California’s full legal cannabis market officially opened its doors for business on January 1st, 2018. Following a relatively short time frame when they announced the first licenses awarded less than a month ago, retail stores were open for business in counties throughout California. Customers came out in full force, with long lines on the opening day, with some hundreds deep stretching around blocks.
For the quick turn around time between implementing regulations and awarding temporary licenses, the grand opening of the cannabis market in the nation’s most populous state proceeded smoothly. Only a handful of minor hiccups associated with the launch were reported throughout the state. In the grand scheme of things, that’s a pretty good job for a new regulatory agency (The Bureau) tasked with regulating such a massive fledgling market.
One major and definitely foreseeable hiccup in the launch of California’s new medical and adult use markets was the failure to implement tracking software. According to Michael Blood with The Associated Press, licensed businesses are being asked by the California Department of Food and Agriculture to manually document sales and transfers of cannabis with paper invoices.
Los Angeles Image: Kevin Stanchfield, Flickr
While the Department said the traceability system was implemented Tuesday, Blood says, cannabis businesses are not required to use it and will be trained on how to operate it before it becomes required to use later in 2018.
Local control regulations in California means that businesses must first seek approval from local authorities before attaining a temporary license from the state to operate. That coupled with the rolling process of awarding licenses meant that only some cannabis businesses could officially open their doors. Municipalities throughout California handle regulating cannabis differently.
The handful of adult use dispensaries with temporary licenses in the Los Angeles area received a massive influx of customers on opening day. Residents of LA came in droves to the four West Hollywood dispensaries open for adult use business.
Integrating Your LIMS System With State Tracking Systems
By Hannah O’Brien, Operations Manager, Confident Cannabis
Running a lab is hard. Running a cannabis lab is harder. Watch this webinar hosted by Confident Cannabis, the most popular and only free cannabis LIMS in the country, to learn how cannabis compliance and regulatory burdens impact analytical testing laboratories in any state, and how important purpose-built software solutions are to make their business run smoothly.
According to a press release published this morning, BioTrackTHC successfully implemented their Universal Cannabis System (UCS) in Washington State, a temporary solution for the state’s seed-to-sale cannabis tracking system, while the new system is yet to be deployed.
BioTrackTHC had a contract with Washington State for four years, which expired just weeks ago at the beginning of November. Back in June, after a few minor hiccups, the state announced that MJ Freeway would be the successive software platform used for the state’s seed-to-sale traceability system.
The deadline for the new software to be ready for deployment was set for November 1st, when the BioTrackTHC contract would expire and the MJ Freeway contract would begin. Between when the contract was awarded and the deadline for implementation, MJ Freeway made headlines for a series of security hacks and systems failures. Subsequently, MJ Freeway said they could not deliver the software platform until January of 2018, leaving a two-month gap where businesses have no state-mandated software to use for the tracking system.
The contingency plan that the state laid out consisted of business owners manually inputting data in excel spreadsheets. When first pressed for a Band-Aid solution, representatives of BioTrackTHC cited security concerns related to MJ Freeway’s hacks as reason for being hesitant to extend their contract through the interim period.
In an open letter to the Washington cannabis industry back in October before the end of their contract, Patrick Vo, president and chief executive officer of BioTrackTHC, laid out an explanation for what went wrong and provided an alternative solution, essentially a private sector version of their government-mandated traceability software system.
The open letter to the Washington cannabis industry, written by Patrick Vo
Announced this morning, the new system, UCS, is being used by over 1,600 of the 1,700 cannabis licensees in Washington. The UCS has so far submitted 39,000 individual excel spreadsheets to the Washington State Liquor and Cannabis Board (WSLCB). “After the WSLCB announced that their replacement system would not be ready in time and that the only other option was for all 1,700 licensees to submit their seed-to-sale data via manual spreadsheets, BioTrackTHC created the UCS—a privatized clone of the government system—within a few days and deployed it minutes after the termination of the old system to minimize the impact on all licensees,” reads the press release.
