2017 was a year of disappointment for MJ Freeway. The seed-to-sale trailblazer finds itself dealing with frequent outages and dangerous data breaches that lead to increasingly dissatisfied customers and contract cancellations.
Recently, Nevada state announced that they will be parting ways with the company, only 18 months into their 5-year contract. This decision came after a period filled with controversy for MJF, and the press is already speculating about what it all means for MJ's future.
MJ Freeway pioneered in the seed-to-sale software market. The company launched the first service back in 2010. Their innovation became a standard for the newborn legal cannabis industry and competitors have started to emerge.
Software as a Service (SaaS) specialized for the cannabis industry offers a powerful ally for retailers, who have to undergo strict regulatory audits. "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,” said Jeremy Berke, a columnist for Business Insider.
MJ Freeway still remains the biggest player in the space, owning more than 40% of the market. Their software is designed to be compliant with every state’s regulatory agency, providing data for every aspect of the cultivation and sale processes. Therefore, the system tracks data at all points in the cannabis supply chain, distribution, retail, or wholesale. That's a mountain of data that's hard to handle. As the industry is growing, so is pressure from local authorities, who want the software to be not only robust but reliable.
Outages, Data Breaches, and Breakdowns
Problems for MJ Freeway began in January 2017 when their servers were hacked, leading to a major cash of the PoS systems. In June, a source code leak led to a second security breach that drew a lot of attention from social media and the press. Connor Penhale, CEO of Compliant Cannabis said: “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?”
The company’s CEO and COO asked for support during this difficult time for the company. A video statement was released in which Amy Poisnett, MJF’s CEO, explained the technical nature of the problems. Jessica Billingsley, COO of MJ Freeway reminded: “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 quarter than most of our competitors’ gross in a quarter.”
MJ Freeway and the Washington Cannabis Program Controversy
Despite MJ Freeway’s reassurances, the hard part might not be over yet. MJ Freeway’s Washington cannabis program, Leaf Data Systems was set to go live on November 1st. However, the state announced in the previous week that it will be postponed until January 2018.
This setback caused the press speculate even more on the future of the seed to sale giant. Spokane’s Spokesman-Review stated that the delay was a “Database Detour,” while Ganjapreneuer labeled the Washington delay a “Cannabis Armageddon Seed to Sale Halloween Scare.” David Busby’s Washington-based compliance software provider WeedTraQR predicted in a July blog that “Leaf Data system is barely ready for prime time… we’re predicting disaster.”
Currently, the state is trying to cut a deal with BiotrakTHC, who are reportedly reluctant to undertake the project after the involvement of MJF. So, in order to avoid further abuse or 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.” Whether he means it or not remains to be seen.
Putting it All Back Together: The Future of MJ Freeway
MJF has a mountain to climb, as it has to deal with internal issues as well as repairing their reputation. Amy Poisnett said: “We understand our clients’ frustration and we apologize for the inconveniences.”
On a more defiant tone, J. Billingsley further added, “We’re not in this business for short-term wins. While we’ve been first to market, we’ve also been first to stumble… 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.”