The Washington State Liquor and Cannabis Board (WSLCB) Traceability Advisory Committee convened between January 2017 and August 2019 to discuss cannabis supply chain transparency in Washington state. The Committee was composed of agency staff, traceability software vendor representatives, industry stakeholders, a representative from the Washington State Office of the Chief Information Officer (WA OCIO), and a quality assurance vendor.
The committee discussed further delays on the next release of MJ Freeway’s Leaf Data Systems and alternative approaches to cannabis traceability.
Here are some observations from the Thursday June 13th WSLCB Marijuana Traceability Project (MTP) Advisory Committee meeting.
My top 3 takeaways, plus a bonus takeaway at the end:
- The committee reviewed complications which prompted the WSLCB to further delay release 1.37.5 of Washington State’s version of MJ Freeway’s Leaf Data Systems (audio – 7m).
- Washington State’s version of MJ Freeway’s Leaf Data Systems is a custom implementation of the software the State of Nevada abandoned in 2017. Pennsylvania also uses a variant of the Nevada system to operate its medical marketplace, although licensees there are further required to use MJ Freeway’s enterprise software. With each release, the citizens of Washington pay for more unique requirements requested by Washington regulators, encoded in an increasingly isolated branch of MJ Freeway’s software.
- The last successful release of Leaf in Washington State (1.35.6) was in late August 2018.
- MJ Freeway was contracted to launch version 1.37.5 on November 6, 2018. Multiple subsequent deadlines have been proposed and all have been pushed back. The company has been willing to continue accruing a $3750 daily penalty since November for the delay, albeit a negotiated fee due to shared responsibility with the agency. The final cost to MJ Freeway will be decided upon delivery of release 1.37.5 with the funds earmarked for WSLCB expenses which were not budgeted beyond November.
- Meanwhile, MJ Freeway was acquired by MTech Acquisition Corp. in October 2018 and the resulting combination rebranded as Akerna. Additional funding rounds were secured by the combination before the merger was sealed yesterday. The new entity began trading on the NASDAQ exchange this morning (“KERN”).
- As late as June 3rd, launch plans for release 1.37.5 appeared to be moving ahead. That night, unanticipated issues were identified during the production data migration and the agency announced the latest delay on Tuesday June 4th. Additional detail about the situation was shared with the third-party software providers on Thursday June 6th.
- By all accounts, the last nine months of work by the agency and its vendor has resulted in a large software release with substantial corresponding changes to the underlying data model. In addition to bug fixes and a heavy emphasis on laboratory workflows, unanticipated problems—though apparently obvious to some—have necessitated further locking down the API and initial efforts on what has begun to sound like a monumental data cleanup effort (audio – 6m).
- On Monday June 17th, WSLCB posted a bulletin with the latest information and a new launch date: Monday morning July 15th at 8am PT.
- Leaf will be unavailable starting Saturday July 13th at 11pm PT and the outage is planned to last 33 hours.
- WSLCB and MJ Freeway are using the opportunity afforded by the additional delay to further validate and practice the data migration in test environments (audio – 8m).
- To the WSLCB’s credit, the conservative approach taken by the agency to focus on quality at the expense of time while attempting to minimize risks of marketplace disruption has probably been a wise path to take with MJ Freeway’s track record as sherpa. Unfortunately, due to the scope of changes and the surprisingly large size of the data generated since Leaf’s launch in Washington in February 2018, mitigation of risk will create direct impacts on the marketplace.
- As a consequence of undisclosed issues with the State’s traceability data, re-launch of the WSLCB open data portal has been postponed into 2020 (audio – 3m).
- As part of WSLCB’s original contract with MJ Freeway, the agency requested creation of an integration between their Socrata-based open data portal and Leaf Data Systems. The status of that integration has been a consistent subject of discussion at the Traceability Advisory Committee meetings since April 2018.
- The integration has been constructed and awaits the deployment of the upcoming release. At that point, it’s said that WSLCB has to flip a switch to enable public access to only slightly delayed transactional data from the I-502 marketplace, and programmatic access through Socrata’s well documented API.
- On Wednesday June 5th, one day after the agency decided to further postpone release 1.37.5, I received an email from WSLCB Director of Communications Brian Smith detailing the postponement: “We recently made an agency decision to prioritize the state’s marijuana traceability project (Leaf Data Systems) and to postpone the unveiling of Washington’s marijuana data dashboard and data sets, originally set to launch at the end of May.”