The UCS allows business owners to streamline data recording, instead of manually entering information into spreadsheets. It is also integrating with 3rd party software competitors such as WeedTraQR, GrowFlow, Mr. Kraken, TraceWeed, GreenBits, S2Solutions and DopePlow. “After the WSLCB’s announcement, we knew that we had only a few days to provide a universal system to which the whole industry could submit compliance data and enable communication across the supply chain between licensees and their seed-to-sale system,” says Vo. “Our priority was to ensure that licensees could continue to operate in the absence of a government seed-to-sale system. Not having that system in place could have left Washington licensees vulnerable to noncompliance in a variety of ways, not to mention the potentially crippling volume of extra work needed to manually track a business’ entire inventory.”
Washington State’s new traceability software system by MJ Freeway is expected to deploy in January of 2018.
MJ Freeway, a seed-to-sale traceability software company with a number of government contracts, has been making headlines this year for all the wrong reasons. A series of security breaches, website crashes and implementation delays have beleaguered the software company throughout 2017.
Just this morning, the Philadelphia Inquirer reported the company’s services crashed Saturday night and Monday afternoon. That article also mentions an anonymous hacker tried to sell sensitive information from the Washington and Nevada hacks in September. Back in April, when Pennsylvania awarded the state’s contract to MJ Freeway for its tracking system, Amy Poinsett, co-founder and chief executive officer of MJ Freeway told reporters “I think I can confidently say we are the most secure cannabis company in this particular industry.” It is safe to say this is now being called into question.
Earlier this week, New Cannabis Venture’s Alan Brochstein reported that MJ Freeway is unable to meet Washington’s October 31st deadline to integrate their software with the state, forcing customers to manually report data.
According to an email we obtained, all of MJFreeway’s clients in Spain experienced an online outage, but that services were restored within 24 hours. In an email sent to clients in Spain, the company told customers that the problems were the result of a system failure. “Our initial analysis indicates that this was a system failure and unfortunately none of the data was able to be successfully retrieved from the backup archive due to an error but we can assure you that none of your data was extracted or viewed at any moment,” reads the email. “We are extremely distressed regarding the event that occurred with the system and the service interruption that occurred yesterday. We recognize that this is a situation that is very serious and negatively impacts your club.” The email says that MJ Freeway is addressing those problems in a few ways, one of which being ongoing audits of their data backups. “The event has led us to reconstruct our “hosting environment” in Europe to use the latest technology from Amazon Web Services with the best redundancy, flexibility and security, using the highest stability measures in the AWS environment,” reads the email. While the site will be restored fully, according the email, historical data is lost. The company is working with their clients to help them get data back into the system.
Two weeks ago, we reported on the State of Washington choosing Franwell as their apparent successful vendor (ASV) for their seed-to-sale traceability system contract. Late last week, the Washington State Liquor and Cannabis Board (WSLCB) sent out an email explaining that they are no longer going with Franwell and the new ASV is MJ Freeway.
The email (left) consisted of a letter sent by Peter Antolin, Deputy Director of the WSLCB, to licensees “who had written to the Board and staff regarding the marijuana traceability Apparent Successful Vendor and RFID tags.” Apparently, the reason behind switching the ASV to MJ Freeway is because Franwell’s system requires only one method for tagging plants- RFID tags. According to the letter, Deputy Director Antolin says the initial request for proposal (RFP) stated that the traceability system needs to support a variety of tagging methods, including bar codes and RFID. “The RFP requirements did not allow a vendor to make any assumptions regarding use of a single tagging methodology or allow vendors to include any such costs affecting the state or our licensees in their proposal,” says Antolin. As they made clear in the previous press release, the ASV is not the official contract winner until they complete negotiations and sign the contract.
On June 7th, Franwell withdrew their proposal for the state’s traceability system, thus Washington went with the second highest scoring vendor, MJ Freeway. Deputy Director Antolin says they submitted a strong bid, but there are still many questions left unanswered. How could such a glaring mistake be overlooked when the state named Franwell the highest scoring bidder? Is MJ Freeway’s system robust enough and capable of handling the state’s cannabis licensees’ traceability requirements even though they were not the highest scoring bidder? The deadline for the new system to be in place is October 31, 2017, which is quickly approaching for such a massive systems overhaul.
The WSLCB’s oversight highlights a few inadequacies with the state’s regulatory agency, particularly their indecision and lack of foresight. So much of the concept behind seed-to-sale traceability rests on Cole Memo compliance. A big reason why some states seek to implement a robust tracking system is to remain compliant with the Cole Memo; preventing diversion to crime organizations with regulatory oversight is a key tool that states use to tell the federal government they are complying with their directive and intend to protect their state’s legal cannabis operations from federal prosecution. Without a proper system in place, the state runs the risk of exposing their entire cannabis market to threats of federal enforcement, a scenario that seems unlikely but could be disastrous to cannabis businesses and the local economy.
