2017 has been a rocky road for MJ Freeway. Despite picking up some big contracts, the company saw major outages in January and again in late October, not to mention numerous disastrous data breaches. They picked up Pennsylvania’s system only to have their recent outages temporarily derail the entire Keystone State program just as it was getting up and running. When those recent outages coincided with failure to launch in one state and contract termination in another, many in the industry are wondering whether to continue down MJ Freeway’s troubled path or find a detour.
On top of everything else, Nevada officially discontinued using MJ Freeway’s seed-to-sale tracking software, for the official state “track and trace compliance system for marijuana establishments.” The ruling, originally announced mid-September, became official this week. Nevada’s decision to can MJ Freeway comes just eighteen months into a five-year contract. As The Cannabist’s Bruce Kennedy noted, it has been a “brutal year for MJ Freeway.”
MJ Freeway set the gold standard in seed-to-sale software
The pioneering company basically created the concept of seed-to-sale tracking for the cannabis industry in 2010 and has gone on to become the gold standard of the field, though competitors such as Viridian Sciences, BiotrakTHC, and Franwell have been carving out a fair share of the market.
Currently MJ Freeway is the official software for 40% of America’s cannabis operations. It facilitates the regulation of cannabis markets in twenty-three states and five countries. Until recently, the cannabis software company had been riding high on a series of high-profile successes, including landing the $10.4 million-dollar contract to oversee Pennsylvania’s system and a contract to revamp Washington’s beleaguered program, plus landing $3 million in financing to fund their expansion.
As Business Insider’s Jeremy Berke explained in his coverage of the October outage, “Seed-to-sale reporting is an important step for bringing legitimacy to the nascent cannabis industry, as well as helping businesses navigate the often byzantine regulations on a state-by-state basis.”
Because the software is designed for vertically integrated companies in a state regulated industry, MJ Freeway software tracks the data involved in cultivation, extraction and edibles production, wholesale networking, distribution dispensary operations, and even the platform to interface among the sectors. When the entire economy of a state’s medical or recreational marijuana programs can hang in the balance, state industries and state governments demand their compliance software be as dependable as gravity.
MJ Freeways problems begin to mount
Last week, when MJ Freeway suddenly went dark, hundreds of businesses across the country once again found themselves thrust into the slow lane of having to hand enter each transaction across each lane of the platform on Saturday and then again on Monday.
But that was not their first fender-bender. In January, MJ Freeway’s first 2017 hack disrupted markets nationally when it caused their whole system to go down, “resulting in a major crash of MJ Freeway’s point-of-sale system, which is used by hundreds of marijuana retailers across the country.” The problem dragged on over a week.
Once the platform was again operational, MJ Freeway estimated they had recovered as much as 90% of their customers’ data. One thing many patients lost were their “in-store points” at various dispensaries. Dispensaries lost much good will as a result, in addition to thousands of hours of labor trying to catch up on the data entry.
A second security breach came to light in June, when the company had some of its source code information illegally posted online. It was several days before the company noticed. By the time the info was reigned in, it had become so public there was even a discussion thread about it on Reddit.
In the aftermath, industry insiders publicly began expressing their doubts. As Connor Penhale, the CEO of software consulting firm Compliant Cannabis, put it, “Once that risk is there, you’ve got a threat. Based on the track record that MJ Freeway has – do I feel confident that they can handle this one more big thing that they have on their plate?” Following the hack, there were calls for an outside audit of the firm’s cybersecurity. MJ Freeway’s director of data and marketing, Jeannette Ward, would later claim the leaked source code was outdated material.
MJ Freeway’s damage control response
In the face of all the controversy and negative press, MJ Freeway founders, CEO Amy Poinsett and COO Jessica Billingsley asked for good will as they dealt with ongoing investigations of the hacks and the welter of problems challenging them all at once. The company briefly released a video statement in which Poinsett said the problem was some parts of the various programs were built on eight-year old first-generation “legacy software,” but it was soon retracted.
