New York’s marijuana market is facing significant challenges due to the absence of a functioning track-and-trace system, even more than two years after the first legal adult-use marijuana sale. Operators and regulators agree that a considerable portion of the $1 billion worth of adult-use marijuana sold last year at licensed stores likely came from other markets, which violates both state and federal laws.
The problem of “inversion,” where cannabis from out of state enters the legal supply chain, is acknowledged by many in New York. Officials from the state’s Office of Cannabis Management (OCM) and Cannabis Control Board recognize that the lack of oversight is prompting unscrupulous operators to smuggle marijuana produced elsewhere. Recently, The New York Times reported that several major cannabis brands, including California-based Stiiizy, are under investigation for distributing products that may originate from outside regulated channels.
Without a track-and-trace system, it’s difficult to accurately assess how much out-of-state cannabis is being sold. The absence of detailed production data from the OCM adds to the confusion, making it hard to determine the extent of the issue. Licensed cultivators and producers are struggling to compete with cheaper products flowing in from other markets.
Joseph Calderone, president of the Cannabis Farmer Alliance (CFA), expressed his frustration, calling the failure to implement a working track-and-trace system a “catastrophic betrayal of the state’s farmers.” The CFA is actively pursuing legal action against the OCM, seeking a court order to enforce seed-to-sale tracking. Calderone emphasized that without this system, there is no way to stop illegal products from undermining the legal market.
Licensed cannabis businesses in New York are mandated to use an electronic inventory tracking system to share supply-chain data with state regulators. The OCM had chosen BioTrack as the software vendor for this system, but several deadlines for implementation have passed without action.
New York cannabis operators have been aware for years that a track-and-trace system was supposed to be on the horizon, as indicated by the state’s legalization law and OCM regulations approved in September 2023. In November, the OCM announced plans to implement the seed-to-sale tracking system, but it remains to be seen when this will actually take effect.
