The cannabis industry in Washington is in a crisis this week as technical issues concerning that state’s new seed-to-sale tracking system continue to cost business owners thousands of dollars in lost sales and diminishing inventories.
Dubbed Leaf Data Systems, the new software was developed by Denver-based MJ Freeway, which provides business management solutions and consulting services for the cannabis industry. Launched on the first of February, the system has been plagued by a slew of bugs from the very start.
According to the Seattle Times, some growers have complained that the system scrambled their shipping orders while some dispensary managers have been unable to receive order shipping manifests. In addition to slowing down or altogether halting daily business operations, some users haven’t even been able to log into the system at all.
Initially, the state was supposed to switch over to a new seed-to-sale tracking system in November 2017 but the technology company chosen as the vendor, Franwell, abruptly backed out of the contract. MJ Freeway was subsequently chosen to pick up the contract but was only given several months to put together a system.
In a letter to licensees, Washington Liquor and Cannabis Board deputy director Peter Antolin said that the source of the transfer/manifest issues was related to an unauthorized access of the traceability system.
The system intruder reportedly downloaded a copy of the traceability database and took undisclosed actions which caused the technical issue with inventory transfers. Although no personally identifying information was stolen, the WSLCB says that some information was accessed.
The intruder gained access to route information of manifests filed between Feb. 1 and Feb. 4 as well as transport information; such as the vehicle type, VIN and license plate number. Driver information was not accessed.
The WSLCB claims that the issue has been resolved and that it and MJ Freeway are working towards fixing the other technical glitches within the system, noting that there are several workarounds for the errors while the system is being fixed.
Despite the board’s reassurances, some cannabis business owners, like Cannasol Farms CEO Jeremy Moberg, are more than skeptical.
“I don’t believe it’s fixed,” said Moberg told MJ Biz Daily. “Not until I hear of retailers bringing in product.”
Moberg went on to say that he has approximately $18,000 in inventory sitting in a van because he cannot integrate his company with the Leaf Data Systems and that this week he’s had to lay off all but a handful of employees who are remaining to help him figure out the system.
“If you think about five days in this industry, it’s millions of dollars worth of transactions that are not happening,” Moberg added.
Some business owners have suggested that the state cancel its contract with MJ Freeway and go back to the contingency system left by the state’s previous vendor BioTrackTHC. But as the state continues to fix the technical glitches, cannabis businesses will continue to lose thousands of dollars; and while Washington’s cannabis industry will at some point return to normal, for many businesses, the damage has already been done.
The Back Story
BioTrackTHC was contracted in 2013 to monitor the program with its seed-to-sale tracking, and by all accounts, it seemed to be working just fine. Then the state decided to open the program up to a public bid to see if there might be a better vendor for a better price.
In June the state selected Franwell’s METRC system to replace BioTrackTHC. However, when Franwell came to the table to begin the negotiations of planning the program takeover, talks quickly broke down. On June 9, Franwell walked away from the contract and never spoke publicly about it. One inside source said that basically, the state wanted more than what they were willing to pay for from Franwell.
The state then chose MJ Freeway, which has had its own share of troubles last year. The company has suffered hack attacks, alleged security breaches (which the company denies) and systems failures. By winning the contract, it was also put in the position of trying to take over a multi-million dollar system with over 1,700 participants in a matter of months. No easy task for any software company. MJ Freeway issued a video response regarding the situation and trying to address market concerns.
BioTrackTHC was set to terminate its contract on October 31, but in early October the state began talking to BioTrackTHC to extend the contract. “Events occurred that brought up a potential security concern,” said Jeff Gonring, Director of Market and Communications for BioTrack. He was referring to security over data issues surrounding MJ Freeway. Regardless, BioTrack designed a work around for the state to use as it makes its transition. This band-aid approach has helped the customers and reduced BioTrack’s exposure to MJFreeway’s security problems that seem to plague the company.