For the first time in the history of the cannabis industry, we’re about to witness a state switching their government seed-to-sale system to a new provider with an active adult-use market.
This will require the state to shut off and remove the current system and launch a new one overnight, all without disrupting the operating businesses which are required to report to these systems in order to stay compliant. There are hundreds of uncertainties around this change and no previous state to observe from because this change is unprecedented. Most amazingly, it’ll be happening in two states, and on the exact same date.
What’s going on?
For those who don’t know, government seed-to-sale systems operate on a typical contract lifecycle, and for the state of Washington, BioTrackTHC’s contract is set to expire at the end of October and the company opted not to bid on the new contract for business reasons. Those business reasons are, in summary, so that we can focus more closely on our core, commercial product and better serve that area of the business (our customers).
This left the opportunity open for the highest bidder of the new RFP, which was Franwell’s METRC. However, Franwell chose to withdraw after they were told they had won the contract. The contract then went to the second highest bid, which was MJ Freeway’s Leaf Data System. MJ Freeway is expected to have their Leaf Data system up and running in Washington state by November 1, which will leave BioTrackTHC to sunset theirs and focus more heavily on the commercial product and servicing customers, rather than state traceability needs.
As for Nevada, MJ Freeway was awarded the five year contract in 2016, which was unexpectedly pulled from the company 8 months into the contract to be awarded to Franwell’s METRC. Franwell is expected to have METRC in place in Nevada on November 1.
With a long list of unknowns for these two transitions, here are some of the potential risks, as well as how you can prepare yourselves for them.
- System downtime – While it’s not expected in Nevada, many sources are indicating that the state of Washington is planning for a period of system downtime, which would restrict businesses from accepting/initiating transfers, reporting sales, and possibly more. This could cause interruptions in supply chain. We’ve advised our licensees to order additional inventory by 10/28 to prepare for any potential interruptions in supply-chain flow.
- Unable to migrate data – State traceability systems house a significant amount of business and customer data. If for some reason a data migration were to fail, it could cost years’ worth of data. Right now, there’s no reason to assume this will happen, but it is a definite risk in transitioning software systems that you can easily prepare for by storing additional backups of your data somewhere secure.
- Integrations – Who is your business seed-to-sale software provider? Are they integrated with whoever your respective state’s system will be come November 1? Many companies have struggled to provide thorough integrations to both METRC and Leaf Data in the past, so it will be crucial for licensees to make sure their software provider is able to provide full integrations and do so before the November 1 planned launch date. BioTrackTHC is already integrated with Leaf Data, and we recently announced our plans to launch the most complete full-vertical METRC integration to date, which will be available to Nevada licensees before November 1.
- New workflows – Depending on the system your state is switching to, it’s possible there will be small changes around how you’re required to operate in order to report data in a compliant manner. This would mean changes in your workflows that often take some time to fully adjust to, but that’s where flexible seed-to-sale systems come into play and will allow you to easily adapt your processes.
At the end of the day, there’s only so much you can do to prepare yourself for the unknown, and we’re ultimately at the mercy of whatever changes or complications stem from the implementation of each new system. We don’t know what might happen, but we know that preparation can ensure minimizing any hiccups you may experience.
One thing we do know is that, come November 1, everyone will be eagerly watching to see how things unfold, especially neighboring states including Colorado, whose existing state tracking contracts are set to expire in the coming years.
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Source: Cannabis Business Executive