Earlier this month, Lakeland, FL.-based Metrc announced the launch of Metrc Retail ID, “a new solution designed to enhance supply chain transparency, bolster compliance, simplify brand processes, and reduce labor for retailers and brands through item level identification with serialized QR codes. This innovative solution sources product information directly from Metrc, ensuring unparalleled consumer visibility and fueling improvements in public safety and confidence.” The new solution “allows real-time access to item-level product data such as origin, potency, test results, Certificate of Analysis (COA), and more, through a single scan of the QR code.”
Major brands are already embracing Retail ID. Partners currently include Wyld, Planet 13, Glass House Brands, and others. To get a better sense of the capabilities and expectations that Metrc has for this technology, Cannabis Business Executive spoke this week with CEO Michael Johnson, who was last interviewed by CBE in late 2022, shortly after he assumed the leadership role at Metrc. The conversation is presented as a Q&A and has been edited for clarity.
Michael Johnson, Metrc CEOCBE: Why did Metrc decide to move towards a QR code, and when did the idea to pursue it occur to you?
Michael Johnson: If I were going back to the origin, it would have been maybe about the time we last connected. (late 2022) I spent a lot of time with our states, a lot of boots-on-the-ground time after becoming CEO, really getting deep into what some of the pain points are associated with not only track-and-trace but the supply chain. What we found is that with respect to the standards of how typical CPG supply chains work, some critical pieces are missing from the cannabis supply chain that ultimately we think are also missing from the opportunity to demonstrate really valuable public health opportunities for the states as folks become more and more acquainted with cannabis and as the market matures.
Something that is a big gap in the cannabis ecosystem is standardization of different product types and the ability to follow those products through the supply chain individually. Metrc certainly follows the product literally from seed to sale, but we have not historically extended to the individual retail item in terms of identification and tracking. And the fact of the matter is that cannabis lacks a UPC. Typically, you buy a can of Coke, and it has a standard barcode on it. And wherever you buy that can of Coke –whether it’s a gas station or a Walgreens or a grocery store or whatever – you can scan that barcode to check out. In the cannabis space, that doesn’t exist; there isn’t a standardized code or UPC across the entire supply chain.
And so, we’ve endeavored to help solve that, which really is very much in line with what we do on the track-and-trace and overall support of public health side. Because standardization and the identification of each individual product allows for comparability, it allows for identification of the actual appropriate product name, as per the brand, and it certainly allows us to be able to put all the ingredients in one place and for the identification of the different sizes and the way products are sold. And we standardize that at the front end, which is not really done consistently within any system today. So, I think Metrc is the closest system to this in today’s world, and Retail ID certainly enables this to be something that’s visible as a standard through the entire supply chain.
And then for the individual unit, we’re able to affix a serialized QR code that goes on the individual product label. That’s a unique QR code for each individual product, and you can literally follow that product all the way through the supply chain through to the final retail sale. In the cannabis space, there’s a lot of disruption in terms of keeping these products identified and separate because of the testing requirements, and also the different ways that the “truck-to-shelf” process flows, and then further, at the dispensary when the dispensary folks take in products, they have to individually identify them and frequently relabel them, adding another sticker that they can check after the point of sale. For an identifier that’s required to be matched back to the source package, and source COA, which is the lab test, and that’s a very time-consuming process. With Metrc Retail ID, you’re literally able to check out and not have to re-sticker at all across the supply chain, literally saving days for each item to flow through the supply chain.
And you’re really giving a huge benefit to public health, because individual consumers can now scan the QR code get access to information on the item that they’re going to consume, or even if they haven’t consumed it yet, they can see the name of the item, picture the item, description of the item, and they can see the actual associated lab test, a lab test that is automatically affixed to this individual item, and automatically associated to the individual item just as it currently is inside of Metrc.
What are the larger challenges to providing that standardization? Is it that each of these states and markets has different labeling and reporting requirements?
Every state has something different, and it’s really important for us to make sure we fully understand those differences. When we are trying to create standardization across the ecosystem, it means that we have to identify where the variances exist state-by-state, and then create a solution that really reduces the complexity and the variation so that we can make it as easy to use as possible and create the overall best outcome in the supply chain.
Is there any duplication of the uses of the RFID tag by the QR code? Do they overlap at all?
