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Imagine if a vintner had to keep track of every grape. That’s a little like the task facing Colorado’s marijuana growers, whose free-spirited ways are slowly adjusting to regulations that have sprung up around their newly legitimate business. Under the state’s rules, pot merchants, who must grow most of what they sell, have to put a microchip on each plant so it can be recorded and monitored in Colorado’s Marijuana Inventory Tracking Solution. “A flower child dies a small, painful death every time a MITS tag is issued,” says Elliott Klug, who owns Denver dispensary Pink House Blooms.

$134m Estimated Colorado revenue from marijuana taxes in the coming fiscal year

1. A canary-yellow tag placed on each plant emits a radio frequency identification signal (RFID) that allows officials consulting a statewide database to track crops from bud to blunt.

2. Tags with 24-digit IDs are staked into the soil or wrapped around individual plants while they grow in the dirt or hydroponically. The tags travel with the plants through a growhouse to harvest and as the pot flowers are dried and cured for flavor.

3. For shipment to stores, each strain gets grouped into a batch that receives matching RFID tags, which remain on the packages until sale. During scheduled and unscheduled visits to dispensaries or growhouses, state officials use RFID scanners and electronic inventories to ensure that none of the plants go missing.

On March 10, Colorado reported that revenue from marijuana taxes and fees totaled more than $3.5 million in January, the first month recreational pot was legal. Governor John Hickenlooper’s proposed budget for the coming fiscal year estimates that marijuana taxes will top $134 million.

The tag system was designed by Franwell, a Lakeland (Fla.)-based company that sells crop-tracking software, and makes up the technical backbone of Colorado regulatory efforts to monitor pot sales. Each plant tag costs 45¢; the batch package tag is 25¢. Growers say costs add up. For many, the bigger frustration is having to enter the data twice: once into their own accounting databases and again into the MITS system, which isn’t compatible with most other programs. “Plugging and chugging numbers is what most of my management staff is doing now,” says Jessie Levy, a store manager for the dispensary Native Roots. Given the potential margin for error, says Klug, the stakes, which could include loss of license and criminal charges, are absurdly high. When a plant dies, he follows a lengthy ticketing procedure to document and delete it from the system. “It’s like, guys, it’s a plant,” he says.

Franwell’s executive director for sales and marketing, Scott Denholm, says the company is working to develop a system that can sync with grower databases, adding that the water- and chemical-resistant tags are relatively cheap given that orders are typically small. Julie Postlethwait, a spokeswoman for Colorado’s marijuana enforcement division, says red tape and fees are “part of being regulated.” Complaints notwithstanding, “RFID tagging is absolutely necessary to legitimize the industry,” says Toni Savage Fox, owner of the dispensary 3D Cannabis Center.

The plant tags can offer savvy growers a closer look at which strains are selling well or where a troublesome batch shipped, says Amy Poinsett, co-founder of the marijuana-tracking software provider MJ Freeway, incorporated in Littleton, Colo., and used by growers in 12 states and abroad.

When a batch of pot-infused gummy bears shipped from Native Roots turned moldy, store manager Levy says she used the data recorded on MITS to pinpoint and recall only the rotten gummies. Even Klug says he may install his own RFID scanners to electronically track each plant’s location in his warehouse. As long as he’s paying for the tags, he says, “I might as well make the most out of it.”

The bottom line: A new hurdle for recreational pot farmers is an RFID-based tracking system that strikes them as Orwellian.

Weise_190 Weise is a reporter for Bloomberg Businessweek in Seattle. Follow her on Twitter @kyweise.

http://www.bloomberg.com/bw/articles/2014-03-13/colorados-legal-pot-growers-grumble-about-rfid-tagging

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