Updated to include Nevada Medical and Adult-Use STS award effective November 1, 2017
With fall just around the corner, Scott Denholm and his team at Franwell/Metrc have to be feeling good about their recent wins that include the award of seed-to-sale (STS) tracking system contracts in Ohio and Michigan, and the two ton guerrilla, the lucrative California contract. And based on the above update, you can add Nevada as well.
These successful bids now put Metrc firmly in the lead in the state seed-to-sale tracking game, with seven state contracts, but also in the annual revenue game that not only includes the annual dollar contract award by each state, but uniquely in Metrc’s case, the revenue derived for the RFID tags that licensees must purchase. Those are estimated to add another 20-30 percent of the annual contract award revenue.
|Seed to Sale Contract Wins YTD 2017|
|City of Arcata||x|
|Nevada (MMJ & Adult Use)||x|
|Total State Contracts||8||2||5|
|Total State/Local/US Territory Contracs||8||3||6|
Metrc’s wins this year have driven a large annual operating revenue advantage over its main competitors in this space as it has distanced itself from it’s main competitors, MJ Freeway and BioTrack THC, whose STS contracts have generally not generated as significant an annual revenue. Additionally, the gravy days of reaping 70-80 percent of the Point-of-Sale (POS) software marketshare and revenue for winning state contracts is certainly behind them, now that there are a multitude of competitors like Adilas, Cova, Flowhub, Greenbits, Leaf Logix Technologies, Inc., Trace Weed/Dauntless Software, and WeedTraqr.
And, in the case of MJ Freeway, which did land the Pennsylvania and Washington (replacing BioTrackTHC) STS contracts this year, anecdotal data would indicate that their POS marketshare and revenues dropped sharply in 2017 due to two separate security incidents. Numerous sources told CBE that they had replaced MJ Freeway and gone to another vendor as result of the security breaches. Also, as disclosed last week by Forbes.com, METRC has replaced Leaf data System, MJ Freeway’s system in Nevada which now includes STS tracking for the state’s Medical and Adult-Use Marijuana programs.
The recently published 2017 CBE Ancillary Business List provides a pretty good snapshot of what the race for the revenue in the combined software categories looks like based on year-end 2017 revenue ranges shared with CBE.
|Seed-to-Sale and Point of Sale Software Projected 2017 Revenue Rankings|
|CBE AB List Ranking||Company||Employees||2017 CBE AB Revenue Range|
|28||MJ Freeway||75||$5-$7.5 Million|
|45||BioTrack THC||60||$5-$7.5 Million|
|76||Leaf Logix Technologies, Inc.||23||$1-$2.5 Million|
|114||Trace Weed/Dauntless Software||17||$1-$2.5 Million|
|Source: 2017 CBE AB 150|
There are several additional states looking to contract an SOS supplier in the near future. But MJ Freeway and BioTrackTHC have their work cut out for them in light of Franwell/Metrc’s big 2017 wins, and a business model that generates significant revenue from the RFID tags that it supplies and are mandated as part of the states that use their services. None of the upcoming state contracts rival the sheer size of the lucrative California award.