Puerto Rico Inventory Tracking System Deal Embroiled in Dispute

By John Schroyer

Three U.S. cannabis inventory software firms are involved in a legal tussle centered over whether Puerto Rico may have violated its own laws when awarding a government contract.

BioTrackTHC, which beat at least five other competitors to win the Puerto Rico contract, is the target of the dispute.

Rivals MJ Freeway and Agrisoft are challenging the Florida-based company over the seed-to-sale medical marijuana tracking contract, which was tentatively awarded in August.

The two rivals have asked the Puerto Rico Department of Health to reconsider its decision, contending that BioTrackTHC is ineligible under the U.S. territorys law in part because the companys founder was sentenced on charges related to fraud and money laundering. An administrative judge in Puerto Rico is reviewing the matter.

BioTrackTHC disputes the pairs assertions.BioTrackTHC CEO Patrick Vo said in an interview the company is confident in our win and had submitted an honest proposal.

The wrangling underscores the increasingly competitive nature of the seed-to-sale software industry, with each of the three parties fighting tooth and nail for as much market share as possibleeven in what could be a relatively small MMJ industry in Puerto Rico.

Nationwide, seed-to-sale tracking companies are waging battles to win government contracts to build systems that allow regulators to keep tabs on the cannabis industry. The Puerto Rico case takes the competition to a new level.

MJ Freeway Complaints

Colorado-based MJ Freeway alleged multiple times between June and August in complaints to the Puerto Rican Department of Health that BioTrackTHC was ineligible because the companys founder, Steven Siegel, has a criminal record, according todocuments obtained by

In 1997, aU.S. district court judge in Florida sentenced Siegel to a 30 months in jail and three years of court supervision for conspiracy to commit mail fraud and money laundering, court documents show. Siegel could not be reached for comment.

Siegel is a convicted felon who served time in federal prisons on charges of conspiracy to commit mail fraud, wire fraud, bank fraud, and to launder monetary instruments, Amy Poinsett, the CEO of MJ Freeway, wrote on June 9 to an administrator at the Puerto Rico General Services Administration.

In the letter and at least two subsequent communications, representatives of MJ Freeway argued that BioTrackTHC was ineligible because Puerto Rican law prohibits the territorys government from awarding contracts to companies where executives have broken specific laws related to fraud and corruption.

In addition, Poinsett wrote, a BioTrackTHC subsidiary based in San Juan swore an oath to the Puerto Rican government that none of its corporate officers had pleaded guilty to crimes consisting of fraud, embezzlement or misappropriation of public funds. Poinsett contended that assertion made BioTrackTHC ineligible.

BioTrackTHCs Position

In an email, BioTrackTHCs Vo declined to discuss Siegels criminal history, saying itsagainstcompany policy to discuss personnel issues.

However, Vo added that Siegel is not the CEO of BioTrackTHC as MJ Freeway has argued to Puerto Rican officials and had not been a company officer or had any day-to-day managerial responsibilities since November 2015. Siegels title is founder and chairman emeritus, Vo wrote.

According to Florida Secretary of State records, Vo is the CEO of Bio-Tech Medical Software the parent company of BioTrackTHC and Terrance Ferraro is board chairman.

In August, BioTrackTHC announced it had received the top score in the bidding for the Puerto Rican deal tied to the territorys emerging MMJ industry. Runner-upMJ Freeway immediately filed a request for reconsideration with theterritorys healthdepartment. That was followed by a similar request from Agrisoft, which is owned by California-based Kind Financial and came in fourth in the scoring process.

Other bidders includedFranwell, which landed in third place, Amercanex, and E3 Consulting. None have filed a request for reconsideration.

Puerto Rico Health Department

Mayra Maldonado, the director of the controlled substances and medical cannabis office within the Puerto Rico health department, said in an interview that MJ Freeway and Agrisofts requests both cited Siegels criminal history as a reason for the department to revisit its decision.

Its almost the same issues as raised by MJ Freeway, Maldonado said of Agrisofts complaint.

Maldonado said the matter has been forwarded to an administrative judge, who is reviewing the requests, and that the contract dispute may be resolved in another few weeks. While BioTrackTHC was the top scorer, a formal contract has not yet been signed between the company and the Puerto Rican government, Maldonado said.

Maldonadoalsosaid she could notcomment on further specifics of MJ Freeway and Agrisofts requests. She did say the health department had asked its legal division whether BioTrackTHC was eligible following MJ Freeways June complaint. Maldonado added that the legal division has provided an opinion, but she has not seen it.

MJ Freeway executives declined to comment for this story, aside from issuing a brief statement: We have every confidence that the Puerto Rican authorities will judge this protest on its merits and make the best decision.

BioTrackTHCs Vo said in an email that ...