Washington state’s marijuana tracking contract up for bid

washington state regulations

By Bart Schaneman

Washington state regulators have begun accepting bids for a new seed-to-sale tracking system to keep tabs on marijuana commerce, a deal with an initial value of about $3 million.

The competition likely will be fierce, given that the contract involves one of the nation’s largest cannabis markets.

But businesses won’t be squaring off against the provider of the state’s current seed-to-sale system, BioTrackTHC.

The company said it has no plans to bid for the new contract, saying it is uncomfortable with some specifics of the state’s proposal.

BioTrackTHC’s contract expires in October.

Bids for the new contract are due by April 26, and the state hopes to have the new system in place by Oct. 31, Brian Smith, communications director for Washington’s Liquor and Cannabis Board (LCB), told Marijuana Business Daily.

The contract length will be negotiated.

BioTrack bowing out

State government contracts have become a lucrative – and prestigious – source of income for software companies that provide seed-to-sale tracking systems. In some states, numerous competitors have submitted bids for contracts, which are often worth hundreds of thousands of dollars, if not millions.

BioTrackTHC first won Washington’s contract in 2013.

It beat out 21 other companies, netting $750,000 for the base deal and even more as part of a two-year maintenance agreement. But the company’s software platform has come under criticism from commercial cannabis growers who complained it was costing them time and money.

Patrick Vo, CEO of BioTrackTHC, argues that the LCB’s proposed system is less robust than the company’s existing platform.

And he believes the language in the bidding documents, or RFP (request for proposals), may not satisfy requirements spelled out in the U.S. Justice Department’s Cole Memo.

“At this time, with the requirements that are in the RFP, we are not comfortable with bidding,” Vo said.

System price tag, revamp

Washington’s planned seed-to-sale system carries a price tag of approximately $3 million for initial installation.

The state Liquor and Cannabis Board is contributing $980,000 to help cover the costs. State lawmakers must develop a plan to pay the rest.

The platform allows regulators to monitor cannabis companies’ supply chain – everything from cultivation and transportation to dispensary inventories and sales.

Washington’s cannabis market is burgeoning. Sales nearly doubled in 2016, increasing 95% to $696 million. (Last year, Washington merged its previously unregulated medical marijuana market into its heavily regulated adult-use industry.)

Initially, the state developed its requirements for the tracking system before any marijuana licenses were issued. The system met the state’s initial needs, the LCB’s Smith said. But now, with some 1,600 licensees, it’s necessary to revamp it.

Since operations began, Smith said, the state cannabis market has grown “exponentially” and has exceeded the current platform’s capacity. Washington has about 500 MJ retailers and some 1,200 producers and processors.

According to Smith, his agency wants an existing off-the-shelf system given the LCB’s “aggressive timeline.”

“The vendors for this aren’t limited to the marijuana industry,” he added. “It could be anyone who maintains systems like this for other products in other industries. We need a more robust system that can flex with Washington’s growing, maturing marijuana system.”

To pay for the system’s ongoing cost, the annual license fee for the seed-to-sale contractor would rise to $1,300 from the current $1,000.

Roll with the punches

Like state regulators, industry officials want a new system that’s flexible and can adapt to a changing cannabis industry.

“We didn’t know what we didn’t know when the state originally procured a system,” said Lori Lizotte, a member of the Washington CannaBusiness Association. “The industry has evolved, and as the industry evolved, the needs have changed.”

When Washington legalized adult-use cannabis, regulations were applied that have since been amended and changed. The state has struggled to alter the tracking system to account for those changes, according to Lizotte. Each change requires customizing the system, which comes with a “very, very expensive” price tag, she said.

BioTrackTHC’s Vo countered that his company’s current system “is very configurable.”

“The government platforms that we have deployed in other states are all different. They’ve all been configured for their specific regulations,” he added.

Mixed reviews

Karl Keich, who owns two marijuana retail stores in Washington, hasn’t experienced any glitches with BioTrackTHC.

“We haven’t had any issues,” he said.

He does hope the state will award a contract for a system that uses an interface that integrates easily with the different of point-of-sale software systems used by rec shops and dispensaries.