Billingsley further explained, “What we need to do is to work to transition our existing, legacy customers to our new platform because it’s a much-improved product and not as susceptible to this type of issue. It is not an exaggeration to say that we have spent more on security in a [fiscal] quarter than most of our competitors’ gross in a quarter,” she added. More than one thousand companies in sixteen states suffered outages in October, though Billingsley acknowledged two-thirds of their customers were already supposedly on Gen-2 software.
More warning signs
Meanwhile, MJ Freeway’s biggest road-wreck may still be in the making. MJ Freeway’s Washington program, Leaf Data Systems was set to go live November 1st as the state operations system for Washington, but this week the state had to announce they will not make it.
In May, Washington’s Liquor Cannabis Board announced they were going to replace their ailing BioTrackTHC system with a METRC system by Franwell at the end of October. But when Franwell rescinded the contract, Washington’s LCB turned to MJ Freeway.
Spokane’s Spokesman-Review declared the delay a “Database Detour.” Ganjapreneuer labeled the Washington rollover a “Cannabis Armageddon Seed to Sale Halloween Scare.” A little less theatrically, David Busby’s Washington-based compliance software provider WeedTraQR quipped in its July blog: “Leaf Data system is barely ready for prime time … we’re predicting disaster.”
No matter what you call it, the failure of MJ Freeway to launch in a timely manner has the whole state’s industry and law enforcement and legal cannabis users on hold.
Operations will either have to start paying an additional fee to use BioTrakTHC during the transition, cease operations altogether, or resort to old-school reporting techniques, like copying and filling in and filing reams of paperwork, or entering and transposing a series of figures into a series of Excel spreadsheets. The program is now not expected to go live until January of 2018. The expected delays have retailers and consumers alike already stocking up, just in case.
In the stop gap, 25% of the state’s cannabis businesses will be stuck dealing with the spreadsheets. According to Brian Smith, spokesman for the Washington State Liquor and Cannabis Board (LCB), the remaining 75% of the state’s companies will use “a commercial piece of software (a litigious way of referring to BioTrakTHC).” Smith also noted the state of Washington will pay MJ Freeway $800,000 to set up the program, and then $600,000 annually to maintain it.
When asked about taking the contract back on, in light of MJ Freeways struggles, BioTrackTHC CEO Patrick Vo washed his hands of the matter. Though Vo was offered double the price to extend the BioTrakTHC contract through the transition period, he says given MJ Freeway’s track record with vulnerability, his company couldn’t feel secure handling Washington’s data now that MJ Freeway had touched it.
October 26th, Vo took to the pages of New Cannabis Ventures to further blast the WSLCB choice to go with MJ Freeway and to haggle with BiotrakTHC over the extension to bridge the service gap. VO went on to allege that someone was leaking data base info and offering to sell contact info databases with names like “WA DATABASE,” “NV PROD DATABASE,” and “PA PROD DATABASE.”
Even so, Washington’s state officials claim to be satisfied with MJ Freeway’s efforts so far. Hoping to calm media concerns that the system might be abused, resulting in diversion to out-of-state markets, Brian Smith, spokesman for the Washington State Liquor and Cannabis Board (LCB) stated, “We’re very pleased with MJ freeway and the work that they’re doing.”
Will MJ Freeway avoid a fatal crash?
Despite all the hazards they’ve had to face, Billingsley, Ward, and Poinsett all seem to remain optimistic about MJ Freeway’s ability to navigate the debris and roll on. “We understand our clients’ frustration and we apologize for the inconveniences,” Poinsett assured.
“We’re not in this business for short-term wins. While we’ve been first to market, we’ve also been first to stumble.” Billingsley agreed, “We literally invented seed-to-sale software, patented it. And all we do is to strive to do the right thing for our clients, to be part of the solution and to show the industry that we care.”