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Webinar Recap: Understanding Oregon’s Cannabis Batch Tagging and CAMP Updates

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Last week JL co-hosted an insightful webinar with Alex Berger from Emerge Law Group, delving into critical updates for Oregon’s cannabis industry. The focus was on two pivotal topics: batch tagging and OLCC’s transition to CAMP. 

Batch Tagging

Since the beginning of Oregon’s recreational marijuana system, OLCC was tasked by the legislature with developing a “Cannabis Tracking System”. ORS 475C.177 created a duty in OLCC to “develop and maintain a system for tracking the transfer of marijuana items between” licensed premises. The statute lays out the purposes for this system as follows: 

• Preventing the diversion of marijuana items to criminal enterprises, gangs, cartels, and other states; 
• Preventing persons from substituting or tampering with marijuana items; 
• Ensuring that lab testing results are accurately reported; and 
• Ensuring compliance with cannabis laws and rules. 

The statute requires the tracking system to have the following minimum capabilities: 

• Tracking the propagation of immature marijuana plants and the production of marijuana by a producer; 
• Tracking processing of marijuana by a processor (into oils or concentrates); 
• Tracking the receiving, storing and delivering of marijuana by a wholesaler; 
• Tracking the sale of marijuana items by a retailer to a consumer; and 
• Tracking the sale, purchase and transfer of marijuana between licensees. 

In 2015, OLCC contracted with Franwell to develop the system that would become Metrc. Franwell had at that time already developed similarly tracking systems in Colorado and Washington (the two states that preceded Oregon in developing legal recreational marijuana systems). OLCC’s contract with Franwell/Metrc was for an initial term of 5 years which could be renewed for an additional five years. We are currently in the last year of the renewal term, and some time last year OLCC announced that they were looking at possibly replacing Metrc under a new contract once this contract concludes.  

The Metrc system as we largely know it today rolled out when OLCC started issuing licenses in 2016, and OLCC promulgated administrative rules that outlined how licensees are to interact with Metrc. 

As part of those rules, OLCC required that every growing marijuana plant be individually tagged as soon as it reached 36 inches in height or began to exhibit secondary sex characteristics (that is, begins forming buds), whichever is earlier. Immature plants under 36 inches were not required to be individually tagged, but were required to be tracked in batches in Metrc. Immature plants are to be tracked in cultivation batches of up to 100 individual plants, typically tracked by reference to their strain name and other information (such as date of propagation) to enable them to be traced either to a seed batch or a mother plant.  

For producers, the requirement of individual tagging of plants quickly proved itself to be a costly endeavor. Plant tags come at a cost of 45 cents per tag. When you’re talking about a room full of plants for indoor producers, or a field or greenhouse full of plants for outdoor producers, you’re looking at thousands of tags at 45 cents a pop – this direct cost can be upwards of $5000 or more for a modest outdoor grow.  The tags have to be purchased from Metrc from the producer’s Metrc account, and can only be paid for via credit or debit card. This presents a problem to the majority of licensees who are unbanked – meaning they have to either use their personal cards or those of their employees who then get reimbursed in cash. 

Expensive Labor

In addition to the hard costs of purchasing the tags, there are hard costs in terms of labor necessary to affix a tag to each individual plant. One producer I’ve spoken with has analyzed the labor cost for individual tagging. They found that it takes roughly 8 labor hours to tag 1200 plants. For several years, cannabis industry advocates have bemoaned the cost of individual plant tagging versus the benefit of it – the costs far outweigh any regulatory benefit.  

Notably, the statutory minimum requirements for the Metrc system do not require individual tagging of plants. OLCC’s stated justification for requiring individual tagging at the time boiled down to – it’s a Schedule 1 controlled substance so we need to know at all times whether a plant is legal or illegal. If you’ve read the news recently, that justification is going to fall by the wayside with the rescheduling to Schedule 3.  

