Track-and-trace systems and transactions

What a track-and-trace system is

A track-and-trace (or seed-to-sale) system is the state’s inventory ledger for licensed marijuana. Each plant and package carries a unique tag. Each event in its life, from planting to harvest, processing, testing, transfer, sale, and destruction, is reported by the licensee to the state. California, for example, requires receipts, manufacturing steps, packaging, test results, disposal, and sales to be recorded within 24 hours of occurrence.

Three features matter in a transaction:

1. Inventory belongs to a licence number. The system does not know who owns the company. It knows which licence holds which tags.
2. Inventory moves only by manifest. A lawful movement between licences is a recorded transfer that the receiving licence accepts.
3. Users are individuals. Logins, training records, and API keys are issued to named people and to a specific licence.

A sale has to work within all three. See the glossary entry for Metrc for the basic terms.

Which system does each state use?

Two vendors dominate. When Metrc and BioTrack announced a partnership on 5 August 2025, Metrc listed 27 government contracts: 24 states plus Washington, D.C., Guam, and the U.S. Virgin Islands. BioTrack’s government work moved to a new affiliate, BT Government.

System (August 2025)	Jurisdictions
Metrc	Alabama, Alaska, California, Colorado, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Jersey, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Virginia, West Virginia, D.C.
BT Government (formerly BioTrack)	Arkansas, Connecticut, Delaware, Florida, Hawaii, New Hampshire, New Mexico, New York, North Dakota

The list moves. New York has since gone to Metrc: the Office of Cannabis Management required all licensees to be credentialed by 17 December 2025, retail inventory to be loaded by 12 January 2026, and retail item IDs on distributor-to-dispensary transfers from 28 February 2026. Illinois has been making the same move from BioTrack to Metrc. A migration matters to a buyer because history before the switch sits in a different system, and opening balances loaded during a migration are a common source of errors. The system for each market is noted on the state pages.

How does inventory move to the buyer?

It depends on the deal structure and the state’s transfer model. The structures are compared in asset sale vs membership-interest sale; the state models are in the state licence transfer rules overview.

Structure	What happens in the system	Practical effect
Equity sale, same licensed entity, approved ownership change	Nothing moves. Same licence number, same tags.	Cleanest. Users and owners are updated; inventory history is continuous.
Licence transfer to a new owner (states that permit it)	Regulator approves, then inventory is transferred or the licence record is updated.	Timing is set by rule.
New licence issued to buyer at the same premises	Regulator authorises the vendor to move remaining inventory from the old licence to the new one.	Needs coordination so there is no gap between the old licence ending and the new one going live.
Asset sale of inventory only, to a buyer with its own licence	Ordinary wholesale transfer by manifest, with a price per package.	Only works between licence types allowed to trade with each other.

Examples of how regulators handle it:

• California. Licences are not transferable or assignable. If at least one existing owner remains, the business can keep operating under the licence while the Department of Cannabis Control reviews the new owners, who must be reported within 14 calendar days. If every owner changes, the buyer needs a new licence, and the former owner’s inventory is moved to the new owner’s track-and-trace account when that licence is issued. More on the California page.
• Oklahoma. Under the ownership-transfer rules effective 29 October 2024, once OMMA approves the transfer and the buyer registers with the Oklahoma Bureau of Narcotics, the prior owner has 15 business days to transfer all inventory to the new owner, after which the prior owner is no longer a licensee. The buyer may not take possession or control before approval. See Oklahoma.
• Michigan. Where a business ends up under a different licence, the Cannabis Regulatory Agency’s licence change guidance has the licensee contact the Enforcement Division once the new licence is active, and the agency then authorises Metrc support to carry out a re-licensure that moves remaining inventory from the old licence to the new one. See Michigan.

The common thread: nobody moves tagged product between licences on their own authority. The regulator either approves the owners behind the licence or tells the vendor to move the inventory.

Operating between signing and approval

Approval can take months. During that time the seller’s licence, the seller’s users, and the seller’s compliance responsibility all remain in place. A buyer who starts entering data, directing transfers, or controlling inventory before approval risks being treated as an undisclosed owner. If the buyer needs a role before closing, it is normally done through a disclosed interim management services agreement where the state allows one, with the seller still the licensee of record.

Track-and-trace items in a closing

1. Pre-signing data pull. Active inventory, adjustments, waste, and transfer history for 24 to 36 months. The method for testing this against sales and tax records is in verifying revenue with track-and-trace data.
2. Reconciliation status. Ask for the periodic reconciliations the state requires. California requires physical inventory to be reconciled to the system at least every 30 calendar days.
3. Open items. Pending incoming or outgoing manifests, packages on hold, failed tests, and unfinished corrections. Metrc adjustments need a reason and a note, so unexplained corrections right before a sale stand out.
4. Closing-day count. Physical count against the active inventory report, signed by both sides. This count normally fixes the price paid for stock under the inventory and biomass at closing terms.
5. User changes. New administrator for the licence, buyer staff trained and credentialed, departing users removed the same day.
6. Integrations. New API keys for the point-of-sale or ERP system, tested before the first day of trading. A broken integration produces the kind of sales mismatch that regulators and future buyers will later ask about.
7. Tag stock. Unused plant and package tags are issued to a licence. Confirm whether they stay valid after the change or must be reordered.
8. Records retention. The buyer needs the seller’s historical exports. Once the seller’s users are removed, the seller may not be able to retrieve them.

How system history affects price and approval

Track-and-trace data is where regulators look first. Large unexplained adjustments, late reporting, and inventory discrepancies lead to violations, and an open investigation can stall an ownership-change application. They also affect price, as covered in how compliance history affects value. Sellers who expect to go to market within a year should run a compliance audit before a sale with the state system as the first workstream.

This page is educational and is not legal advice. State procedures change, and the regulator’s current bulletin controls.