Maine on Friday pulled out of a deal with a Florida company to set up a seed-to-sale tracking system for retail medical and recreational marijuana – the second scuttled state marijuana contract in as many months.

The state Department of Administrative and Financial Services pulled out of its three-year deal with Franwell Inc. to use a customized tracking system after state lawyers warned the award could lead to costly and time-consuming litigation.

The agency insists this withdrawal will not delay the timeline of the long-awaited rollout of Maine’s adult-use cannabis recreational program, which voters adopted at referendum in 2016. Two years later, home grow is allowed, but legal sales are not.

“Today’s decision is made in the best interest of stakeholders in Maine’s legal marijuana industry and the state to ensure implementation moves forward in an expeditious manner,” said Erik Gundersen, head of the newly created state Office of Marijuana Policy.

To save time, Maine had tried to negotiate a deal to utilize the tracking system for its small medical marijuana market now, which consists of eight dispensaries and 2,500 caregivers, and expand it later to service what is likely to be a much larger adult-use market.

The state did not solicit its own bids for a tracking system, but instead piggy-backed off of Alaska’s bidding process to strike its $150,000 deal with Franwell to save time and minimize its risk, Gundersen said at the time of the award.

Lawyers in the Maine Attorney General’s Office worried that opened the deal up to appeal, however, and urged the department to use the tracking system, named METRC, for medical and solicit separate bids for tracking adult-use sales. But the Department of Administrative and Financial Services worried that separate bids would take too long.

Instead, the department opted to kill the deal with Franwell and solicit new bids, believing that will avoid delays in getting the state recreational marijuana market up and running, officials said.

The department said Friday that it would issue a request for tracking proposals soon.

Late Friday, Franwell said it would submit another bid when the state issues a new request for proposals.

Thirteen states – including Colorado, Oregon and Alaska – use the METRC system to track marijuana from cultivation to extraction to manufactured products to that final retail sale. In 2017, Massachusetts signed a deal to use it to track its recreational market, too.

Seed-to-sale tracking systems help inspectors deter diversion of legal cannabis into illegal markets, both in state and across state lines. They also help regulators collect all taxes levied and the industry to track its own growth and tax contributions.

Some of Maine’s 2,500 medical cannabis caregivers have complained about a $40 monthly fee to use the system, as well as plant tag and label fees. The state lawmakers who rewrote the medical law to mandate inventory tracking there, too, said Maine would pick up that tab.

Last month, the Department of Administrative and Financial Services scuttled a deal it had made with BOTEC Inc. of Los Angeles to help Maine launch its recreational market and to tweak its medical marijuana program rules after a losing bidder appealed.

That prompted the state to cancel its request for proposals rather than face the likelihood of losing the appeal. The state almost immediately solicited a second round of bids. The original losing bidder prevailed and won the $189,000 contract.

Penelope Overton can be contacted at 791-6463 or at:

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