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Regulatory Oversight Debacle Blows Up In Washington State

Recently, The Washington State Liquor and Cannabis Board (WSLCB) announced that their new contract, seed-to-sale (SOS) system provider, MJ Freeway and its  Leaf Data System, would not be able to meet the October 31st deadline to take over the service provided by the original contractor, BioTrackTHC.

After announcing an arduous work around plan for licensees to follow until Leaf Data System is operational, their attempt to provide a stop-gap solution, by extending BioTrackTHC’s contract, took an embarrassing turn today in the form of an open letter to the Washington Cannabis Industry from the president and CEO of BioTrackTHC, Patrick Vo.

After announcing an arduous work around plan for licensees to follow until Leaf Data System is operational, Vo’s letter outlines the failed attempt to reach an agreement with the state, and a lot of questions that Vo feels that the WSLCB has failed to answer to assure that there are no security issues that could threaten the integrity of BioTrackTHC’s product, service or brand.

Now it’s a mess. Cannabis licensees in Washington will have to use spread sheets for their seed-to-sale tracking until the WSLCB can get Leaf Data Systems up and running.

The mess started when the WSLCB announced with a press release on May 31st this year that Metrc had been awarded the contract, only to turn around within a week of its issuance to announce that wasn’t the case. Metrc and the state had never finalized terms and agreed on the contract. Industry insiders indicated that the licensee base pushed back hard about the added cost of the RFID tags that the award to Metrc would have required, on top of the back-breaking tax structure already imposed on them by the state.

As CBE has reported since Washington’s adult-use program began back in 2014, this is nothing new for a regulatory body that has raised eyebrows with its continual missteps, lack of transparency and practices which wouldn’t fly in the private sector.

We’ve been keeping a close watch on this agency that clearly can’t get things right, as outlined in CBE in our first article about the state’s problems published January 13, 2015: Marijuana Traceability Software Security Flaw Could Shut Down Washington Recreational Program

A second piece published in CBE on April 16, 2016: Dealing with Washington’s Marijuana Retail Licensing System is a Cautionary Tale pointed out the our way or the highway approach taken by WSLCB as it began the process of integrating, as directed by Senate Bill 5052 legislation, medical marijuana operators into the regulatory fold.

And again CBE published, on April 26, 2016, How did so few medical producers win in Washington’s marijuana retail licensing system  which scrutinized the issuance of additional medical marijuana licenses, and where those additional licenses actually ended up.

To be fair, BioTrackTHC has been very aggressive in the past using all legal means when pursuing lucrative SOS contracts which can be a source of revenue, not only from contract awards, but also for generating market share in the competitive and crowded point-of-sale space. And, as usual, there is probably plenty of blame to go around in Washington as more information becomes publicly available.

The net net of WSLCB continual botching of their responsibility to create a regulatory system that provides the oversight to protect consumers and run an effective public/private partnership begs the question of why aren’t the regulators in Washington held to the same accountability standards as the licensees to limit black market activity. In my book, heads would roll after so many mistakes over the last three plus years of oversight.

To get the full gist of BioTrackTHC’s position, here’s the complete open letter from Patrick Vo.

Rob Meagher

Rob Meagher

Rob Meagher, CBE’s Founder, President and Editor-in-Chief is a 30 year veteran of the media world. His career has spanned from stints representing the Washington Post, USA Weekend, Reader’s Digest, Financial World & Corporate Finance to the technology world where he worked at International Data Group and Ziff Davis where he was part of the launch team for The Web Magazine, Yahoo Internet Life, Smart Business and Expedia Travels before starting his own marketing and Publisher’s Representative Firm. He also ran all print and online media sales and marketing for the Society for Human Resource Management before partnering with Forbes and then Fortune to create Special Sections covering a variety of topics. Rob, who started CBE Press in 2014, can be contacted at [email protected]

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