The Department of Finance and Administration signed a new temporary contract with Florida-based software company Biotrack after having been unable so far to reach an agreement on a long-term deal for software to track sales of medical marijuana in Arkansas.
The state's six-year, $2.8 million contract with Biotrack expired on Dec. 14, which could have left the state without software to track medical marijuana sales. While the Department of Finance and Administration was considering four vendors for a long-term deal, it was unable to finalize an agreement with one by the time the state's contract with Biotrack expired in December.
So the state signed a "bridge contract" with Biotrack, Scott Hardin, spokesman for the Department of Finance and Administration, said in an email. It will allow state regulators to still use the software to monitor marijuana inventory at dispensaries, cultivators and processors, but can be canceled by the state when it signs a long-term deal, Hardin said.
The bridge contract the state signed with Biotrack is for $80,000 and will expire on Dec. 13, 2025, according to the agreement.
"However, it does allow a switch to a new system at any point during the year," Hardin said in an email. "We remain in the discussion phase with potential vendors following the RFP that was issued last year. The bridge contract allows the state to ensure day to day compliance within the industry until the new contract is signed and implemented."
Hardin did not give a reason why the Department of Finance and Administration has not signed a long-term contract for its seeds to sales tracking software.
"We continue to ask questions of potential vendors," Hardin said. With an active request for proposal, or RFP, "we are unable to provide details on negotiations."
Biotrack is owned by Alleaves Inc., whose former CEO Michael Shvartsman pleaded guilty to one count of securities fraud as part of an insider trading scheme ahead of a merger with President-elect Donald Trump's media company, Trump Media and Technology Group.
Shvartsman is listed as CEO on corporate documents Alleaves filed with the secretary of state's office in Delaware, where the company is incorporated, but Alleaves told the Miami Herald in November that Shvartsman is no longer a part of the company.
Shvartsman, along with Gerald Shvartsman, pleaded guilty to one count of securities fraud back in April after making $22 million in illegal profits, according to the U.S. attorney's office for the Southern District of New York.
The men were given the opportunity to invest in two special acquisition companies. They agreed to sign nondisclosure agreements, which prevented them from sharing confidential information or using it to purchase stocks, according to the U.S. attorney's office for the Southern District of New York.
When the two men learned that the companies they invested in were targeted by Trump Media, they bought millions of dollars in stocks and tipped others off about confidential details related to the pending merger, according to the U.S. attorney's office for the Southern District of New York.
Arkansas signed a contract with Biotrack in 2018 to provide software, called ARSTEAMS, or Arkansas State Traceability and Monitoring System, so state regulators with the Alcoholic Beverage Control Division could track every medical marijuana plant in the state from when its planted to when its sold. The software is also used by the Arkansas Department of Health, which regulates patient cards, to monitor how much medical marijuana Arkansans are buying. In 2019, the first medical marijuana dispensaries in the state opened for business.
"The ABC seeks to obtain a thorough and robust medical marijuana product tracking system which maintains product accountability throughout the entire manufacturing, production, and dispensing process," according to the request for proposal from the state. "The State requires a seed-to-sale system to allow for efficient tax and inventory audits, to protect the public health, prevent diversion and inversion, and to facilitate the enforcement of the regulations."
In 2023, Alleaves acquired Biotrack from Florian Inc. for $30 million, according to documents filed with the Securities and Exchange Commission.
Hardin said four companies submitted bids for the medical marijuana inventory software, including Biotrack, Metova Strategies LLC, Metrc and TurnpikeAnalyst LLC.
In a statement to the Arkansas Democrat-Gazette, Metrc said, "Metrc submitted a proposal in response to the RFP and is awaiting the State's determination. We are excited about the opportunity to serve Arkansas and its residents and look forward to the State's decision."
Biotrack, Metova Strategies and TurnpikeAnalyst LLC did not respond to a request to comment.
During a legislative hearing in December 2022, medical marijuana business owners expressed frustration with Biotrack's seed-to-sales software, alleging it had crashed and mislabeled inventory.