New Mexico Swapped Out Its Cannabis Tracking System on 11 Days' Notice. The Industry Calls It 'a Disaster.'

At 4:59 p.m. on Aug. 18, 2026, New Mexico's Cannabis Control Division published the first training manuals for the software every licensed cannabis business in the state would be required to use a week later. Eleven minutes earlier, the division's director, Todd Stevens, had answered eight written questions from Kane Oueis, chief executive of Albuquerque's Oasis Cannabis, about how product was supposed to move during the switch. The answer to the most important one was no. "No transfers of cannabis or cannabis products between licensed locations may occur during the migration period," Stevens wrote, and "there will not be a manual or offline process" to get around it. (S1)

The complaint Oueis later swore to describes those manuals. Their screenshots carried a build label, "QA v1.0.0-rc.", the mark of a release candidate still in quality-assurance testing. Inventory tiles read "tbd." Every item status read "Unknown." That evening the division's transition page said the help line "number is being established" and training dates were "being determined." (S1)

Three days later Oasis, the trade group Cannabis Association of New Mexico and the cultivator The Grow NM sued in state district court in Albuquerque to keep the old system running. They lost the race. On Aug. 25 at 5 p.m. the state switched off BioTrack for every licensee except retailers, and on Sept. 4 at 12:01 a.m. it switched off BioTrack entirely. (S1, S2, S3)

Seven weeks later the industry is still counting the cost. "For businesses, it's been really a disaster," Matt Kennicott, the association's executive director, told state lawmakers on Thursday, Oct. 22. Growers and manufacturers lost days of sales while no system was live, he said, and one business he knew of laid off 11 employees during the blackout. The Regulation and Licensing Department, which houses the division, told KRQE it could not comment because of ongoing litigation. (S4, S5)

New Mexico is the clearest test yet of what happens when a state takes its seed-to-sale system in-house on a deadline set by a vendor contract. Every gram of legal cannabis in a regulated market is supposed to be tagged from seed to sale in a state database; without it, product cannot legally move. Kennicott's association does not object to the new platform, the New Mexico Seed-to-Sale System, or NMS2S, built by the New Mexico developer Real Time Solutions. It is free to licensees, he says, easier to use and better featured. The fight is over how it was switched on. (S2, S4, S6)

The deadline came from the old contract. In a letter dated Aug. 19 and quoted in the complaint, the division refused all eight demands the association had sent five days earlier, including a pause. Its emergency procurement agreement with BT Government Inc., the BioTrack entity, expired Sept. 15, 2026. The division said it "sought a substantially longer continuation" but BioTrack "agreed only to terms extending through September 15, 2026," and that it had no agreement, procurement authorization or identified funding to go further. The division had been looking for a replacement since October 2024, according to KOAT, and called the timeline "aggressive" by necessity. (S1, S7)

The plaintiffs' reply is the most pointed line in the filing. The state was paying BioTrack $23,127.50 a month, already contracted through at least Sept. 15, so keeping it on for 11 more days "costs the State nothing it has not already bought." The complaint adds a detail missing from the news coverage we reviewed: on the face of the department's signed March 2026 emergency procurement forms, the continuity term ran to Sept. 15, 2027. In October 2024, the complaint says, the department had certified under signature that losing the tracking system "threatens the health and safety of the people of New Mexico, specifically the continuity of care for medical cannabis patients." (S1)

The legal argument is narrower than the anger. The division's own promulgated rules say a licensee without a working track-and-trace account may not operate at all, 16.8.7.9 NMAC, and may not transport or receive product during any loss of access, 16.8.7.11(C) NMAC. The transition bulletin told licensees to keep operating on paper and reconcile later. That, the complaint says, put every licensee in the state in a position to violate either the bulletin or the rules, "with the Division reserving the right to audit whichever choice they make." It also noted that the public interface for third-party software covered six dispensing functions and nothing for receiving, transfers, adjustments, destruction, plants or lab submissions. (S1)

