Does Court Order Spell The Beginning of the End For METRC in California? | Cannabis Law Report

In 2021, more than 4 years ago now, my client sued the Department of Cannabis Control (“DCC”) for not doing its job and for not complying with the legislative mandate that its track and trace system be designed to flag irregular cannabis transactions.

Our mandamus petition was dismissed on demurrer. We appealed, and the Court of Appeal reversed the demurrer ruling and revived the case in a published appellate decision. After 2+ more years of hard slogging against the DCC, and after several efforts to try to reach a compromise solution were rebuffed by the DCC, the dispute finally culminated last month in a one-day mandamus trial. After the trial, the Court took the matter under submission.

Today the Superior Court issued an order granting our writ petition and ruling that the DCC’s “current report-driven compliance system does not comply with” the flagging mandate contained in Business & Professions Code Section 26067(b)(2). More specifically, the Court found the DCC failed to show that the mountains of reports it generates actually “flag irregularities instead of just containing queried raw data listing events or transactions, which staff, without the benefit of any objective criteria or definitions, must review manually to look for irregularities.” Based on its ruling, the Court is now requiring the parties to address ways the DCC can “implement report-driven flagging of irregularities based on established criteria not requiring manual review to identify irregularities.”

In short, after looking at all the evidence, and despite the DCC telling me that we just did not know what we were talking about, the Court confirmed what we have alleged since 2021 — METRC system reports are effectively useless, as they do not and cannot actually detect or flag irregularities due to, among other things, the failure of the DCC to provide its analysts with objective criteria or other definitions needed to identify potential irregularities in the raw data. DCC analysts instead review and compare reams of reports looking largely in vain for potential irregularities, without the benefit of any established objective criteria or definitions telling them what an irregularity is.

With this decision, which shines a spotlight on a longstanding systemic problem with the DCC’s current enforcement regime, we look forward to working with both the DCC and the Court to substantially improve the current system not only so that it finally complies with the law (albeit 8+ years late), but more importantly so that moving forward it can effectively identify and thereby prevent, or at a minimum drastically reduce, the rampant illegal diversionary activity that has been going on virtually unchecked for years.

A copy of the Court’s Order is attached.