By Chris Walsh

MJ Freeway’s widely used software platform for cannabis businesses crashed over the weekend and remains down for most customers, creating ripples across the marijuana industry.

The outage has sent 1,000 marijuana retailers in 23 states scrambling to handle everything from sales and inventory management to regulatory compliance issues.

A number of dispensaries and recreational stores have had to close as a result. Others are dealing with lengthy lines and customer complaints, as it is taking them longer than usual to complete sales transactions.

But the company’s director of data and marketing, Jeannette Ward, revised the timeline Monday afternoon, saying that restoring the entire system will likely take longer than originally anticipated. She said the company is working on temporary solutions for customers.

Denver-based MJ Freeway told Marijuana Business Daily that it believes the outage was caused by a cyberattack of unknown origin.

“Our initial analysis indicates that this was a direct attack on MJ Freeway’s infrastructure,” Ward said.

The attack hit the company’s main databases as well as its backups, but Ward said no client data was stolen.

MJ Freeway has more than 1,000 retail cannabis clients and a presence in most states with active marijuana industries.

Dispensaries and rec shops use the system for facilitating sales transactions, managing patient records, tracking inventory, maintaining regulatory compliance, helping with marketing efforts and general business management.

Ward said the company has not yet brought in police but intends to take the necessary steps to pursue a criminal case if warranted.

Some businesses closed

Numerous cannabis retailers had to close Sunday and could have to again Monday because they don’t have an alternative to MJ Freeway’s system.

The Tucson, Arizona, dispensary Botanica is one of them.

On Sunday morning, the dispensary tweeted: “Our inventory system (@mjfreeway) is down & we are unable to process any transactions. We’ll post more updates as they become available!”

Other dispensaries and rec shops remained open Sunday but experienced longer-than-usual lines after switching to a slower manual process, which increased paperwork and customer wait times.

These businesses also might have to pay staff overtime to enter transactions into MJ Freeway’s system once the software is back online.

“We’re thankful we were able to remain open; most other people are closed,” said Frank Hawkins, owner of the Nevada Wellness Center, a dispensary in Las Vegas.

Hawkins estimated that only a handful of the dozens of dispensaries in and around Las Vegas were able to serve patients Sunday while MJ Freeway’s system was down.

Backup systems helpful

Nevada Wellness was able to continue handling patients because it designed a manual system as a backup before the company even launched.

“I knew from Day One that we could never be afforded to lose five days of business, or even one day of business,” he said.

Still, Hawkins said it took Nevada Wellness 10-20 minutes longer than usual on Sunday to handle patients from the time they walked in until they left.

The Clinic, which uses MJ Freeway’s system for its five dispensaries and rec stores in the Denver metro area, had a backup plan and process in place as well, which minimized the impact.

Ryan H. Smith, director of retail operations for The Clinic, said the company was able to more or less process customers “like normal,” though transaction times took a bit longer than usual.

“Certainly being down and having issues like this is not a good thing,” Smith said. “But we have a process in place to deal with times when the system goes down.”

Similar to what Nevada Wellness Center employed, the process involves having employees record orders by hand and then enter information into the system when it’s back up.

“This creates a labor impact and a customer service impact, as it slows transaction times,” he said.

The Clinic told patients and customers on Sunday about the technical issues, informing them that waits would be longer than usual.

“I’d say 98 out of 100 customers get it … though some are still unhappy,” he said.

Communication is plentiful

Reef Dispensaries, which has MMJ storefronts in Nevada and Arizona, warned its customers via Twitter of potential hiccups.

“MJFreeway system outage. Reef is open for business, but expect delays. We must collect new patient info from all visitors,” the company tweeted, adding that it isn’t able to give special deals to first-time patients while the system is down.

MJ Freeway has been flooded with phone calls but is trying to keep clients up to speed on social media, via email and through messages on the part of its system that customers can still access.

“We have spoken to many clients directly. We’ve got our support lines open,” Ward said. “We’ve also reached out to (some larger) clients proactively. We’re sending emails to all clients every couple of hours to update them.”

MJ Freeway experienced another technical issue in 2014 that lasted several days.

The company implemented backup systems and other strategies to avoid that specific problem again in the future.

MJ Freeway said this weekend’s attack affected its existing system, not the new, completely overhauled platform it is just starting to market and sell. The new software will likely be active later this month at cannabis retailers that have signed up to use it.

Chris Walsh can be reached at [email protected]