Washington’s New Cannabis-Tracking Software Is Disrupting the IndustryTobias Coughlin-BogueFebruary 6, 2018
Some businesses report that they haven’t been able to generate manifests—the state-mandated logs documenting the movement of cannabis between growers, processors, and retailers—since the new system went live. According to many, it has effectively shut down traceability for the time being.
“It hurts, it totally hurts. We just left behind $18,000 worth of a delivery that we can’t deliver.”Jeremy Moberg, CannaSol Farms
“We’re in Day 4 now, and we’ve never seen an electronic manifest in Green Bits,” Bob Ramstad, owner of OZ. Recreational Cannabis in Seattle, wrote on an industry forum on Sunday, referencing a popular point-of-sale system. “I don’t believe the problems with transferring the manifests in Leaf [have] been fixed yet, as our understanding is that multiple vendors attempted to transfer manifests on Friday.
“I am increasingly of the opinion that OZ. needs to plan on not receiving any deliveries this week,” Ramstad continued, “and we’ll consider ourselves lucky if anything is fixed by the end of the week.”
Jeremy Moberg, owner of CannaSol Farms in Okanogan County, said he’d been experiencing similar problems with the tracking software.
“I can log in to Leaf, but nothing is there,” he told Leafly. “It hurts, it totally hurts. We just left behind $18,000 worth of a delivery that we can’t deliver.”
The issues likely won’t affect anyone’s ability to grab an after-work pre-roll—many Seattle-area retailers said they stocked up on inventory in advance of the go-live date—but the setbacks do come at an especially inopportune time. Federal prosecutors are keeping a close eye on cannabis tracking in legal states.
Late last month, 13 US attorneys met in Oregon to discuss lapses in traceability and the overproduction of cannabis in legal states. The lapses, officials worry, risk allowing cannabis from legal states to be diverted into illicit markets—an area of particular concern to law enforcement. Indeed, in a recent letter to Colorado Gov. John Hickenlooper, US Attorney General Jeff Sessions cited diversion as one of his greatest concerns with legal cannabis.
While traceability software might not be the most exciting aspect of the legal cannabis industry, it is the workhorse of state efforts to curb diversion. The data amassed by such so-called seed-to-sale systems are essentially a digital record of a state’s entire cannabis inventory, allowing regulators to see where any product is, where it was, and where it’s headed.
In such a system, discrepancies matter. Tracking data need to line up with what’s actually in warehouses, delivery trucks, and stockrooms across the state. Some in the industry now fear the transition to Leaf has dirtied that data.
“Third-party traceability software developers are reporting problems that indicate major flaws in data integrity,” the trade group Washington Sungrowers Industry Association (WSIA) wrote in an open letter to state cannabis regulators. “For instance information inputted into the system by users comes back out of the system incorrectly. Manifests, for example, are being outputted to completely random licensees. Data is being scrambled and is potentially putting all operators out of compliance.”
“We can account for all traceability since Feb. 1.”Brian Smith, Washington State Liquor and Cannabis Board
Carl Schoenleber, chief strategist for third-party software integrator DopePlow, told Leafly he found lots of “interesting data leaks” while working in Leaf.
“We found that by sending a call to their API, they will occasionally return another farm’s data points, rather than the farm we were requesting,” he said. “We’ve even found data points from farms that we’re not even associated with pushed back into some of our systems.”
Jeanette Horton, vice president of global marketing and communications for Leaf Data developer MJ Freeway, said any issues with data integrity are specific to the state’s various third-party inventory management software providers. Leaf Data itself, she said, is fully operational.
“We have successfully integrated third-party folks,” she told Leafly. “The individuals having an issue, those have to be troubleshooted individually. It’s not a widespread problem.”
Regardless of who is at fault, if data from licensees who are using Leaf didn’t make it into the database successfully, that could indicate a serious gap in traceability. Licensees were instructed by the Washington State Liquor and Cannabis Board (WSLCB) to stop manually submitting spreadsheets via an interim system as soon as they switched over to Leaf.
“We reported weekly,” said Moberg, who is also a member of an WSLCB advisory group on traceability. “This was supposed to remove that requirement. So last Friday, there was no reporting.”
And no reporting means no enforcement.
“There are always conversations about diversion; those conversations are happening a lot more,” said Schoenleber at DopePlow. “I have every confidence that our farms will stay 100% above board, but anytime you open up regulation to a free-for-all, you make it easy for someone to divert.”
In response to questions about the reported problems, a WSLCB spokesperson said that no data has been lost.
“We can account for all traceability since Feb. 1,” said Brian Smith, the agency’s communications director. “We record by the transaction and back up every five minutes. This issue arose Saturday evening and was fixed Monday afternoon at 2:12 p.m. Because we can trace by transaction, we returned it the transaction that was originally recorded.”
Smith also forwarded a WSLCB press release sent Monday that announced that the problem with manifests had been solved. “Some manifests were impacted by an application bug that subtracted license numbers in the database upon transfer,” the release said, adding that the issues were “sporadic and did not impact every transfer” and have since “been resolved.”
The state’s assurances, however, don’t appear to have done much to placate nervous industry members, some of whom claim the bugs persisted even after the reported fix. Since the software went live, both the WSIA and the Cannabis Alliance have called on the agency to terminate its contract with MJ Freeway immediately and revert back to the contingency system.
“The Alliance asked for the industry’s Unified Contingency Plan (the back up plan that the industry devised to deal with the traceability issue) to be adopted permanently,” said Lara Kaminsky, executive director of the Cannabis Alliance. “We did this back in November. At that time, and especially now in light of the debacle we find ourselves in, we still ‘no longer find it necessary or appropriate to rely entirely or in part on a software system under WSLCB control at an unnecessary cost to taxpayers.’”
But the contingency system isn’t exactly bulletproof in terms of traceability either, warned Jerry Tindall, CEO of third-party integrator Soro Software. Under that system, the state’s third-party software providers helped licensees generate daily and weekly spreadsheets to be submitted to the WSLCB. In other words, said Tindall, the WSLCB does have all necessary traceability data from the last three months—but it isn’t easy to check. To catch discrepancies in the data, enforcement agents would have to sift through hundreds of thousands of spreadsheets, which could be prohibitively time-consuming. Real-time traceability software, on the other hand, can automatically flag suspicious transactions, allowing enforcement to zero in on potential problems.
While he had nothing nice to say about Leaf’s current functionality, Tindall acknowledged that given the growing scrutiny of traceability in legal states, WSLCB not launching the software wouldn’t be a realistic option .
“If I were to put the blame on anyone, I would say it’s probably not the WSLCB,” he said, speculating that it was “probably the WSLCB having other people breathing down their neck, saying, ‘This thing needs to ship.’”
In the long run, that was probably the right call, he said. “Traceability isn’t any better off today, because nothing works. But in a week it will be.”