According to a press release, the State of Delaware has chosen BioTrackTHC as their partner in seed-to-sale tracking software. Delaware’s Department of Health and Social Services (DHSS) signed a contract with BioTrackTHC for the tracking and patient registry software.
In 2016, Delaware issued a request for proposals for “the Delaware Enterprise Consolidated Cannabis Control System,” which encompasses the statewide patient registry and seed-to-sale traceability systems. “Our sincerest thanks to DHSS for choosing Team BioTrack,” says Patrick Vo, CEO of BioTrackTHC. “DHSS has been wonderful to work with throughout the contracting process, and we look forward to partnering with them to provide the tools and data they need to continue overseeing the industry and protecting their patients.” BioTrack’s software was selected as the winner of a number of government contracts in other states previously for the same role.
Their software is currently used in government traceability systems in Washington, New Mexico, Illinois, Hawaii, New York and the city of Arcata, California. The press release states regulators will have the ability to view the retail data “including plant counts and usable inventory, lab results, transportation, and point-of-sale data—to perform periodic audits and ensure compliance.” The patient registry will also provide better patient accessibility through the new software with a faster turn around time and automated application processing.
BioTrackTHC provides technology solutions for businesses and governments to tracking products throughout the supply chain to the point of sale. The software systems help businesses remain compliant with regulations and monitor data for things like inventory management.
On March 18th, the Oregon Liquor Control Commission (OLCC) issued its first recall for recreational cannabis products. The recall, according to the press release, occurred because an unnamed wholesaler sent cannabis products to a retailer before the pesticide test results were entered into the OLCC Cannabis Tracking System (CTS).
Photo: Michelle Tribe, Flickr
The cannabis grown at Emerald Wave Estate, LLC is said to fail a test for pyrethrins exceeding the Oregon Health Authority (OHA) action level (the action level for pyrethrins is 1 ppm). Pyrethrins are a class of insecticides derived from the chrysanthemum flower. Their toxicity varies a lot depending on exactly what organic compound was used, but has an acute toxicity level that is cause for concern. When exposed to high levels of pyrethrins, people have reported symptoms similar to asthma. Generally, pyrethrins have a low chronic toxicity for humans.
The retailer, Buds 4 U LLC, located in Mapleton, OR, issued a voluntary recall for 82.5 grams of the strain Blue Magoo sold between March 8th and 10th. After finding the failed test results in the CTS, the retailer immediately contacted the OLCC. According to The Portland Tribune, OLCC spokesman Mark Pettinger says the retailer was very cooperative in immediately notifying the OLCC. “The retailer was great,” says Pettinger. “They get the gold star.” The Portland Tribune also says the wholesaler who shipped the cannabis prior to test results being entered is Cascade Cannabis Distributing of Eugene. That mistake could be a violation of Oregon’s regulations, leading to a 10-day closure and up to a $1,650 fine.
According to the press release, the rest of the nine pounds in the batch is on hold “pending the outcome of an additional pesticide retest.” The OLCC encourages consumers to check if their products have the license and product numbers detailed in the press release. They advise consumers who did purchase the affected cannabis to dispose of the product or return it to the retailer. The press release also mentions that they have not received any reports of illness related to the tainted cannabis.
In a New York Times article published yesterday, news broke of Microsoft’s entry into the cannabis marketplace, teaming up with KIND Financial to launch its Microsoft Health and Human Services Pod for Managed Service Providers, which is essentially a seed-to-sale tracking technology. Their goal is to provide local and state governments with software solutions for traceability in the burgeoning cannabis industry.
In a press release yesterday, Kimberly Nelson, executive director of state and local government solutions from Microsoft said, “KIND’s strategic industry positioning, experienced team and top-notch-technology running in the Microsoft Azure Government cloud, made for an easy decision to align efforts.” According to KIND Financial founder and chief executive officer, David Dinenberg, the cannabis marketplace will continue to have strict oversight and government regulations. “I am delighted that Microsoft supports KIND’s mission to build the backbone for cannabis compliance,” says Dinenberg.
