Cannabis businesses across the state say they’re frustrated with the transition to a new tracking system mandated by regulators because it’s causing them to lose money.
The state tracks all cannabis products from when the seed is planted until it’s sold. The new system is called New Mexico Seed to Sale, or NMS2S, which was developed locally. But several retailers have had a host of technical issues since it went live on Tuesday.
For example, Matt Kennicott, executive director of the New Mexico Cannabis Association (NMCA), said one retailer had about 50,000 items that failed to transfer over from the old system, BioTrack.
“That's hundreds of thousands of dollars worth of inventory they cannot sell,” Kennicott said, “and this is a holiday weekend.”
To make matters worse, BioTrack was scheduled to go offline at midnight tonight, giving businesses a little time to prepare before having to rely solely on an unproven new system, but BioTrack crashed as soon as it connected to NMS2S.
Kennicott said that threw a wrench into an already difficult situation.
One retailer had $150,000 worth of its top selling product erroneously labelled as a different product, thereby preventing sales. Another had so many issues they will have to hire one full-time, and one more half-time employee just to fix the errors.
One of the state’s larger retailers had $460,000 worth of product miscategorized, all of which it will be unable to sell.
“Those are just what I've been getting so far,” Kennicott said. “We're collecting stuff, honestly, almost by the minute today (Friday) because of the system crash.”
A technical issue that worries Sabrina Aragon, Chief Operating Officer of High Desert Relief, is that testing results for products that were transferred from the old system into the new system must be manually entered, meaning customers will just have to trust that their local retailers aren’t fudging any numbers. Aragon is both a professional in the industry and a patient with a medical card.
“People are depending on this for quality of life, this is a medicine that they depend on each day” Aragon said. “And with that, the ability to kind of just gamble with test results is a little bit scary.”
But it’s not just technical errors causing problems. Both Aragon and Kennicott said the design of NMS2S itself has issues.
“There's a lot of things either missing or unrealistic to the retail operational flow,” Aragon said. “Is it smooth? Is it functional? I would say I'd give it probably a 4-out-of-10 on functionality right now, just from an operational standpoint.”
Some of the problems are so disruptive, Aragon said she’s trying to decide whether they should shut down to perform in depth training, which would cause them to lose revenue, but she thinks it might be worth it.
“We're frustrated, we're scared,” she said. “My heart bleeds for my budtenders. I don't like when I have retail managers coming to me and saying, ‘I'm trying to watch these training videos, and I'm breaking out in hives. I'm so nervous because I don't understand this.’”
For example, Aragon said her employees will have to manually calculate the three different levels of complicated taxes — County, State, and the overall excise tax — on each sale.
Kennicott said the old system used to automatically calculate all the tax details for each sale.
“That's a disaster waiting to happen,” Kennicott said. “I love the budtenders, and I hope everybody has patience with them, but at the same time, I'm not sure I want anybody but the system making those calculations for me to make sure they're correct.”
Kennicott pointed out that manually calculating taxes could lead to legal problems for the business.
“That's a deep, deep flaw within the system right now,” he said. “And I know for a fact (the Cannabis Control Division) won't have a fix for that for at least six months. I was just told that this morning.”
Real Time Solutions, the local software developer who built NMS2S, did so with “zero stakeholder input,” Kennicott said, save a voluntary survey that was sent out to cannabis enterprises in June.
“If they would have consulted with licensees first, we could have told them, ‘If you do this, this is going to happen and cause an issue,’” he said. “None of that has happened, and I feel like that's a very large part of why we're in the situation we're in right now.”
A group of cannabis businesses did try to get the courts to force the state to allow companies to use BioTrack for longer, before withdrawing from the case — for now.
On August 21st, the plaintiffs, which included the cannabis association, filed a preliminary injunction and temporary restraining order against the state’s Regulation and Licensing Department in the hopes they would be allowed to continue using BioTrack until NMS2S is proven to work properly.
On Monday, Second District Court Judge Joshua Andrew Allison issued a continuance scheduled for Friday to see how the NMS2S’s rollout went with retailers.
But Kennicott said they vacated the case with plans to return to court with more evidence of financial damages.
“We can come back now with actual quantifiable harms, dollar amounts attached to them, things that actually happened because of how this rollout has occurred,” he said. “And we can prove that those harms are tied to that rollout now. So, really, it's more of a legal strategy.”
Kennicott said he and his lawyer will be working through the holiday weekend to collect stories and evidence of retailers who have suffered monetary damages because of NMS2S.
“We may need to come back to the court next week and say, ‘man, this initial period has been way too rough and we need relief. We need the old system turned back on, and these guys have to have to get the work done and actually show that it's been done properly.”
Support for this coverage comes from the W.K. Kellogg Foundation.
