Emily Whalen interview with David Urbanowicz, Director of External Affairs and Business Development for Metrc
Emily Whalen, who leads Brown & Weinraub’s cannabis practice, recently interviewed David Urbanowicz, Director of External Affairs and Business Development for Metrc. Metrc has been working with Brown & Weinraub to stay informed of developments and potential opportunities in the adult use cannabis marketplace in New York State.
Q: Colorado was one of the first states to legalize cannabis for adult use. How did you get started in the business?
A: Jeff Wells, Metrc’s CEO and co-founder of Metrc’s parent-company Franwell, has been an innovative leader in the development of radio-frequency identification (RFID) technology for decades. When Colorado released its proposal for a track-and-trace solution, an associate of Jeff’s at Motorola recommended that he put in a bid for it, given his pioneering work and deep well of experience with track-and-trace technologies. The requirements for regulating cannabis were strongly aligned with the work he and his colleagues at Franwell had done in agriculture and cargo tracking. The state of Colorado agreed and awarded Franwell the contract.
Q: What was it like to navigate setting up and launching the first state track-and-trace solution?
A: The most exciting part of the project was also the most challenging in that we were designing something completely new and building it from the ground up. It helped that we were collaborating closely with state officials, resolving issues as we built out the system. Ultimately stakeholders recognized the value of Metrc’s approach and how its track-and-trace system could help keep Colorado’s new cannabis market safe and secure. So much so, that almost every other state in the country now relies on a system like ours.
Q: Give some history of leadership’s experience in the Colorado regulatory world.
A: Metrc worked closely with Colorado state regulators in setting up the nation’s first legalized cannabis market in 2012 and we continue to work with the state in building out system efficiencies and capabilities. Lewis Koski, who is now Metrc’s Chief Operating Officer, served as Deputy Senior Director of the Colorado Department of Revenue’s Enforcement Business Group, directing state policy and enforcement of the regulated market. Lewis also served as the Director of the Colorado Marijuana Enforcement Division, where he helped build the first state agency in the U.S. to develop and implement medical and adult-use cannabis policy. This close level of state cooperation provided Metrc valuable insight into regulatory concerns and priorities, helping us shape the system to grow and evolve as the state’s needs changed. This adaptive approach informs Metrc’s work in Colorado and in states all over the country.
Q: You have been involved in development of the cannabis marketplace in many other states. How has New York’s approach so far differed from your other experience?
A: There are advantages in not being the first state to implement a regulated cannabis marketplace, and New York appears ready to learn from the experiences of other states.
We’ve been impressed with New York’s early commitment to social equity and helping to ensure that small businesses can participate, both of which can be difficult to implement once the marketplace is already established. We also commend the state for recognizing the need to conduct robust stakeholder discussions in venues across the state, ensuring the voices of different communities are heard, steps that were not taken in some other big markets we serve.
Q: What are the regulatory benefits of a single system that tracks and traces cannabis from growth, harvest, and processing to testing, transport, and sale?
A: A single system serves as a robust tool for inventory management for both business owners and regulators. It creates an even playing field for all licensees, ensuring everyone in the market is compliant and playing by the same rules. A single system protects public health, allowing for swift regulator action. Metrc’s RFID-based model provides a complete and accurate genealogy of every plant, allowing for the immediate and targeted recall of contaminated or dangerous products. Business owners use Metrc to monitor their supply chains, information that is visible to regulators without the burden of additional reporting, saving licensees time and money. And a single system tracks product to the point of sale, helping to ensure proper tax compliance. The transparency of Metrc’s all-in-one system allows regulators to focus on a more targeted and risk-based enforcement strategy, while providing valuable data to better inform public policy and business decisions.
Q: You provide services to growers, manufacturers, testing facilities, transport providers, and dispensaries. How do you decide who to work with?
A: We don’t. We sign on as a partner to the state, knowing that in doing so, we are working to protect the shared interests of government, residents, and industry. Metrc works with state regulators to help create a secure and credible regulatory environment that supports business and protects consumers. Our objective is to create a system that works for everyone. For regulators, individual plant-tagging coupled with RFID technology speeds auditing and inspections, ensuring every plant is accounted for in the system, enhancing the security of the market. For cultivators and producers, remote scanning enabled by RFID helps automate reporting and inventory-tracking while minimizing the danger of physical cross-contamination which can sterilize plants. For consumers, Metrc’s seed-to-sale tracking helps protect public safety, ensuring products purchased in licensed dispensaries have been tested and are safe, free of toxins or harmful contaminants. Metrc has a dedicated customer support team, an open API, and online tools to help all users of the system track shipments, check test results, register harvests, log processing data, record transactions, and perform other compliance-related tasks. All work in concert to secure the market and ensure that it works for everyone.
