A licensed cannabis processor in New York has sued the state to halt implementation of a mandatory seed-to-sale tracking system set for January 12. Veterans Holdings Inc., operating as Veterans Choice Creations, claims the requirement to buy unique ID tags from Metrc imposes an unfair economic burden and exceeds the Office of Cannabis Management's authority. The dispute arrives amid recent enforcement setbacks for the agency, including a dropped recall and investigation into alleged license rentals.
Lawsuit Targets Metrc Tags and Regulatory Overreach
Veterans Holdings filed its 19-page complaint on December 16 in Albany Supreme Court, seeking a temporary restraining order. The suit names the Office of Cannabis Management (OCM), interim executive director Susan Filburn, the Cannabis Control Board, the Division of Alcoholic Beverage Control, and Metrc. Plaintiffs argue that OCM lacks statutory power to mandate tags from a specific vendor, violating separation of powers.
The core grievance centers on scale: previous BioTrack rules required tagging batches or lots, while Metrc demands tags for individual plants or items. Metrc charges 10 cents per unique identifier. Indoor operations, limited to 10,000 square feet of canopy with one to two plants per square foot, could require up to $2,000 in tags per crop. Outdoor sites, allowed 100,000 square feet, face costs up to $20,000. OCM responded on December 15 by offering 20 million free tags, distributed evenly to licensed processors.
Enforcement Woes Undermine Agency Credibility
The lawsuit compounds OCM's recent troubles. In December, the agency abandoned its largest recall to date and dropped an investigation into Omnium Health, accused of renting facilities to unlicensed operators for legal and illicit production. That probe, launched by the Trade Practices Bureau in February 2025, relied on audits, contracts, and witness testimony.
Governor Kathy Hochul ordered resignations of interim executive director Felicia Reid and deputy counsel James Rogers on December 8, citing OCM's obstruction of market growth. Rogers had led the bureau formed to combat illicit diversion. A functioning seed-to-sale system, OCM argues, would prevent such schemes by tracking products from cultivation to sale. Director of Regulatory Operations Patrick McKeage affirmed on December 18 that delaying the system endangers consumer safety and product authenticity. The state must respond in court by January 7.
Delays in Tracking Expose Market Vulnerabilities
New York legalized adult-use cannabis on December 29, 2022, with BioTrack as the initial tracking provider and a 2023 deadline that repeatedly slipped amid retail rollout delays. OCM switched to Metrc after BioTrack's August partnership announcement, pushing compliance to January 12, 2026. Filburn, now interim director, pledged stability and public health focus at her first Cannabis Control Board meeting on December 18.
These hurdles highlight tensions in building a regulated market. Without robust tracking, diversion persists, fueling black-market competition and safety risks from unverified products. The court's decision could reshape enforcement timelines, testing OCM's ability to balance operator costs against statewide safeguards.