This move could represent an opening of the floodgates for corporate interest in the space. According to Matt Karnes, founder of GreenWave Advisors, a cannabis financial data analysis firm, this could potentially result in an increase in capital flow into the cannabis industry. “This signals a wider acceptance of cannabis and perhaps that changes to national policies are more likely now that we see a large corporation stepping in,” says Karnes. “This could certainly mean an inflow of capital from larger, mainstream enterprises that were previously unwilling to take the risk.” Microsoft also made news recently for the acquisition of LinkedIn for $26.2 billion. The move to get into the cannabis space could represent a diminishing stigma associated with the market and a wider mainstream acceptance in business.
According to Nic Easley, chief executive officer at Comprehensive Cannabis Consulting (3C), this is another legitimizing factor for the cannabis industry. “It shows that cannabis is here to stay, and the fact that Microsoft is now spending resources on software, further validates that,” says Easley. “Many of the first mover seed-to-sale companies, entered the industry too early, had problems with their technology and lacked quality customer service, which created opportunities for new companies to emerge to dominate and capitalize upon the first ‘Netscapes’ of the cannabis industry’s failures.” Additionally, this could rationalize the market for other quality software companies such as Compliant Cannabis, according to Easley.
While Microsoft publicly announced their entrance into the cannabis marketplace, one can speculate that other large companies are planning their entrance as well. “We are fielding inquiries from Fortune 500 companies, Wall Street investors and even major foreign investors on a weekly basis,” says Easley. “In the past week alone, we received calls from three different Fortune 500 companies asking us how they can get into the industry.” It appears that because Microsoft is in the cloud business and they are offering this ancillary service that not only does this further legitimize the industry, but it could be quelling the dated stigma associated with cannabis.
With the news of Pennsylvania’s medical cannabis legalization measure passing, lawmakers are clamoring for strict regulatory oversight in the form of traceability to prevent diversion and misuse. State Senator Daylin Leach (D- Montgomery/Delaware) introduced the bill and believes it will have the most intensive protections for safety in the country. “Our goal was to create a system that helps as many patients as possible, as soon as possible and as safely as possible,” says Steve Hoenstine, spokesperson for State Senator Leach. “The seed-to-sale tracking system and the bill’s other protections do just that.”
At the recent Cannabis Labs Conference, Cody Stiffler, vice president of government affairs at BioTrackTHC, discussed why traceability is so important. Stiffler previously served as the chief executive officer of the American Medical Management Association, where he fought the Florida prescription drug abuse epidemic. “We originally started tracking prescription medications and methamphetamine precursors to combat the prescription drug abuse and meth epidemic in Florida,” says Stiffler. He focused on providing accountability and traceability, making sure every prescription was legitimate and keeping drugs off the black market. Implementing tracking protocols allowed for the accountability of pharmacists, physicians and patients.
Cody Stiffler presenting at the Cannabis Labs Conference
The primary goals of a traceability system, according to Stiffler, are to prevent diversion and promote public safety. “We want to advance the cannabis industry with respect to traceability and regulatory compliance by integrating laboratory testing with traceability,” says Stiffler. “Our software helps get safe products to patients and consumers in a responsible manner.”
Stiffler’s role at BioTrackTHC is to provide industry insights to states looking to legalize cannabis and support them with identifying the best practices that meet requirements in their state. Traceability is commonly defined as the ability to verify history, location and application of a product from source to distribution. BioTrackTHC’s tracking software covers everything from seed to sale, involving regulatory bodies in oversight. In the beginning of cultivation, each plant is assigned a bar code or sixteen-digit identifier. According to Stiffler, Colorado’s system uses radio-frequency identification (RFID) tags while Washington’s system gives the business a choice because the software can work with any type of identifier, whether it is a barcode, QR code or RFID tag. “Our system generates those numbers and prevents diversion with a closed loop system,” says Stiffler.
A plant tagged with a barcode and date for tracking
Washington, Illinois, New York, New Mexico and Hawaii are the five states that use BioTrackTHC’s software. “If the state wants to see the chain-of-custody, they can go back in the system and see every touch point and the full life cycle of the product in real time,” says Stiffler. “Our system also incorporates lab testing to ensure no product reaches shelves unless test values are associated with it.”
A flowchart showing tracking from seed to sale.
