In April 2022, Pennsylvania’s base five-year contract with seed to sale and medical patient tracking software builder MJ Freeway expired. Since then, state regulators, despite regular complaints from cannabis company operators about software bugs and cost, have moved to exercise the first of three year-to-year extensions. Meanwhile, MJ Freeway has told operators that the contract has “renewed”, pressing operators into long-term, expensive tech support contracts.
“I don’t think anyone is aware that there are these extensions, everyone is under the impression that we’re locked into this contract long term,” said Meredith Buettner, executive director of the Pennsylvania Cannabis Coalition, an advocacy group for cannabis operators in the state.
The seed-to-sale tracking contract won by MJ Freeway in 2017, valued at $10.3 million, made the company the required vendor for medical cannabis operators. As a result, MJ Freeway is also able to charge the state’s 193 medical program operators up to $80,000 a year for technical support, a service that was originally supposed to be subcontracted to TreCom Systems Group, a diverse-owned company that MJ Freeway stopped paying for services in 2020, according to a lawsuit filed by TreCom and now in mediation.
“Really the only way people get any support at all is through the enhanced support option,” that MJ Freeway charges for, said Buettner.
Multiple Pennsylvania operators declined to speak on the record to Grown In about MJ Freeway, citing concerns the company or state regulators at the Department of Health (DOH) could retaliate. But the leader of the state’s cannabis trade association, Buettner, volunteered to speak on their behalf.
“There’s a lot of frustration that we’re locked into a single vendor, with the functionality of it, and with finger pointing that goes on with functionality,” said Buettner. “DOH tells people that it’s an MJ problem, and MJ says they need DOH approval. Any changes take an extraordinary amount of time.”
MJ Freeway largely refused to comment on Grown In’s findings.
“MJ Freeway intends to not only remain faithful stewards of all Commonwealth funds but also honor all of its commitments to the Commonwealth of Pennsylvania, which limits MJ Freeway’s ability to make any further statements about the project it facilitates for the Commonwealth,” said Georgia Jablon, a spokesperson for MJ Freeway.
The company has been plagued by technical issues, including total system crashes in 2017 and 2019. Since then, Pennsylvania operators tell Grown In that there have been problems with creating integrations for new point of sale and payment systems, long delays in getting technical support problems resolved, and according to Buettner, the system requires operators to enter data manually, rather than using automated, interconnected systems. Also, if data is incorrectly entered, say from a testing batch, users must wait for MJ Freeway or the DOH to correct it.
“I’ve seen operators say that the results are incorrect, and it’ll get stuck in the never ending finger pointing between MJ and DOH. We have whole batches geting caught up for a month, because we’re waiting around for DOH and MJ to decide who can hit the back button on software,” said Buettner.
Asked if it has begun a process of seeking a new contractor, a Department of Health spokesperson dodged the question.
“As with most IT solutions, the department has received occasional comments from Medical Marijuana organizations about the utility of the system. That said, the department continuously works with the vendor on quality improvement efforts to address any identified updates, concerns or technical limitations with the system as we would with any vendor,” said Department spokesperson Maggi Barton.
Two companies, MJ Freeway and BioTrackTHC, made it to the final round in 2017 for Pennsylvania’s seed-to-sale tracking contract through a Request For Proposals (RFP) scoring system that assigned 1,030 possible points in four categories. For technical ability, up to 500 points on a sliding scale. Here, BioTrackTHC won almost 50 points more than MJ Freeway.
Up to 200 more points were awarded for companies that utilized Small and Diverse Businesses as subcontractors. TreCom, which is today suing for non-payment, was the main, diverse subcontractor in MJ Freeway’s RFP submittal.
Then, up to 300 points for contract cost. For this grade, the lowest cost got full points, while the worst got none. If there had been three, instead of two, applicants in the final round, the middle cost offer would have gotten half points. Here MJ Freeway had the lowest bid price, providing it with full points, and BioTrackTHC with zero.
Essentially, MJ Freeway won the contract because it had the lowest bid, regardless of the technical quality of its offering.Last month MJ Freeway announced a corporate restructuring with unspecified layoffs and a 25% reduction in salaries for executives.
