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Cannabis Businesses Suffer from ‘Breakdown’ of Washington State Traceability System

Last week, the Washington state’s cannabis tracking system was down from Saturday night until Wednesday morning. The outages caused some of the state’s cannabis businesses, including retailers, producers, and processors, to lose significant sales. For over four days, they were not able to conduct business transactions. The Leaf Data Systems, a comprehensive trace and track marijuana software from seed to sale, experienced “two discrete outages.” According to Denver-based firm MJ Freeway, the chosen vendor by the Liquor and Cannabis Board (LCB) to provide a cannabis traceability system in Washington state, they have noted two outages. The Leaf Data Systems software that tracks and trace cannabis supply from seed to sale went down on Saturday night and was open for a number of hours Tuesday. The executive director of the Washington CannaBusiness Association (WACA), Vicki Christophersen, said that cannabis businesses were losing so much money which they did not have to lose in the first place. The outages caused a stir among businessmen. The Washington State LCB released a notice on Tuesday that there was an error in the Leaf Data Systems software release 1.37.5. The error caused a breakdown that prevented wholesale firms from doing business-to-business operations within the Leaf software. According to LCB, the association from inventory to the testing lab results has been broken, which therefore prevented licensees from creating manifests to purchase and trade cannabis products. The disruption brought a negative impact on the marijuana supply chain. Cannabis growers were not able to offer their products to processors, and at the same time, cannabis producers were not able to supply their retailers.

Impact on Revenue

The Cannabis Alliance, a non-profit association, conducted a survey on the recent outages. They asked several marijuana business owners in the state to provide an estimate of their overall loss, including revenue loss, employee pay, and other related factors. The survey results showed that most businesses lost about $1,000 to $80,000. Meanwhile, eight cannabis firms mentioned that they lost $25,000 and more in sales.

System Back Online

The LCB Traceability Project Steering Committee closed the system temporarily on Tuesday until MJ Freeway identifies the root cause of the “breakdown” and come up with a solution to fix the disruption. Finally, the Leaf Data Systems software system was back online on Wednesday, 5:50 am. PT, and immediately released a notification to marijuana business owners. According to an email written to Marijuana Business Daily by Jeannette Horton, the Leaf Data Systems spokeswoman, the system was back online on Wednesday morning. The testing showed that the disassociation of the inventory and testing lab results had been fixed. All lab results are intact, and no negative impact on data integrity was observed. LCB spokesman, Brian Smith, said that the primary priority was to make a functioning system that cannabis licensees could use to conduct smooth business transactions today. This is not the first time an outage issue like this has happened. The traceability system has been plagued with errors and glitches since 2017 when MJ Freeway was awarded by regulators the state’s traceability contract.

After Effects of the ‘Breakdown’

Although the system error has been solved, cannabis licensees are still suffering from the impact of the software release as of Wednesday afternoon. Owner of the Seattle-based OZ. Recreational Cannabis retail, Bob Ramstad, stated on Wednesday that his store would usually accommodate 10-12 orders and about 15-18 total in a week. But as of midday Wednesday, Ramstan said he had not received any. He conducts businesses with about 30 processors and 30 producers. According to Ramstad, the immense impact of the system breakdown is more observed in the smaller processors and producers who can’t fill orders. They will lose their shelf space and market share, which can easily be contained by more prominent players in the cannabis market. Ramstad noted that the last time an outage like this happened was in November. It took around three weeks before the cannabis supply chain has recovered and went back to normal.

The Timeline of Events

On June 17, the LCB released a notice that says the Leaf Data Systems would be down for approximately 30 hours, beginning on July 13 nighttime, as reported by the newsletter Cannabis Observer. The outage was then prolonged to 48 hours. Greg Foster, the founder of Cannabis Observer, wrote that there wasn’t a public communication about potential impacts of an extended outage which spanned the beginning of a business week. The software provider suggested a 24-33-hour disruption on a Sunday, but it spanned across Monday. Christophersen from WACA questioned the choice to release the software on that day and time. According to Christophersen, they should not have gone live without thinking of the possible negative impact on the cannabis industry. Horton of MJ Freeway refused to provide an elaboration of the extension of the outage than initially planned. According to Horton, they have tested the release of the software beforehand. She also apologized for the inconvenience brought by the disruption.

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