Edibles maker sues Colorado over costly tracking rules, overreach

A Colorado-based edible cannabis company filed a lawsuit against the state’s Marijuana Enforcement Division, alleging confusing and costly regulatory practices over the tracking of cannabis products.

Lifestyle Foods Inc., which operates as Ripple, contends that despite recent regulatory changes, the state continues to enforce the use of specific radio frequency identification (RFID) tags for tracking due to an existing a contract with a Florida vendor, Metrc.

The lawsuit, filed Wednesday, challenges the division’s adherence to RFID tags despite a rule change last month that removed explicit references to such technology, Law360 reported. Ripple argued that the tags, which cost the company more than $1,400 monthly, are an unnecessary financial burden, rarely used in state audits, and not essential for tracking purposes.

Ripple accused the Colorado Department of Revenue and its Marijuana Enforcement Division of maintaining the RFID requirement based on a contract with Metrc that does not expire until 2026, despite the possibility of annual renewals.

“METRC is so entwined with MED that in 2023, a Colorado District Court … granted METRC state-actor qualified immunity from Colorado antitrust claims,” Ripple wrote in filings.

That has led to confusion among cannabis businesses, with the state even issuing a news release clarifying the continued necessity of RFID tags after local media reported the apparent phase-out.

“Nevertheless, the result is a confusing outcome: RFID has been removed from the rules, but remains a mandate — but only by oral declaration of the MED leadership at the final hearing,” Ripple said.

The company’s suit raised questions about the transparency and fairness of state regulatory practices, alleging violations of the state’s Administrative Procedure Act due to unclear rulemaking and improper notice.

Ripple also contends that the requirement for RFID tags and the associated fees paid to Metrc may violate state laws dictating that such fees should be collected by the Department of Revenue.