There’s also no public safety benefit to individual tagging of plants. Once the plants are harvested, the marijuana is mixed in with that of other plants in the same harvest batch, and that batch is assigned a package tag. This batching after harvest makes it impossible to trace a batch of marijuana to a particular plant, and in any event, there doesn’t appear to be any reason why you would need to trace a given bud to a particular plant – the harvest batches are all grown under the same conditions.  

In connection with this effort, one producer invited OLCC’s executive director, then Steve Marks, to show him what it takes to individually tag each individual plant. Steve Marks assisted this particular licensee with tagging, but gave up after an hour of backbreaking monotonous labor after tagging only 71 plants. After this, Marks instructed his staff to investigate the concept of batch tagging.  

Around this same time, I think in the 2021 legislative session, a bill was introduced in the legislature to mandate batch tagging. However, that legislation stalled after OLCC informed the legislature that they were moving forward with rules to implement batch tagging on their own.  

In November 2022, OLCC published its proposed batch tagging rule, which was finalized in March 2023, with an effective date of January 1 of this year. The language of this rule did not require any particular functionality of the Metrc system – it was assumed that the 100-plant cultivation batches for immature plants would just continue throughout the lifecycle, with a single 45 cent tag being attached to the batch of up to 100 once the plants reached 36 inches.  

The Delays

On December 15, 2023, just about two weeks before the batch tagging rule was to go into effect, OLCC announced that they would be temporarily amending the batch tagging rule to delay it until April 22, 2024. They pointed to a “contract procurement process” with Metrc that had not been completed. This puzzled many industry observers – Metrc already had the functionality to do this in its existing systems, and Metrc’s contract specifically allowed OLCC to amend its rules.  

It turns out that Metrc was pushing back on this amendment because it wanted to maintain its revenue, which was based on individual plant tagging. OLCC didn’t need to indulge this, but they did.  

On February 27 of this year, OLCC announced another delay in the implementation of batch tagging, this time pushing it out to June 17. We are now on the cusp of that go live date.  

Last month, OLCC issued an informational bulletin regarding batch tagging. 

Here’s the highlights of what it says: 

• The maximum number of plants per tag is 100. To qualify for batch tagging, the plants have to be: 

• • The same strain 
  • Grouped together in the same contiguous growing area 
  • Physically separated and demarcated from other plant batches 
  • The tag must be affixed to the outermost plant in the batch (i.e., nearest to a walkway in the growing area) 

The rule doesn’t define what it means for a batch to be physically separated and demarcated, but I would imagine that some amount of space between batches, or ropes, twine or other indicators of where one batch ends and another begins will likely satisfy this rule. 

Cost Savings? Nah.

Beginning May 20 (last week), Metrc will begin selling batch tags for plant quantities of 1, 5, 10, 25, 50, and 100 plants, at a cost of 45 cents times the maximum number of plants. Thus, we bid adieu to cost savings – a 100-plant batch tag will cost the same as 100 individual plant tags.  

OLCC provided a helpful example (lol): if you have a cultivation batch of 77 plants, you can tag them with a 100-plant tag, but you’d be overpaying to the tune of $14.85. If you want to save that $15, you can purchase a 50-plant tag, a 25-plant tag, and two single plant tags. But remember that when you do that, you have to physically separate your 77-plant batch into FOUR separate areas. Here are more pointers from the bulletin: 

• You can continue to individually tag your plants. How nice of them! Thank you, OLCC! 
• There is no limit on the number of plant batches you can have at your premises. But remember that you’ll still be limited to your canopy areas as to where to locate the plants.  
• For outdoor producers, there is some relief. If you have plants that have reached 36 inches but aren’t flowering yet, they don’t need to be tagged until June 17. However, if they start to flower before June 17, you must tag them individually. 

• Practically, this means that outdoor producers will need to still have a supply of individual plant tags for this season, and the benefits of batch tagging will have to wait until your next crop.  

With all of this, is there any benefit to batch tagging?

