates, and even every transaction and transportation manifest would require its own ID. But because the system is only citywide, those who produce products outside city limits would only need to register them upon entry into Arcata.
One concern that prompted significant discussion was the five-day hold requirement. All cannabis products sold in Arcata must be set aside and not used or sold for five business days, not including holidays. This means bud entering the city must be left sitting in case the city chooses to audit and inspect it. After the wait period for that transaction, the bud can be used or re-sold. However, any transaction triggers the five-day waiting period again: from shake to concentrate to edible to retail, the delays and inefficiencies pile up quickly. One intermediary between growers and retailers said this requirement will at least double her turn-around between orders and fulfillment.
Cultivators came up frequently. MCRSA requires a transportation manifest, and all cannabis entering or leaving Arcata must have one showing what is being shipped, from and to whom, and the times of departure and arrival (estimated and actual). How do hill-dwelling farmers get a manifest without Internet? The answers fizzled around "you'll figure it out." When distributors bring product to the Bay Area to shop it around, the manifest creates another complication: One must be created for each potential buyer a distributor visits, even though they may not buy anything.
Transactions involving more than 5 pounds will trigger automatic city inspections. It's possible the city is underestimating how many transactions of this size take place and won't have enough staff to perform audits in a reasonable time frame. The system requires that every individual plant's weight be recorded (both wet and dry, separated by processed components) by unique ID. This drew particular disdain from the crowd and BioTrack's COO tried to pacify these worries, saying operators could just weigh all their plants together and divide by the total, then fill in that average weight for every plant ID. Is it legal to cut corners this way? "They probably won't send cops to your house," came the unconvincing reply.
Arcata's complex system is creating problems and costs, and is incompatible with the county system. Compatibility with other software like QuickBooks is also not yet available, meaning the same data will need to be double or triple entered across platforms. Data entry requirements are intense enough that BioTrack recommends every business hires another full-time employee to keep up. Unsurprisingly, one solution mentioned at the meeting involves paying BioTrack more. After saying they weren't supposed to talk about it at a public session, company reps discussed accessing functions like accounting or employee management, at a cost of $400 a month (plus a $1,500 set-up fee).
Who benefits from Arcata's unforced error as the county goes another direction? BioTrack's goal is clear: Win local contracts as stepping stones to a contract with the state. Until then, it can up-sell its software to all the businesses that would otherwise have to enter data multiple times. For Arcata, the benefit is unclear. Will it influence the coming regulatory system? More likely, the intent of creating countless restrictions is to force cannabis businesses into the city's Medical Marijuana Innovation Zone. Repeatedly during the meeting, city officials chimed in, "This restriction doesn't apply to businesses and transactions in the MMIZ."
Given the shortcomings of Arcata's abruptly mandated system, other municipalities should take a more reasoned approach that considers existing realities.
Laws change to reflect attitudes, and our society doesn't stigmatize cannabis like it once did. Now is the time for local governments to demonstrate bold leadership and represent constituent interests: as much as MCRSA allows, they should treat cannabis like a plant and not unduly restrict access. This is also a crucial moment for cannabis supporters. As regulations are discussed, it is up to advocates to speak up and remind officials they are watching. And that their voice will be heard this election year.
Max Esdale is a policy nerd who lives in Berkeley but would rather be back in Kneeland (and wants to see cannabis regulated like a plant).