- Smith’s email continued, “As you know, this new dashboard will allow people to access data sets regarding the sales and inventory within Washington’s marijuana industry, all online. Postponing this release allows us to ensure that this tool houses the best possible quality data, easily accessible by the public. As the project is scheduled to be complete at year’s end, we are tentatively planning a launch of the data dashboard in January 2020.”
- Unfortunately, public access to this information—and one could well argue operator accountability—remains a casualty of the state’s approach to traceability since the close of the BioTrackTHC era on October 31st, 2017.
- In a promising show of openness, WSLCB asked the committee members for alternative approaches to contemporary seed-to-sale traceability systems (audio – 9m).
- It’s worth mentioning that although the agency asked “committee members” for input, participation on the Traceability Advisory Committee has consisted of myself alone for the past two meetings. Participation and the governance of membership on agency workgroups has become an issue, prompting the committee executive sponsor, Deputy Director Megan Duffy, to ask for ideas at the start of this meeting (audio – 5m).
- During discussion about release 1.37.5 and in response to concerns shared by the agency, WSLCB Project Manager Clare Olson asked me, “do you have a possible solution for the organization?”
- My engagement with and observations of cannabis traceability in Washington State has led me to question the overall approach and identify anti-patterns in the software and network architecture. I documented those observations as part of a presentation for the Canna West Summit in May.
- I encouraged the state to re-think its approach to traceability to focus on reporting and compliance in contrast to facilitation of the I-502 marketplace.
- WSLCB should focus on collecting the data it needs to ensure regulatory compliance, public health, and public safety. The agency can greatly scale back its investment in traceability by standing up a simple API interface which collects well-defined data, in a format defined by the agency, and at a required cadence.
- For this scenario to be feasible, the private sector must take on responsibility for business-to-business (B2B) transactions between operators. Currently, all transactions are mediated through centralized, state-managed, seed-to-sale traceability systems. When those systems go down or are removed, business halts—an eventuality narrowly avoided during the contingency reporting period here in Washington due to BioTrackTHC’s independent actions.
- I encouraged regulators to seed this conversation amongst their peers—who are also struggling with their traceability vendors—at the upcoming Regulators Roundtable in July. Participants will consider the formation of an association which may be an ideal venue for pooling of resources to address shared challenges such as the future of traceability and supply chain transparency in the global cannabis marketplace.
- I suggested the creation of an open source implementation of a simple reporting API which meets the needs of WSLCB. From there, a standard reporting interface can be derived. Third-party software providers would be required to write to that standard interface to document cannabis supply chain activity.
- The B2B transactional layer is more challenging as it necessitates collaboration amongst software vendors who currently operate in an environment of enhanced competition as all communication with peers is mediated through centralized state traceability systems. Requiring vendors to communicate directly with one another is economically expensive and possibly intractable due to the number of potential peer systems. One way industries mitigate that expense is to come to agreement on standard interfaces and protocols for data exchange. I suggested the formation of a public/private consortium for this purpose.
Finally, a bonus takeaway:
- MJ Freeway Director of Regulatory Systems Todd Caldwell unceremoniously hung up on committee participants in response to a simple question about the vendor’s follow through on a stated commitment (audio – 5m).
- With the passage of the federal 2018 Farm Bill and Washington’s commitment to creating a more robust hemp program in the state, many questions have arisen about the interplay between hemp and marijuana supply chains.
- During the last Traceability Advisory Committee meeting, I asked MJ Freeway’s Director of Regulatory Systems, Todd Caldwell, about progress on delivery of an estimate on a Leaf Data Systems workflow which would enable licensees to document testing results on CBD Product additives introduced from outside the I-502 system. Caldwell was very quick to respond that MJ Freeway was ready to provide the estimate to the WSLCB the next day.
- Subsequently, the WSLCB decided the workflow wasn’t going to be possible within a reasonable time and recommended the agency rescind its rule requiring documentation in the traceability system. The Board adopted that interim policy on Wednesday June 12th, the day before this meeting.
- I followed up to ask Todd Caldwell if he provided the workflow estimate the following day, as he said he would. After some confusion about whether some kind of estimate was eventually provided to WSLCB, Caldwell announced “I’m leaving” and hung up on the meeting participants. MJ Freeway’s on-site Project Manager attempted to manage the evasion, but the question appeared well answered.