Metrc, the dominant provider of cannabis track-and-trace software, announced a strategic partnership with rival BioTrack this week, creating a new entity to handle BioTrack's government operations. The move raises questions about whether it signals the end of competition in the seed-to-sale tracking market for the $32 billion U.S. marijuana industry. Uncertainty from the deal has already halted implementation in states like New York, delaying compliance in a market that generated $1.5 billion in sales.
Details of the Partnership Emerge Amid Sparse Information
A new company, BT Government, will assume BioTrack's government-facing operations and function independently from both Metrc and BioTrack. BioTrack Chief Operating Officer Moe Afaneh will lead BT Government, while BioTrack retains its point-of-sale and other business software services. Metrc, based in Lakeland, Florida, holds contracts in 29 states, where operators use its RFID tags to monitor cannabis from seed to sale, aiming to prevent diversion to illegal markets. BioTrack, from Fort Lauderdale, Florida, serves eight or nine states but has lost ground, including to Metrc in Illinois earlier this year.
Historical Dominance and Recent Shifts in Track-and-Trace Market
Track-and-trace systems assign unique identifiers to cannabis plants and products, enabling regulators to oversee supply chains and reduce illegal diversion. Metrc has expanded steadily, securing a four-year, $113 million contract with California starting July 1, 2024, while New York's five-year BioTrack deal from November 2022 totals just $1.2 million. BioTrack's history includes a 2018 merger with Helix TCS and a $30 million sale by Forian to Alleaves in February 2023. Operators in BioTrack states have faced higher costs, such as 10-cent tags for individual pre-rolls in New York—a "sublot" rule not explicitly in state law—which fueled disputes and implementation delays.
Uncertain Implications for Regulators and Operators
New York regulators suspended track-and-trace compliance requirements days after the announcement, pending clarity on system changes. Connecticut operators also await details, as do businesses in other BioTrack states like Arkansas, Delaware, Hawaii, Florida, New Mexico, North Dakota, and Virginia. Multistate operators contend with varying state systems, creating operational challenges. Emily Paxhia of Poseidon Asset Management described the partnership as potentially streamlining experiences as the industry matures. Some speculate Metrc software could replace BioTrack in those states, prompting questions on timelines, tag pricing, and technology upgrades from leaders like Mack Hueber of the Empire Cannabis Manufacturers Alliance. Metrc stated the partnership enhances supply chain transparency and public safety.
