State made right call to reject hidden costs in seed-to-sale tracking
The state of Missouri has rightfully ruled that its seed-to-sale tracking contract doesn’t allow hidden costs to be passed along to medical marijuana license holders via RFID tag fees. The additional fees, which are often passed along to patients in the form of higher prices, can cost license holders tens of thousands of dollars in extra costs annually.
Now it’s time for a Cole County Circuit Judge to uphold that decision —and resolve a legal dispute that threatens to cast a pall of fiscal uncertainty over patients and operators on the eve of our looming industry rollout.
Last November Missouri voters overwhelmingly passed Amendment 2, which is now enshrined as Article XIV of the Missouri Constitution. The ballot initiative calls for the Missouri Department of Health and Senior Services (DHSS) to establish a seed-to-sale tracking system to ensure all cannabis grown, processed and sold is safely and securely tracked and kept off the black market.
In April, Missouri’s Office of Administration awarded the five-year, $5 million track-and-trace contract to Florida-based Metrc as part of a competitive bidding process.
The request for proposals from the state Division of Purchasing that guided Metrc’s successful submission was clear in its requirement that bidders provide “firm, fixed pricing.”
In the case of the winning bid, that means a $40 monthly charge by Metrc per licensed dispensary, cultivation and infused product manufacturing site. These costs are in line with industry standards in other states.
When subsequently asked by the state purchasing office to clarify its intent to include “variable, industry-paid pricing”— specifically, an additional, 45-cent fee for each radio frequency identification tag added to plants, and 25 cents for each package tag — Metrc revised its proposal to exclude those additional fees.
The removal of that provision was pivotal to the state’s May 20 denial of a protest petition by unsuccessful bidder BioTracTHC challenging its competitor’s pricing plans.
That led Metrc, which operates seed-to-sale tracking systems in 11 states and outbid 19 other applicants in Missouri, to sue Office of Administration Commissioner Sarah Steelman, who oversees state purchasing decisions, in late September. A hearing is scheduled this week.
In the suit Metrc points to an emergency rule filed by DHSS in May that it claims allows licensees to be charged a separate fee.
State Purchasing Director Karen Boeger reached the opposite conclusion: “The proposal accepted by the Division did not include variable prices … And the resulting contract between Metrc and the State does not authorize Metrc to do so.”
She goes on to conclude that the company’s “written communications prior to award … constitute persuasive evidence of their understanding of the integrated contract’s relevant terms.”
For the past year, literally from the moments after Missouri voters overwhelmingly approved the historic ballot initiative enshrining medical cannabis in the state Constitution, implementation of the new law and its myriad of administrative requirements has been a smooth process. Unlike implementation in other states, Medical Marijuana Director Lyndall Fraker and others at DHSS have actively engaged patients, doctors and industry voices like MoCannTrade in a cooperative and collaborative manner, while strictly following the constitutional amendment provisions.
Now it’s up to a Jefferson City judge to resolve a legal dispute that threatens to add a last-minute, costly burden to operators, patients and Missouri’s new industry
As any football fan knows, moving the goalposts after kickoff isn’t allowed. Missouri medical cannabis patients and potential licensees deserve a consistent approach that holds all seed-to-sale tracking bidders, including the winning one, to the same rules of the game.
Andrew Mullins is the executive director of the Missouri Medical Cannabis Trade Association.