Metrc Has Ongoing Dispute in Missouri

Foley Hoag LLP - Cannabis and the Law

Foley Hoag LLP - Cannabis and the Law

[author: Courtney Suggs]

In September 2019, Metrc, a prominent cannabis seed-to-sale tracking company, filed suit against the Missouri Office of Administration (OA) requesting the ability to charge additional fees beyond those specified in its contract with the state.

In April 2019, Metrc was awarded a five-million-dollar contract to oversee three of Missouri’s medical marijuana programs. Metrc was one of  20 bids for the contract. The Missouri Division of Purchasing advised bidders to provide “firm, fixed pricing” in their proposals. In its initial bid to the state, Metrc planned a $40 monthly charge to each facility for the tracking software along with $0.45 for each plant tag and $0.25 for each package tag. Upon the OA’s questioning, Metrc subsequently removed the variable, industry-paid pricing for the radio frequency identification (RFID) tags from its bid proposal and presented a firm, fixed price.

The second-place bidder protested the state’s decision to award the contract to Metrc and accused Metrc of omitting its RFID tag fees from its bid application. The OA rejected the bid protest, noting that the contract disallowed tag fees or any other variable costs. However, Metrc pointed to a separate Department of Health and Senior Services rule that would allow for such fees. This confusion led Metrc to file suit against the OA in September, claiming that the OA provided conflicting information on the scope of fees Metrc could charge.

In January 2020, the Cole County Circuit Court ruled against Metrc and determined that it could not charge separate RFID tags fees to the state and to privately operated cannabis dispensaries beyond those stated in the contract. Metrc filed a notice of appeal with the Western District.

Now, Metrc is offering licensees a tag purchase agreement in order to purchase the RFID tags. Under such agreement, licensees are to pay Metrc directly for each package and plant tag. In a statement to a Missouri cannabis publication, Greenway Magazine, one licensee reported that if it did not sign a tag purchase agreement, Metrc would not allow the licensee to order tags until a determination on Metrc’s appeal is reached. Metrc views these tag purchase agreements as separate and distinct from its contract with the state. The OA disagrees and has noted that if Metrc breaches the state contract, the OA will consult with its counsel and the Attorney General’s office as to next steps.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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