💻 Dutchie goes down on 4/20, again

Dutchie once again goes down on the biggest Cannabis sales day of the year and risks of customers switching providers have never been stronger.

Source: Dutchie

On 4/20/24, Dutchie customers faced issues with their POS systems in multiple states (MA, MD, MO, NM). The issue seems to stem from their Bluegate server, which is an internet service that allows users to monitor measuring data, which includes several functions and applications, including: visualization of measured values, remote control functions, online backup, Process visualization (SCADA), and automatic download of remote data to a local device. While the issue was resolved on 4/20, it wasn’t until 7:14p EST, presumably when consumers have already attempted to collect on 4/20 deals.

Despite the company’s awareness of the issues from last year and assuming it made every conceivable effort to avoid a repeat this year, Dutchie seems to have provided a big opening for competing POS to convince customers that they should switch.

Tim Barash, CEO of Bend, Oregon-based Dutchie, said the company has been focused on meeting the demands of the industry’s busiest sales day since last year’s setbacks. “Since then, we have redoubled our efforts to stay ahead of the industry’s scale,” he told MJBizDaily via email. Dutchie’s POS and e-commerce software handles more than 1 million daily orders from more than 6,000 cannabis retail clients in the U.S. and Canada. Its technology facilitates $14 billion-plus of cannabis sales annually. “By far the industry’s largest provider, it is our responsibility to consistently improve performance to support our customers,” Barash added. — MJBizDaily (4/18/24)

In speaking with Talking Joints Memo, CTO Chris Ostroski explained this year’s crash due to customers local to a specific instance of their POS system experiencing serious issues that impacted their ability to transact.

Other POS providers were quick to jump on the opportunity:

Flowhub

BLAZE

Flourish Software

Treez

Cova

Meadow

Dispensary Losses:

• Curio Wellness (Far & Dotter and Pharmkent in MD) Co-Founder Wendy Bronfein estimates a loss of ~$80,000 in sales, in addition to nearly 1000 preorders that had to be canceled and reallocated to inventory in order to remain in compliance

• Bloom Brothers (Pittsfield, MA) CEO Nathan Girard estimates they lost ~$25,000 through the 4 hours and 34 minutes that Dutchie was down. Last year, Dutchie offered credit to customers based on a formula for losses, but at $12,000/year for eCommerce and Back Office, Girard will not be taking the credit a second time

Questions to Answer (will be updated as I dig through this in the next few weeks):

• 2023’s outage was caused by an issue with Dutchie’s database provider that powers many of the largest companies in the world, is the company using the same database provider this year?

---

👋 Highly Objective is a weekly Cannabis newsletter and podcast curated by Dai Truong, who leads Cannabis Investment Banking at Arlington Capital Advisors. Third-party information presented here and links to third-party content are for informational purposes only and are not intended as a recommendation, offer or solicitation for the purchase or sale of any financial instrument, security or investment.  The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Linking to third-party sites in no way implies an endorsement or affiliation of any kind between Arlington Capital Advisors, LLC, or its affiliates and any third party.  The information in this blog constitutes my own opinions (and any opinions posted by guest bloggers from time to time) and it should not be regarded as a description of services provided by Arlington Capital Advisors, LLC or any affiliate.