Washington’s Broken Seed-to-Sale System Has Cost $2M

According to new documents obtained by Ganjaprenuer, the Washington State Liquor and Cannabis Board has issued nearly $2,000,000 in payments over a two-year period to MJ Freeway for Leaf Data Systems, the state’s problem-plagued seed-to-sale traceability database.

MJ Freeway was chosen in summer 2017 as Washington’s contractor to build the state’s traceability database after competitor Franwell hastily withdrew from the contract negotiations.

The company, however, missed its first deadline of Halloween 2017 then changed the launch date for Leaf Data Systems to February 1, 2018. Numerous other challenges have followed, including a data breach in 2018 and a complete timeline rework in spring 2019. By the fall, it was clear the project was still having problems after an LDS shutdown in July. Shortly thereafter, the LCB announced that MJ Freeway would “maintain” the database only, scrapping the new timeline and putting on hold all future updates.

According to documents obtained via a public records request, the LCB paid MJ Freeway $1,971,421 between May 2017 and August 2019 for its work on Leaf Data Systems.

In 2019, MJ Freeway completed a merger with MTech Acquisition Corp. to form a new company, Akerna Corp., which adopted the LDS system.

In an email, LCB spokesperson Julie Graham said the LCB paid the contractor an additional $52,500 in September for “project deliverables,” but the two parties have also agreed on a $265,000 credit to the LCB for “outstanding invoices that LCB has been holding pending resolution of the contract discussions.” At the moment, it is unclear how much longer the LCB will continue to pay its $50,000 monthly subscription fee to MJ Freeway.  

“The latest amendment extended the contract through June 1, 2020 with the option of up to four six-month extensions at LCB’s discretion. The monthly subscription fees will continue as long as the contract continues.” — Julie Graham, LCB spokesperson, in an email

The LCB is currently holding workgroup sessions with Washington cannabis stakeholders to decide what traceability will look like going forward in the state.

“While we can’t predict the specifics of the future of our traceability needs and impacts on the cannabis system, one thing is certain – there will be change,” Graham continued. “In the past five years developing and refining our state’s regulation of the new system, it’s clear that ongoing assessment and modifications have and will be necessary to keep up with the evolving marketplace, including changes at the federal level.”