The division had handled an outage differently before. During an unplanned system failure in June 2025, its Bulletin 25-07 told licensees to stop transfers, keep manual records and expect an audit after service returned, consistent with the rules, according to the complaint. This time the instructions moved while operators were reading them. A capture of the transition page at 6:12 p.m. on Aug. 18 said retailers could keep selling in BioTrack "if licensees choose"; a capture at 6:58 p.m. said sales "MUST" run through BioTrack until the cutoff. (S1)

New Mexico's exit is also part of a national reshuffle. MMJ Daily reported that BioTrack has announced a partnership with its larger rival, Metrc, which holds state contracts in 24 states plus Washington, D.C., and that BioTrack's remaining state contracts include only two adult-use markets. New Mexico chose to build rather than move to Metrc. (S9)

The squeeze arrived early. On Aug. 19, Argon LabsNM told customers it would stop accepting samples at close of business that day because of the surge ahead of the shutoff, the complaint says, so the lab blackout scheduled for Aug. 25 started six days ahead of time. The department's own timeline closed sample intake from Aug. 25 through Aug. 31, then required new finished-product tests whenever a product changed form. (S1, S2)

In court, the state argued that nobody had been hurt yet, and on Aug. 31 Second Judicial District Judge Joshua Andrew Allison agreed that the plaintiffs had not shown genuine harm. He continued the case to see how the retail cutover went. Retailers, Kennicott conceded to KUNM, had overstocked ahead of the blackout. "The retailers, they've experienced no harm through this yet," he said. Growers and wholesalers were another matter: one wholesaler, he said, faced about six weeks without revenue because of how orders cycle through testing. (S8)

Jon Updegraff, chief financial officer of Verdes Cannabis, described the same split before the switch. His company overstocked its stores and widened vendor orders. "Not everybody has that privilege and that ability," he told KOAT. (S7)

The retail side broke the week the old system went dark. Kennicott told Source NM that one retailer had about 50,000 items fail to transfer from BioTrack, that another had $150,000 of its top seller labeled as a different product, and that one of the state's larger retailers had $460,000 of product miscategorized and unsellable. Those figures are his, gathered from members, and have not been tested in court. The association dropped the lawsuit that week, he said, planning to return with documented losses. The department was still citing "ongoing litigation" on Oct. 22; the public record does not make clear which case it meant. (S6, S4)

“For businesses, it's been really a disaster.”

— Matt Kennicott, Executive Director, Cannabis Association of New Mexico

Sabrina Aragon, chief operating officer of High Desert Relief, scored the system "probably a 4-out-of-10 on functionality." Test results carried over from BioTrack had to be keyed in by hand, she said, which left patients trusting that no one had fudged a number, and her budtenders were calculating county, state and excise taxes manually. Kennicott said he had been told a fix for the tax calculation was at least six months out. (S6)

Jason Bowles, the Albuquerque lawyer and former federal prosecutor who filed the case, framed the original request as modest: keep BioTrack as the system of record "until CCD demonstrates that NMS2S is ready." Tony Martinez, the association's board chair, said the industry's earlier requests for a pause "were ignored." On the state's side, the division's bulletin promised to keep "as much continuity for licensees as possible," and Superintendent Clay Bailey told an interim committee on Oct. 20 that adult-use retailers have sold $2.4 billion since sales began four years ago, while declining to discuss the system because of the litigation. (S3, S9, S10)

The stakes run past New Mexico. Track-and-trace data is how regulators audit testing and potency. This month Colorado's state auditor used three years of Metrc records to show that most production batches skipped pesticide testing. In New Mexico, some test results for migrated inventory were typed into the new system by hand, retailers say. (S6)

When he swore to the complaint on Aug. 21, Oueis wrote that roughly 770 of the daily transactions in his stores were sales to medical patients, in communities with no other supplier. "We support modernizing track and trace," he said in the news release that day, "but no responsible business would launch essential software this way." Seven weeks on, NMS2S is the only system of record, and the question his eight questions raised, who pays when the state's system cannot see the inventory, is back in front of lawmakers rather than a judge. (S1, S3)

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