For many states, problems lie not in diversion, but inversion, where black market growers bring their products into the legal market. “A lot of people growing black market product are inverting it into the regulated market,” notes Stiffler. This kind of black market activity can flood the legal market with un-tested cannabis.
Product recalls are examples of when traceability software can be very useful. Pesticides, microbiological contaminants, heavy metals and other contaminants are at issue. Stiffler invokes an example from a company in Washington making THC-infused drinks. “Because of an issue in the manufacturing process, the bottles were exploding in refrigerators and on shelves,” says Stiffler. “Because the product’s lineage was completely tracked, we could isolate all of the products in that specific batch from that specific manufacturer and then forward trace to every retailer that had it in inventory,” he adds. “Whenever someone who did not get the recall notice would attempt to scan that barcode at point of sale, a message appeared noting its recall status and that it is not for sale.” The software’s financial data analytics can provide real time visibility for profit margins or losses resulting from recalls.
According to Stiffler, these kinds of protections in place give law enforcement and government agencies piece of mind that they are helping to prevent diversion and promote public safety. Traceability software is one of the very important safeguards protecting food safety and product safety.
HARRISBURG, PA– On Wednesday, the Pennsylvania Legislature approved a bill to legalize medical cannabis. Pennsylvania will be the 24th state to legalize cannabis in the United States. The House voted 149-46, passing bill SB3 and sending it to Governor Tom Wolf, who signed the bill into law on Sunday.
The bill, with a list of seventeen qualifying conditions, will allow for certifying physicians by the Pennsylvania Department of Health and licensing growers and dispensaries. The bill also requires standards for traceability in regulatory oversight, establishing criminal penalties for diversion or falsification of identification cards issued to caregivers and patients.
House Majority Leader Rep. Dave Reed
House Majority Leader, Rep. Dave Reed (R-Indiana), believes the bill allows for robust regulatory oversight. “[…] I am confident Senate Bill 3 provides all the necessary protections to prevent the abuse of medical cannabis, including its unavailability in leaf form,” says Reed. “This new health care program will be closely monitored and if there are found to be weaknesses in the law down the road, we can certainly make any necessary revisions.”
The measure’s prohibiting the distribution of cannabis in dry flower form follows New York’s policy of only allowing patients to use it in forms other than smoking, such as vaporizing or consuming orally in capsules.
Tom Santanna, director of government relations at the Pennsylvania Medical Cannabis Society, is confident the PA Department of Health is the right organization to regulate medical cannabis. “An important part of the regulatory process includes providing for the safety of cannabis via laboratory testing, and it is our feeling that the PA Department of Health is the correct agency for that task,” says Santanna. “The legislation gives the Department of Health the authority to create standards for safety and it is our goal as an organization to work with them to make sure the proper safeguards are in place.”
State Senator Daylin Leach introduced the bill.
The passing of this legislation will undoubtedly encourage more doctors to consider recommending cannabis as a treatment option in Pennsylvania. Dr. David Casarett, professor of medicine at the Perelman School of Medicine, University of Pennsylvania, believes this could help a number of his patients. “When it becomes legal in Pennsylvania, I will certainly discuss it as an option for some of my patients,” says Casarett. “If it is legal, then at least I will know my patients are getting it from a safe and reliable source, without supporting the illegal drug trade and organized crime.”
State Senator Daylin Leach (D- Montgomery/Delaware) introduced the bill and has introduced medical cannabis legislation in every session since 2009. Steve Hoenstine, spokesperson for State Senator Leach, believes the measure will have the most intensive protections for safety in the country. “Our goal was to create a system that helps as many patients as possible, as soon as possible and as safely as possible,” says Hoenstine. “The seed-to-sale tracking system and the bill’s other protections do just that.” State Senator Leach will deliver the keynote speech at the Innovation in the Cannabis Industry; Technology, Medical & Investment Conference in Philadelphia on April 30.
It is expected to take up to two years to begin the implementation of regulations and allow retailers to open their doors to patients.
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For the quick turn around time between implementing regulations and awarding temporary licenses, the grand opening of the cannabis market in the nation’s most populous state proceeded smoothly. Only a handful of minor hiccups associated with the launch were reported throughout the state. In the grand scheme of things, that’s a pretty good job for a new regulatory agency (The Bureau) tasked with regulating such a massive fledgling market.
