Our Take:

“The waiting is finally over.” That is an understatement! I wonder how many times these regs will be combed over, repeatedly, in the next year (or until they come out with the next version). Reporting into the state’s track and trace system (METRC) is only required for those with Annual licenses and won’t be online until the summer but don’t get complacent. It is in your best interest to get your track and trace system(s) in place sooner than later. The last thing you want is you and your employees ramping up on a new software system at the same time everyone else is doing the same thing. The alternative is entering data directly into METRC which is nobody’s friend. On a related note, we are looking forward to working with Flow Hub on future projects.


Source: Flow Hub  |  Date: 11/23/17  |  Author: Patrick McCleary

The waiting is finally over. Last week California’s Bureau of Cannabis Control added emergency regulations outlining the commercial sale of recreational & medical cannabis starting on January 1, 2018.  These regulations are the framework of a new $7 billion dollar cannabis economy and provide the requirements to be apart of this burgeoning opportunity.

The mission of the California Bureau of Cannabis Control is to make sure Cannabis grown within the legal cannabis market maintains DOJ Cole Memorandum.  In particular, the diversion of legal product to other states and the replacement of an illicit marijuana drug trade funding criminal enterprises, with a tightly regulated market in which revenues are tracked and accounted for.

In this article, we are going to explore specific California regulatory requirements regarding Inventory Management, the state’s track and trace system Franwell metrc™, and how Flowhub can support your licensed business by providing tools and expertise with inventory accuracy, expedited workflows, and stress-free compliance solutions.

§5048. Track and Trace System

A Licensee shall create and maintain an active and functional account within the track and trace system prior to engaging in any commercial cannabis activity including the purchase, sale, test, packaging, transfer, transport, return, destruction, or disposal, of any cannabis goods.

Earlier this year, California Bureau of Cannabis Control announced Franwell metrc™ won California’s state contract to be their Track and Trace System.  Franwell’s Marijuana Enforcement Tracking Reporting Compliance (metrc) is a seed-to-sale reporting tool the California Bureau of Cannabis Control will utilize to prevent diversion, theft, loss, and criminal activity.  Accurate record keeping and inventory management are imperative to the maintenance of a compliant cannabis industry.  It is a licensees responsibility to record all commercial cannabis activities conducted under the protection of their license within metrc™.  It is almost certain the Bureau will make an example of a licensee that fails to comply with regulations, as regulators have previously done in Colorado.  For example, in 2017 a Colorado recreational licensed retailer was suspended 90 days and was fined $75,000 “failing to keep a transport manifests” and “failing to maintain accurate tracking records that accounted for, reconciled, and evidenced all inventory activity.” Cases like these will attract the attention of the DOJ and the reevaluation of the Cole Memorandum putting the whole industry at risk.

§5034. Significant Discrepancy in Inventory

A significant discrepancy in inventory means a difference in actual inventory compared to records pertaining to inventory of at least $5,000 or 2% of the average monthly sales of the licensee, whichever is less.

§5051. Track and Trace System Reconciliation

In addition to other inventory reconciliation requirement under this division, a licensee shall reconcile the physical inventory of cannabis goods at the licensed premises with the records in the track and track database at least once every 14 days.

If a licensee finds a discrepancy between its physical inventory and the track and trace system database, the licensee shall conduct an audit, and notify the Bureau of any reportable activity pursuant to section 5036 (Notification of Theft, Loss, Criminal Activity)

§5802. Citations; Orders of Abatement; Administrative Fines

The Bureau may issues citations containing orders of abatement and fines against licensee or an unlicensed person, for any acts or omissions which are in violation of any provision of the act of any regulation adopted pursuant thereto.

May contain an assessment of an administrative fine of up to $5,000, and/or an order of abatement fixing a reasonable time for abatement of the violation.

Failure to pay a fine within 30 calendar days of the date of assessment, unless the citation is being contested, may result in further action being taken by the Bureau including, but not limited to, suspension or revocation of a license.

Under these guidelines all licensees are required to maintain accurate inventory records within $5,000 or 2% of average monthly sales.  Every package tag that is outside of this threshold, after 14 days, is a compliance violation. Licensees can expect a citation and a fine carrying a penalty up $10,000 each. Failure to pay these fines allows the California Bureau of Cannabis Control the right to suspend, revoke, or surrender their licenses.

Maintaining regulatory compliance must be a critical core competency of any successful commercial cannabis business.  Flowhub is the original metrc™ integrated seed-to-sale inventory and cultivation management platform built specifically for the Cannabis industry.  Flowhub supports many of the largest retail and cultivation enterprises in Colorado and Oregon, because they know choosing proven tools that they can rely on for accuracy, efficiency, and stress-free compliance is critical to growing their businesses.