By Court Orders System Overhaul
An Orange County Superior Court judge has ordered California’s Department of Cannabis Control to take steps to bring the state’s cannabis track-and-trace system into compliance with California law. The August 4, 2026, final judgment in HNHPC Inc. v.
Department of Cannabis Control concludes that the system does not currently flag irregular transactions for investigation. The ruling represents the latest development in nearly five years of litigation brought by HNHPC, the parent company of California cannabis retailer Catalyst.
The decision follows an earlier ruling from California’s Fourth District Court of Appeal, which revived HNHPC’s case after a lower court had dismissed it. The appellate court held that the existence of contracts to develop a track-and-trace system did not establish that the DCC had actually fulfilled its legal obligation to create a database capable of flagging irregularities.
Statutory Requirements
California Business and Professions Code Section 26067 requires the DCC to establish a track-and-trace program covering the movement of cannabis and cannabis products through the licensed supply chain. The statute also requires the department’s electronic database to be designed to “flag irregularities” for investigation. Jeff Augustini, the attorney who represented HNHPC, said the ruling confirms that the DCC has failed for more than eight years to fulfill its statutory duty to design and implement a compliant tracking system.
Compliance Mandate
The court’s order directs the DCC to address the gap between the current system’s capabilities and the statutory mandate.
The ruling highlights the distinction between having a tracking system in place and having a system that actively complies with the law’s specific design requirements. By ordering the DCC to take steps toward compliance, the court emphasizes that the current infrastructure is insufficient under the existing statutory framework.