By contrast, Jeremy Moberg – president of the Washington Sungrowers Industry Association and CEO of Cannasol Farms, a producer/processor company in Okanogan County, Washington – hasn’t been happy with BioTrackTHC.

Moberg uses the system for the reports the state requires and said simple tasks, such as sorting correctly and narrowing margins, have been “subpar.”

“It really doesn’t function on a business level very well, or very efficiently,” he added. “So I’ve invested a lot of time and resources and money into writing functional software over the top of BioTrack.”

Bart Schaneman can be reached at [email protected]

9 comments on “Washington state’s marijuana tracking contract up for bid
  1. Pam on

    Definitely get rid of BioTrach, they are a Florida company built for Pharmacy Prescription Tracking and we know how well tracking opioids is working out.
    The 24hr Quarantine really mucks up tracking software and a fluidly running business.
    BioTrach, is an Access front over Excel. I’ve had many problems with the interface giving the wrong transaction dialog box, inventory transfer entries hanging and not being fixed for a few days.
    I faintly presumed that being in Washington we’d have a slue of tech companies tripping over this opportunity.
    What does Microsoft have to offer?

    • Sanhadra Guptakrishna on

      A “configurable” systems is NOT the same as a flexible system that is customizable to the ever changing rules and statutes in state government. Change or die.

      • Tyler Mitzen on

        I guess my question to the state would be, what needs to be more flexible? Wouldn’t a system designed to regulate and enforce need to work in the manner they dictate? I can see customizable being more relevant here. If it needs to change as the state flip-flops on rules, maybe they should talk more to the industry before implementing these rule changes so it will work best for all of us. A good car goes into drive when put into gear, and reverse when put in reverse. If you want a new radio, get a new radio instead of complaining that when you first bought it you didn’t buy the one with a different stereo. Sounds like the state might need their parents to help them pick out a car next time. I agree that change is important, but when the changes are so constant it keeps adding to our cost as businesses. Getting rid of the current system or not, the state needs to get their sh*t together instead of going back and forth all the time. They can replace the state system, but they need to keep that in mind for once!

  2. Tyler Mitzen on

    I am somewhat of a mixed bag here. I started working as a grower in Colorado and have used a number of systems, including BioTrack. I actually really liked it and it did most of everything we needed. I ended up moving to Washington about a year and a half ago and have been working at a Tier 2 producer processor. We have tried 3 different inventory management softwares since I’ve been here. All of them had issues, and they seemed to be more tied with the state’s weird rules than the business logic itself of any of the systems, like the 24-hour quarantine. I checked out the free system they offer and that could definitely use an upgrade, it was a boxy and slower, but it’s also free. Most of the complaints I hear, not all, are user error. As for the speed issues and workflow, I don’t know if that’s on BioTrack or the state to upgrade, so I won’t weigh in too much, but it seems like a simple hardware upgrade for the state would solve a lot. I haven’t used their actual program in Washington yet, but I’d like to give it a try because it made my job much easier in Denver.

    I don’t know any of the politics and have only been in Washington for just over a year and a half, but it’s telling that the current vendor doesn’t want to bid on such a lucrative contract. Maybe, if they actually wanting to make things better they should get the new system in (PLEASE NOT METRC!!!) and also get rid of all the people making these ridiculous rules., and listen to the industry’s ideas more than just squeaky wheels. Offer a solution or step down. Thanks!

    Tyler M.

  3. Robert on

    BioTrackTHC is the market leader and Microsoft hasn’t come far to what this firm offers. I have been using their software for years and am completely satisfied.

    • Jeff on

      Actually, KIND is allowed to house government traceability systems in the Microsoft Azure cloud. They didn’t “partner” with them, but rather received proper authorization and were granted access to use Microsoft’s Azure cloud. They blew it out of proportion a bit by calling them “partners.” Since KIND does not have any government contracts, this is simply an offer to potential government contracts; they do not have any traceability systems currently in the Microsoft Azure cloud. On the other hand, BioTrack has a live traceability system in Amazon’s AWS GovCloud, which is Amazon’s equivalent to the Azure cloud. BioTrack did not call them “partners.”

      • Jim on

        Actually, I work in a cultivation facility in RI and we use their system. From what I understand they won the state contract here.

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