They don’t overlap at all. They complement one another. The RFID tag is going to identify the individual package for which the items are contained, but once the items are outside of the package, there’s no separate identifier, unless you put the individual tag identification number on the individual item, and that’s a manual process that generally occurs at retail. In the Retail ID offering that we have, this association with the entire supply chain and every step along the way can be identified and accessed through scanning the individual items, so it’s a complement [to the tag].
At what point is the QR code affixed to products?
There are a variety of different ways that this can work, and it really is going to depend on the application. We generally would see this QR code being associated and affixed at the time of the creation of the source package, or the production batch, which occurs in Metrc now, so this is a seamless creation within Metrc in exactly the same way that somebody would create a production batch of products. They do that now, and we’re merely creating additional identifiers that can either be connected directly to a company’s labeling software or printed out directly onto a sticker and attached to the individual item, which happens more often than not I would say in the space, but we certainly have a variety of different ways to deploy it.
Now, sometimes dispensaries or wholesalers or even distributors will take in items, and then they’ll relabel or repackage them, and certainly at those times the QR code could be affixed. And then even theoretically it could be affixed at the point of retail if something happened, or something was damaged, or was missing for whatever reason. You could affix a code at that time as well, so really anywhere along the supply chain.
Who is responsible for creating and maintaining that information and assuring that it’s correct?
That information already exists within Metrc. Right now, if a company were to make a production batch of some gummies, that data already exists within Metrc. The identification of that product, the SKU description of that product, even the picture of that product, is something that’s maintained within Metrc, and all we’re doing is creating a unique identifier for every item that’s produced in that particular production batch so that it can be identified and affixed throughout the supply chain
How does Retail ID differ from other UPC and QR codes on the market?
I can’t speak to the functionality of some other products, but historically, what we’ve seen in this space is a lot of folks trying to leverage identification for marketing, and we’re not doing that. We’re leveraging identification as a throughput of the supply chain that we already manage from seed-to-sale for the cannabis industry, and as an opportunity to augment and support public health and efficiencies throughout the supply chain. It’s a win-win for everybody. It makes businesses much more efficient, it gives consumers great visibility and much higher confidence in their product, and it certainly helps the regulators to be able to identify individual items to be able to have an item-level sense of inversion, diversion, and anything that happens on the supply chain. It certainly helps them facilitate recalls, since we can identify that, and it keeps safe products on the market and gets the products that need to be recalled out of the market in a way that is currently not available and to my knowledge not offered by any other solution.
Colorado changed its track-and-trace rules last year, presumably to open up the possibility that they could go with another company. Is that how you see this situation unfolding? And they’re being sued over the RFID tags, which are clearly still an issue for some people. Are you concerned that other states could follow suit?
I don’t think that Metrc is in a position where we’re trying to really shoehorn ourselves into any one way to provide the best solutions possible for the markets we serve. That means that we need to be continuously open to new offerings, and to new innovations. And there certainly has been some push back on the use of RFID, and over 30 percent of the plants that are harvested in Colorado were harvested using a third-party RFID solution. Now, I do think there’s a number of operators that don’t take advantage of RFID, and I think that’s unfortunate, because there’s a reason why RFID is ubiquitous in the supply chain. There’s a reason why Walmart was able to cut billions of dollars out of their supply chain through the use of RFID.
But I’m also sensitive to the fact that certain people want to see how Metrc can support them in a variety of different ways, and so we’re going to continue down that path. We’re going to continue to try and support the state of Colorado in the best way we can, to support all of our states in the best way we can, but folks that are struggling with RFID, or who are not taking advantage of RFID, are leaving tremendous opportunity for profitability on the table.
Will QR codes replace the need for RFID someday?
I don’t really know that I see that. I think there are a variety of different ways we can think about things like the original use and the core purpose of RFID tags, which is not wireless readability. It’s anti-counterfeit functionality, and that gets lost a lot. There is no physical identifier that I’m aware of that you get from the government anywhere that doesn’t have some kind of anti-counterfeit element to it. Like, nothing. Your driver’s license, the renewal date that goes on your license plate, or think about industries that require any kind of validation, like a tax stamp on cigarettes or alcohol; every single thing has an anti-counterfeit element. You can’t buy a hat for your college football team without a hologram on it, and that’s not even a requirement of the government, that’s simply to demonstrate the authenticity.
