A couple of weeks ago, CBE published Seed-to-Sale Scorecard: METRC’s Big Year. But at the time, we had yet to put our hands on the contract, that in our eyes, has put Franwell so far ahead of the pack in terms of revenue and working capital, that catching-up will be extremely difficult for the only other state seed-to-sale contract awardees.
It’s looking more and more like MJ Freeway, BioTrackTHC and Kind Financial will have to duke it out for market-share with all of the other competitors in the Point-of-Sale space.
And oh what a contract it is.
According to the terms of the recently awarded Cannabis Activity Tracking (CAT) Solution Solicitation #17-0210 for the California Department of Food and Agriculture issued on June 30, 2017, METRC was awarded the contract over competitive bids from BioTrackTHC, MJ Freeway, Quintel and SICPA . The contract calls for an initial two-year term, with compensation potentially generating $58 million dollars for the CAT solution and for the tags which the state will purchase.
Projected METRC Revenue Totals California Department of Food and Agriculture Cannabis Activity Tracking Contract #17-0080
LABOR RATES – STATE MANDATORY KEY STAFF ROLES: $3,437,575
LABOR RATES – CONTRACTOR ADDITIONAL STAFF ROLES: $1,933,540
SAAS LICENSING: $1,976,000
Help Desk Support Services: $3,673,216
Unanticipated Tasks (10% of Base Contract): $1,102,033
Subtotal CAT Solution: $12,122,364
Proprietary Consumables (Plant and Package Tags) (Not to Exceed Amount)/1: $47,600,000*
Total Base Contract Potential Value: $59,722,364
Average Annual Potential Contract Revenue Contribution: $29,861,182
*1/The “Not To Exceed” amount is based on an estimated volume of 70,000,000 tags per year (for the 2 year base contract period), multiplied by the highest tag unit cost (plant tag). The actual amount paid will be based on the actual number of proprietary consumable items ordered by licensees. For Optional Years 1-5, the state, at its sole discretion when exercising its option(s) for contract extensions, may also increase the maximum amount of the agreement to fund the purchase of proprietary consumable items, at the rates specified this cost worksheet.
Additionally, the contract carries five option years, all having a CAT solution and a tag revenue stream if renewed.
With the California win under METRC’s belt, below is a total and annual revenue estimate for current contract winners and the original contract term. Most, if not all of the contracts noted in the chart below, carry renewal clauses after the initial term expires.
|State||Franwell/Metrc (000)||Years||Annual Value (000)||Award Date||Renewal Date|
|California (7x’s Colorado)||$59,722||2||$29,861||2017||2019|
|Nevada MMJ & Adult Use||$816||4||$204||2017||2021|
|Total Contract Value/Annual Value||$79,897||$34,218|
|Additional Ave. Total/Annual Projected Tag Revenues (30%)**||$6,053||$1,307|
|Total Contract Value/Annual Projected Revenue||$85,950||$35,089|
** Represents an extremely conservative estimate of 30% of the annual contract value (not including CA)
|State||BioTrackTHC (000)||Years||Annual Value (000)||Award Date||Renewal Date|
|California (7x’s Colorado)|
|City of Arcata||$-0-||2.5||$-0-||2016||2018|
|Total Contract Value/Annual Value||$3,728||$867|
|State||MJ Freeway (000)||Years||Annual Value||Award Date||Renewal Date|
|Total Contract Value/Annual Value||$10,400||$2,080|
MJ Freeway nimbly continues to adapt and create new revenue streams in addition to their POS and STS contracts. Their website promotes a slew of consulting services to leverage the footprint and data they have generated as a first mover in the Cannabis Industry.
According to their website, MJ Freeway Consulting Services include:
Keep an eye on additional state contracts like Arkansas and Florida coming in the not to distant future and CBE will update the scorecard and projected STS revenues as additional awards are granted.