Q: Can you describe the work you’ve done with state regulators, and law enforcement officials in other states?
A: Metrc engineered its approach to cannabis regulation to be highly adaptive and flexible, rooted in close cooperation and partnership with each state and each state’s unique laws. We routinely adjust the system to reflect ever-evolving cannabis policies. For example, when the the State of Oregon changed its laws on home delivery, Metrc did the development work at no charge, and then offered that functionality to all the jurisdictions we serviced. Several years later, when Nevada changed its home-delivery stance in 2019 in an emergency response to the Covid outbreak, Metrc was able to turn that functionality on in a matter of days, helping consumers and businesses to continue doing business together. Being a responsive partner in the compliance space helps generate goodwill between regulators and licensees, strengthening participation in the regulated market.
Q: Does your work with law enforcement deter customers on the supply chain side from working with Metrc?
A: Just the opposite. We hear that businesses meeting compliance guidelines and operating by the rules are supportive of Metrc’s role in leveling the playing field. Metrc’s system ensures that licensees and business owners, law enforcement, and state regulators have access to the same protected data that helps secure the market against illicit product. We have a 100% contract renewal rate because we work with all system users to drive efficiencies and deliver solutions that add value to the industry. Compliant businesses are increasingly eager to showcase how they merge their operations management with compliance reporting and the lengths they go to protect their employees and customers. Our system helps them to do just that.
Q: It seems like supply chains in every industry have been disrupted during the pandemic what has been the experience in the cannabis marketplace?
A: While supply chain disruptions have been a concern for many industries, cannabis has remained robust over the past year. Some markets are, in fact, experiencing excess supply. This is in part because of the effectiveness of track-and-trace solutions and the strong ecosystem of shared visibility that participation in the system makes possible. With immediate access to necessary data, state regulators were able to make emergency decisions, such as allowing for home delivery. We are proud that supply disruptions did not impede the manufacture and delivery of Metrc’s critical RFID tags. Shipment delays did impact the timeline of new, more sustainable tags that the company has had in development for more than a year. Field testing of the new tags, which incorporate recycled paper and hemp into a more environmentally friendly design, are slated to begin later this year.
Q: Given the large number of dispensary and on-site consumption opt-outs at the municipal level, does Metrc anticipate any unique challenges in serving the New York market? If so, how will you address those challenges?
A: Close cooperation and coordination with state agencies and regulators is a centerpiece of Metrc’s approach, allowing us to address the specific challenges of each market. Our system was made to be flexible, scalable, and adaptable, and we have been successful in addressing numerous regulatory challenges for both regulator and licensees. We do not foresee any insurmountable challenges in the system as it relates to opt-outs. Municipal opt-outs have occurred in almost every state we serve. The system can start small and scale up as the needs of the market expand and can likewise scale down to a smaller sales footprint if the market contracts. Our hope is that residents and municipalities recognize the safeguards provided by Metrc’s track-and-trace technology and that they will be more comfortable opting into the marketplace.
Q: New York is poised to become the second-largest regulated cannabis market in the United States behind California. Given the existing California partnership, what obstacles does Metrc expect may arise in helping to manage a market of this size? How will the California experience and experience in other large markets inform its work in New York?
A: Metrc is currently active in 17 states and jurisdictions across the country. Some states we support, such as California and Oklahoma, represent the largest regulated cannabis markets in the country, with thousands of businesses and tens of thousands of active users accessing the system daily. We work through problems as they arise by investing the time and resources needed to understand and solve them. We will always scale our business to deliver the services and support our users expect and need. As with any new system, it is critical that people using it have adequate training and access to customer support. Building on our deep and diverse implementation experience with multiple states, we offer both—including in-person training (as Covid guidelines allow), virtual webinars, and on-demand interactive lessons. We also provide unlimited support to licensees accessing the system, should questions or concerns arise.
Q: What do you see in terms of increasing innovation in the cannabis sector? Where will a place like NYS be in 5 or 10 years?
A: The data-driven approach to building a solid regulatory framework will continue to mature over the next decade, breeding new applications and innovations. Access to large volumes of product data is unprecedented and both businesses and regulators are just scratching the surface when it comes to how it can be used. In five to ten years, this broadly transparent data framework will be in a mature state, providing value to regulators, industry, patients and consumers, law enforcement, doctors, hospitals, research facilities, and policymakers. We see a future where regulators have an effective list of risk-based profiles to work with—underrepresented demographics that could benefit from more support to grow, expand, and thrive. We foresee new classes of products that have been deemed safe and highly effective for patients that could be subsidized or partially covered by health care. And we expect that consumers will continue to demand access to information about the quality, origins, and processes behind the products they buy. The regulatory framework Metrc is helping to establish for cannabis can be applied to many different kinds of supply chains, supporting the creation of vibrant and sustainable markets that broadly benefit all.