Businesses that provide seed-to-sale tracking systems to the marijuana industry operate in an intensely competitive environment, but one company appears to be pulling away from the pack with its recent contract victories.
Franwell – the Florida manufacturer of the regulatory compliance system known as Metrc – has won contracts with more than half the markets that require cannabis businesses to use a specific seed-to-sale traceability system.
Most states with legal marijuana industries require businesses to have inventory-control and reporting systems in place, though several allow each company to choose the provider they’ll use.
Minnesota, for example, places the responsibility for seed-to-sale tracking entirely on medical marijuana producers in the state.
Here’s what you need to know about the situation:
- Of the six states with operational adult-use industries – Alaska, California, Colorado, Nevada, Oregon and Washington – the latter is the only one that doesn’t use Franwell’s Metrc system. Franwell was initially tapped by Washington state as well after BioTrackTHC decided not to renew its contract, but the company subsequently withdrew its bid. MJ Freeway currently provides Washington state with seed-to-sale tracking.
- The value of seed-to-sale contracts can vary dramatically from state to state. For example, MJ Freeway was awarded a $10 million contract in April 2017 to provide services in Pennsylvania, while North Dakota’s contract with BioTrackTHC was valued at $589,000. The value of each contract depends on a number of factors and may include costly expenditures, such as upgrades to a state’s information technology infrastructure. Furthermore, seed-to-sale providers often generate additional revenue outside the scope of the state contract by charging marijuana business owners for the tags used to trace plants and/or software licensing fees.
- California’s seed-to-sale tracking contract with Franwell is the largest ever awarded, with the potential to generate nearly $60 million in revenue for Franwell over a two-year period.
Eli McVey can be reached at email@example.com