I think we’re in a spot where, as you think about the evolution of identification of plants and packages, and really about the identification of cannabis, and if you look to other similar industries, like alcohol, like tobacco, even fresh food – like cattle, where every cow that’s raised for beef in the United States is required by the FDA to be individually identified, and coincidentally identified via an RFID tag that is attached to each individual cow’s ear – there’s really no scenario where you don’t have some anti-counterfeit element associated with the identification of these items in the supply chain.
So, this is not special to cannabis. I think we just get a lot of additional visibility on it because, frankly, I think a lot of people aren’t familiar with RFID. But RFID inlays for us are significantly less expensive to produce than something like a hologram would be, or any number of other anti-counterfeit elements, and it’s important. The fact that the cannabis market has quite a bit of illicit activity is well documented. I don’t think that’s a surprise or news to anyone. But if you believe in the strength and the robustness of the legal cannabis industry, you want to make sure that product is properly tested and properly identified in a way that that prevents against counterfeit, protects against inversion and diversion, and ultimately strengthens the market for all.
What about the reports of California brands being sold in unlicensed New York shops? Are there ways for people to skirt these anti-counterfeiting methods?
I’m not aware of any situation where somebody is actually skirting something. I think it’s fair to say that there are folks that are coloring outside the lines, but I regularly see investigators that are able to identify things across state lines and shut businesses down that are breaking the rules. In fact, there are a number of states that utilize the RFID functionality and it has happened multiple times and is well documented that they’ve been able to wirelessly read and identify these tags in their state as tags that originated in another state and were able to act on that.
And look at some of the some of the states that have made meaningful inroads into challenging the illicit market, like Oklahoma, which did not have a track-and-trace system and earned a reputation as being a little bit looser than they are now. Or look at California, where there are a number of meaningful data points that show a lot of movement. I’m very proud to be working with California and Oklahoma, and I feel strongly that we’ve been able to be great partners in helping them make progress in battling the illicit market and trying to build a more robust legal and safe market.
It’s a tough spot for anybody to be in, because there is no single silver bullet to tackling the illicit market problem in the cannabis space. I think Metrc is certainly one of them, probably more than a few of them given the different angles that we’re able to give visibility to the investigators, but it also takes the industry. You’ve got the regulators, you’ve got Metrc, you’ve got different law enforcement agencies, but the industry has to also recognize the risk to their businesses and their operations by allowing the illicit market to continue.
I think if you’re somebody that wants to see cannabis successful, and you want to see a continued destigmatization and wider adoption, you want to make sure that everybody’s buying legal whenever and however possible and ensuring that they’re having a safe experience and helping to grow the industry. From our perspective, the way to grow the industry is to make sure that you are following the different testing and track-and-trace protocols with the express intent of keeping people safe and allowing folks to participate in a market that really enriches the greater good.
Can Metrc incorporate the hemp market if it was required or needed?
Absolutely. We support hemp in multiple states today, and there’s a lot of discussion, a lot of debate, about hemp. I think that there are meaningful risks associated with intoxicating hemp, just as there are with cannabis, and I’m sure that there are a number of positive outcomes for different substances that can be available to consumers. What’s most important is consumer confidence, making sure that people are safe, and making sure that we’re properly testing and tracking these products, however they’re required by the end consumer.
Does adding QR codes also make you more attractive to new markets and increase your value in a competitive marketplace?
What I can tell you is that this solves a massive gap in the industry, a problem that is costing operators a ton of money and is limiting visibility for end consumers and hindering their ability to build really strong appreciation and confidence in their products. There is nothing like this, so I don’t view it as a competitive situation. There’s no one that’s doing anything associated with building a standardization of products, the Universal Product Catalog and Universal Product Identifier, throughout the supply chain for the express purposes of data visibility and public health protection.
For the partners that you have, what is it that they see the most value in? Is it the supply chain value, the consumer-facing information, all of the above?
I think it’s different for each constituency. On the producer side, they’re able to streamline the overall process in the production line. Everywhere along the supply chain, there’s a lot of movement repacking, restickering products, and this completely eliminates that, so that’s a massive time and cost savings. And then there is a huge benefit to visibility in the supply chain as well as quicker checkout and turnaround for the retailer. Based on the time studies we conducted, each retailer spends about a minute per item that they take in over the course of holding that item in inventory and selling that item by doing things with it that are no longer required because of Retail ID. That might be checking the product into the inventory, cycle counting, identification within the point-of-sale system, adding additional stickers, and even doing additional work or additional clicks in the checkout process. That’s about a minute per individual item.
