A licensed cannabis processor in New York has sued the state to block a mandatory seed-to-sale tracking system set to launch on January 12, arguing it imposes crippling costs and exceeds regulatory authority. The lawsuit compounds enforcement woes for the Office of Cannabis Management, which recently abandoned its biggest product recall and dropped a probe into alleged license rentals. These setbacks hinder efforts to stanch illegal diversion in a market launched less than two years ago.
Lawsuit Challenges Metrc Tags as Economic Burden
Veterans Holdings Inc., operating as Veterans Choice Creations in Fulton County, filed a 19-page complaint on December 16 in Albany Supreme Court. The suit targets the Office of Cannabis Management, its interim executive director Susan Filburn, the Cannabis Control Board, the Division of Alcoholic Beverage Control, and tracking provider Metrc. Plaintiffs seek a temporary restraining order against the compliance deadline, claiming the requirement to buy unique ID tags from Metrc at 10 cents each violates separation of powers and lacks statutory backing.
The dispute centers on a shift from the prior BioTrack system, which tracked batches or lots, to Metrc's item-level tagging. Indoor operators with up to 10,000 square feet of canopy—accommodating one to two plants per square foot—could need up to $2,000 in tags per crop. Outdoor sites, allowed 100,000 square feet, face costs up to $20,000. To blunt the impact, OCM announced on December 15 it would distribute 20 million free tags evenly to licensed processors.
Enforcement Stumbles Undermine Diversion Crackdown
The legal fight follows OCM's December decision to drop its largest recall to date and an investigation into Omnium Health, accused of renting facilities to unlicensed operators for legal and illicit production. Governor Kathy Hochul ordered the resignation of then-interim Executive Director Felicia Reid and Deputy Counsel James Rogers on December 8, the same day the Omnium case ended without explanation. Rogers led the Trade Practices Bureau, formed in February 2025 to combat the illicit market through audits, inspections, and witness testimony.
OCM Director of Regulatory Operations Patrick McKeage affirmed on December 18 that halting the seed-to-sale system would jeopardize product authenticity and consumer safety. New York planned BioTrack implementation in 2023 to log inventories and prevent diversion, but court delays in retail licensing pushed deadlines. An August partnership between BioTrack and Metrc prompted the switch, with January 12, 2026, as the latest target. The state must respond in court by January 7.
Stability Push Amid Rocky Market Rollout
Filburn, now interim executive director, addressed the Cannabis Control Board on December 18, pledging stability and clarity after "meaningful progress" with gubernatorial support. New York's adult-use market debuted December 29, 2022, amid persistent illicit competition. A robust tracking system aims to expose schemes like facility rentals, but repeated reversals erode enforcement credibility and delay safeguards against contaminated or diverted products.
