A licensed cannabis processor has sued New York's Office of Cannabis Management to block a mandatory seed-to-sale tracking system set for January 12, exacerbating the agency's recent enforcement setbacks. Veterans Holdings Inc., operating as Veterans Choice Creations, claims the Metrc system's requirements impose unauthorized economic burdens and exceed regulatory authority. This legal challenge follows the state's abrupt dismissal of its largest recall and an investigation into alleged license rentals, underscoring persistent struggles to regulate the young adult-use market.
Processor Challenges Metrc Mandate
Veterans Holdings filed a 19-page complaint on December 16 in Albany Supreme Court, seeking a temporary restraining order against the tracking rollout. The suit names the Office of Cannabis Management, interim Executive Director Susan Filburn, the Cannabis Control Board, the Division of Alcoholic Beverage Control, and Metrc as defendants. Plaintiffs argue that requiring unique ID tags for individual items—unlike the prior BioTrack system's batch tagging—multiplies costs dramatically, with Metrc charging 10 cents per tag.
Indoor operators with up to 10,000 square feet of canopy, accommodating one to two plants per square foot, could face $2,000 per crop in tags, while outdoor sites up to 100,000 square feet might incur $20,000. The complaint accuses the agency of legislative overreach, violating separation of powers by imposing policy without statutory backing. In response, the agency announced on December 15 it would distribute 20 million free tags evenly to licensed processors. OCM's regulatory operations director affirmed on December 18 that halting the system endangers product authenticity and consumer safety; the state must respond by January 7.
Resignations Follow Dropped Omnium Case
On December 8, Governor Kathy Hochul demanded the resignations of interim Executive Director Felicia Reid and Deputy Counsel James Rogers, coinciding with the dismissal of a case against Omnium Health. The probe, launched by the Trade Practices Bureau in February 2025, alleged Omnium rented facilities to unlicensed operators for legal and illicit production. Investigators reviewed audits, contracts, and witness testimony, but neither the agency nor the governor has explained the withdrawal.
Hochul stated the office had impeded market growth, including through the withdrawn compliance action. Earlier in December, OCM abandoned its largest recall and a related license rental investigation. Filburn, now interim director, addressed the Cannabis Control Board on December 18, pledging stability and commitment to public health amid these disruptions.
Tracking System's Rocky Path in New York
New York legalized adult-use cannabis sales starting December 29, 2022, initially planning BioTrack for inventory logging to curb diversion to the illicit market, with a 2023 deadline. Court delays in retail licensing pushed timelines repeatedly, settling on January 12, 2026. BioTrack's August partnership with Metrc prompted the switch, aiming to strengthen oversight in a market plagued by unlicensed activity.
A robust seed-to-sale system tracks plants from cultivation through sales, preventing schemes like facility rentals that flood black markets. Enforcement lapses risk undermining the legal industry's viability, erode consumer trust in product safety, and prolong dominance of illicit operators. Resolution of the lawsuit will determine if New York can stabilize regulation or face further delays in building a secure marketplace.
