By John Schroyer

MJ Freeway continues to reel from a systems crash earlier this month that has affected a large swath of the cannabis industry, with its workers scrambling to retain longtime customers and mitigate damage to the company’s image.

The long-term fallout for the software firm is unclear.



It’s possible MJ Freeway can fully recover over time and instill trust in the marketplace.

But some of its customers have already jumped ship for other competing services – and the longer the problems continue, the more clients MJ Freeway is likely to lose.

So far, the company has seen a “minimal” loss of customers, said Jeannette Ward, MJ Freeway’s director of data and marketing.

“Obviously, we have very upset clients,” she said Tuesday, “but we also have clients who have been very patient and understanding. It runs the gamut there.”

Some of MJ Freeway’s competitors, however, believe more clients have fled than the company is letting on.

“It’s a lot. A lot, a lot,” Kyle Sherman, CEO of Denver-based Flowhub, said when asked how many new customers had switched to his cannabis software company after MJ Freeway’s system crashed on Jan. 8.

“We had people switch in under 12 hours to our platform … These are people who are hurting right now, who are down and out, because they’re out of compliance. And that’s a big deal.”

Ben Curren, the CEO of Green Bits – another business management software company – speculated that a significant number of MJ Freeway’s customers have left for other software providers, whether it’s Green Bits, Flowhub, BioTrackTHC or yet another company.

Ward declined in an email to specify how many customers had decided to leave for other software companies, but wrote, “The actual number of clients lost is a very small percentage of total clients.”

System repair ongoing

MJ Freeway said recently that more than 1,000 dispensaries and recreational marijuana stores across the country use its software to process and record sales transactions, track inventory, stay in compliance with state regulations and handle other critical tasks for their businesses.

The company’s recent problems, which it pinned on a cyberattack, forced many of those retailers to close shop temporarily or revert to manual processes.

“By (Wednesday) morning, we will have contacted all clients and set up sites for all clients that we reached. We do have clients who we don’t have their most up-to-date contact information,” Ward said. “If you have not heard from us, please call us. Our support lines are open.”

The alternate sites being provided by MJ Freeway have the same functionality as the breached system, she said, but historical data for medical cannabis patients is still being retrieved.

“That effort will continue for several weeks,” Ward said. “We’ve made progress, but people want to know when their data will be recovered, and we can’t give an exact time frame because we’re going client by client, one at a time.”

She said MJ Freeway staffers are working to recover historical patient data for more than 500 clients.

‘Not going anywhere’

Ward said she’s confident the company will recover and continue to serve those in the marijuana trade.

“We’re still solvent – no company layoffs at this time,” she said. “There are rumors that we’re in bankruptcy; that is not the case. We’re not going anywhere.”

Some industry observers aren’t so sure about that.

“Is this something they can recover from? I think so, but … this just hurt their credibility so badly that all of their other services are in question,” said Nic Easley, the CEO of 3C Consulting, another Denver-based marijuana company. “It’s more like ‘MJ Roadblock’ right now.”

Easley suggested that the lack of historical data for retailers isn’t as easy to gloss over as some observers may think.

That historical data, he pointed out, could become a serious issue in the event of, say, a product recall (Colorado has had many) or a lawsuit over contaminated cannabis.

“(Retailers) can’t go back and back up their data for their clients, to say, ‘This product was sold to this person on this day,’ so if those companies get sued in the future” they’re at risk because of the MJ Freeway episode, Easley said.

Tarnished reputation?

Green Bits’ Curren said many Nevada retailers went down during the crash because MJ Freeway built the entire seed-to-sale tracking system used by the state government.

“Even the whole state system, that got hacked. It’s down, the traceability system,” Curren said. “It’s pretty devastating. I’ve been in tech for 20 years, and I’ve never seen anything like this, ever. This will hurt their reputation forever. I don’t know how you recover from something like this.”

Moe Asnani, who runs the Downtown Dispensary in Tucson, Arizona, said he’s in the process of switching to Leaf Logix because there are various technical issues with most other providers.

He has soured on MJ Freeway because the Jan. 8 incident follows another technical glitch by the company in 2014.

“My biggest concern is, two years ago, when the interruption happened, they said they were migrating to Amazon Web Services, and they would have redundancies, that they’d have backups, and that it would be secure,” Asnani said. “I found out this time around that that was either not true or partially true.”

Ward said Tuesday that MJ Freeway is upgrading to Amazon Web Services, describing it as “the best security in cannabis” for the company and its clients.

But Asnani said MJ Freeway’s approach to solving the current crisis also rubbed him the wrong way.

“They put a lot of emphasis on getting ‘operational alternative sites,’ and they called our data ‘historical,’ but it’s our current data,” Asnani said. “That’s my patient from two days ago. Don’t call it ‘historical data.’ It’s operational data.”

He also thinks this could be enough to sink MJ Freeway.

“Nobody is like, ‘I’m going to stick with them regardless,’” Asnani said.

John Schroyer can be reached at [email protected]