It certainly sounds like it increases efficiency. Could it also cost some jobs?
I don’t know if it’s going to cost jobs. I’ve never been to a dispensary where there’s not a lot more to do. I do think it is a legitimate cost savings scenario, and for some folks there may be an open position they choose not to fill, but we’re certainly not suggesting that people are going to disappear because of this opportunity. I think this really is more of an evolution and a leveling-up of the personnel that a typical retailer will employ.
Will you be able to add additional functionalities to Retail ID as time goes on?
Absolutely. We’ll continue to work with our state partners, our operating partners, our brand partners, and perhaps just as importantly, our third-party integrators, like, for example, point of sale, which has a lot of benefit in ERP systems. It’s a very, very exciting thing. We’re super honored to partner with some of the most forward-thinking individuals and businesses in the cannabis space to help create a solution and a standard that rises the tide for everybody and lifts all the boats.
Are these solutions ripe for AI integration?
The short answer is yes. But while AI can have applications everywhere, I think what we’re seeing is that the actual productive translation of the features and functionality afforded by AI are a little bit fuzzy in terms of how best to take advantage of them. There’s no question that what you see in OpenAI and all of the others is incredibly impressive, but how does that translate into improving the speed of the supply chain, and how does that translate into helping these operators be more successful? That’s really the challenge ahead for anybody.
It’s also a bit of a gold rush in terms of trying to plug AI any which way you can into your products. I think we’re going to take an approach much more in line with Apple, to ensure that as we continue to find ways to provide better service to the industry writ large, we will continue to evaluate the advancements afforded by AI and put those in as they make sense. But we’re certainly not going to just say we have AI inside, without being able to really clearly identify the meaningful and tangible benefit to our end customer base.
Do you need the participation of the state in order to implement a QR code in a particular market, or can you just do it on your own?
It depends on the state. Some states have already passed regulations requiring a QR code, like Maryland and Montana, which makes it a little bit easier for us to support compliance, but it also allows for standardization across the state, and anytime we as an industry can create an opportunity for standardization, it’s going to make everybody run up a lot smoother. So, we’re working with different states whether they want to implement it as something that is a requirement or something to add as an option, and in other situations we’re working directly with individuals. We’ve launched in a number of states already, but companies are able to get in, get involved, and get on board. We’re very pleased with the success that we’ve seen so far, and to the extent that states have specific requirements, we can be nimble and address those. And to the extent that a QR code or individual identification is not a requirement by the state, we can just as easily work directly with licensees. We’re quite flexible.
Labeling of course is constantly evolving, and I think every state is regularly evaluating their labeling requirements and what they’re labeling viewpoints are. And what I think is really special about a QR code is that the information that’s available via the QR code is all information that already exists within Metrc, so there’s nothing new. There’s no real opportunity for manual error or somebody to have to do anything manually. We’ve seen situations where folks that have wanted to add a QR code with a COA on a product are manually attaching or fixing the COA, and it’s not the right COA, which creates a real significant public health risk.
Is it an expensive proposition for companies to implement?
It’s not! We’re currently not charging anybody for it, and we want to get this deep into the supply chain. We are a business, so we certainly want to evaluate ways to be able to make some money on it, but at this point this is simply about us trying to support the supply chain, support public health, and open the aperture and demonstrate the innovation that is part of the new Metrc.
When people do charge for these things in other industries, sometimes you see a charge per transaction, or you see a charge of a penny or two. But if I’m saving you a minute and it ends up costing a penny or two, that’s a pretty dramatic ROI. So, we don’t expect this to be a massive undertaking for anyone. We certainly want to make sure we get out there and demonstrate the value of it, and then we will happily address how we can augment, improve, and continue to innovate, to create the best solution possible and hopefully support the supply chain in a way that it never has been before.
Who do you want to hear from in order to keep this thing going? Wyld is a product brand, Planet 13 is a retailer, Glass House Brands is a cultivator. They’re each different, so do you want to hear from all of the different types of companies, and do you want them to be reaching out to you?
Absolutely. Literally anybody and everybody in the supply chain has a benefit from this, and to be the standard we’ve got to get 100% adoption, not 99%. So, yes, reach out. We’re happy to help everybody get going, and really do something special.
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