• Many producers I’ve spoken to say no.  
• Given the additional labor and Metrc input required for batch tagging, any labor costs saved from moving away from individually tagging will be eclipsed by the labor necessary to physically demarcate each batch, in addition to labor costs for staff to learn how to set up these cultivation batches in Metrc and tracking the new tags.  
• From what I understand, the new batch tags may look the same as an individual tag, which will make mixing up a 100-batch tag with an individual tag likely at the site. This will increase cost redundancy.  
• For many producers whose staff is used to individual tagging and have developed efficiencies in the process over the years, it probably makes more sense to continue individually tagging rather than investing in new processes that may not result in any measurable cost savings. 

What is the Call to Action?

• Not much at the moment, unfortunately. 
• A rule challenge is possible, but practically if the batch tagging rule is challenged successfully, the rule will revert to the individual tagging requirement. This doesn’t benefit anybody. 
• There might be a way to sue Metrc for leveraging its status to gut the cost benefit. That said, any such litigation will take years to resolve and might not be successful given that OLCC has apparently given them carte blanche to maintain their revenue stream from its captive customers 

Transition to CAMP 

Transitioning from batch tagging, the webinar addressed OLCC’s shift to the Cannabis and Alcohol Management Program (CAMP), launched on March 18, 2024. Immediately after the launch of CAMP-all licensing went dark for four days. This period was intended to transfer all information, however virtually no information was transferred and therefore wreaked havoc on OLCC licensees.  

Stated benefits were to improve data tracking, have access to online payment options, and ensure functionality on mobile devices. So far in the legal space, Alex hasn’t seen many benefits aside from quicker payment methods. Most experiences with lawyers and OLCC licensees have not lived up to the pitch given by OLCC.  

Common Issues

• No documents from the previous portal were transferred over creating a roadblock for change of business structure. 
• Contacts have not been accurately recovered.  
• Authorized representatives have not been added (i.e. previously authorized lawyers).   
• The automation is lacking, and there are only two people at OLCC reviewing amendments for thousands of licenses.  
• Possibly an increase in paperwork in disclosure requirements. 
• Changes of ownership are three months behind.  

Tips for CAMP

• For authorized representatives- the best way to go is “old school”. If you have a licensee who needs access to manage your license- register for CAMP and then physically hand over the login information. These representatives can send in amendments on your behalf  

• No business structures have migrated, many licensees don’t know what their approved structure looks like. Email OLCC and request the latest business structure forms and obtain records through direct email- if you wish to make updates to business structure. 
• Investigators are asking for a complete LLC and corporate questionnaire and requested it was filled out with all owners of the business, which isn’t something that was required since 2018. If OLCC is now requiring this for changes of ownership, along with lenders, and other non-qualified applicants, this can be problematic and chill investment. Be aware that you might have to supply information that you haven’t had to in years, so track down all owners and their birthdates (birth days are for some reason required now).  
• It is recommended by Alex to only fill out fields that have a red asterisk (required fields). 
• Only disclose the addition and removal of applicants. 
• Purchasers should know that you need more paperwork to change ownership such as:
  • Metrc certificates of achievement
  • Approved land use compatibility statement
  • Proof of legal access
  • For retailers only-tax compliance certificates.  
• A seller must submit a change of ownership amendment and will need the buyer’s new application file number. Again, for retailers, both buyer and seller need to submit tax certificates for all applicants before change of ownership can go through.  

Tax Compliance Certificates

For licensees trying to get tax compliance certificates from the Department of Revenue; Use the form (PDF) on OLCC’s website. Check the “email” box to have an approved or denied certificate to be sent back via email, this is not accessible on the portal. This form can be used for both individual and entity applicants. Next, email that form to (compliance.checks@dor.oregon.gov). This method may result in a faster processing period.  

Resources 

• https://www.oregon.gov/olcc/pages/camp.aspx 
• OLCC.CAMP@oregon.gov 
• Hotline: 855-907-0836 M-F 8am-8pm 

 

You can contact Kevin Jacoby at kevin@jacobylawllc.com and Alex Berger at alex@emergelawgroup.com