Colorado discontinues traceability tags with RFID chips for cannabis operators

By MJBizDaily Staff
December 8, 2023 - Updated December 8, 2023

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Recently passed rules in Colorado could save cannabis operators in the market tens of thousands or even hundreds of thousands of dollars in track-and trace-compliance costs and might also lead to the replacement of Metrc as the state’s traceability provider.

According to rules that were adopted Nov. 9 and take effect Jan. 8, Colorado marijuana businesses will no longer be required to use seed-to-sale tracking tags that include RFID (radio frequency identification) chips, Denver TV station KMGH first reported.

While the new rules eliminate RFID requirements, they still mandate that cannabis companies use an “inventory tracking system,” Shannon Gray, a spokesperson for Colorado’s Marijuana Enforcement Division (MED), told MJBizDaily in a statement.

The RFID tags previously required by Colorado regulators cost 25-45 cents each, depending on the type of tag.

Different tags are used for different phases in the plant or product life cycle.

Those pennies add up. For example, according to data from Colorado’s MED, there were 1,029,683 plants in the state in September, which would translate into RFID tag costs of $257,420-$463,357.

Marijuana cultivator Jon Spadafora of Veritas Fine Cannabis in Colorado told KMGH that his business’ RFID costs are in the low six digits.

Without the chip requirement in Colorado, tags likely would cost significantly less.

What is not clear is if or when Metrc will start producing new, less expensive, chip-free tags RFID tags.

Colorado, like most markets with a regulated marijuana industry, requires operators to use a state-mandated seed-to-sale traceability system for cannabis plants to guard against diversion and facilitate recalls.

Florida-based Metrc has secured the track-and-trace contracts in a number of legal marijuana markets.

Colorado’s rule change could mean more competition for Metrc when it vies for a new contract with the state after the current deal expires in October 2026.

“By removing the reference to RFID and replacing it with ‘inventory tracking system’ language throughout the rules,” the MED’s Gray told MJBizDaily, “the Division is broadening the future competitive solicitation that would allow for other vendors that do not couple their inventory tracking system with RFID to be considered as part of that procurement process.

“We hope that this initial step in rulemaking will allow for a more competitive contract process as we begin to prepare for an open, competitive solicitation leading up to October 2026, when the current vendor contract will expire.”