Forian Leaves the Marijuana Business By Selling BioTrack To Alleaves For $30 Million!

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Florian, a technology business, has announced it will sell cannabis software provider BioTrack to Alleaves for $30 million in cash and quit the marijuana industry to concentrate on health care. This is the second major IT exit from the cannabis market in as many weeks due to rising competition, extensive layoffs, and declining wholesale prices for marijuana products.

On January 27th, Akerna Corp., the parent company of leading seed-to-sale tracking service MJ Freeway, announced a $4 million cash transaction to sell its Cannabis software business to POSaBIT Systems Corp. Concurrently, Akerna, based in Denver, announced that it would merge with Gryphon Digital Mining, a cryptocurrency startup, in an all-stock agreement that would allow Gryphon to be listed on the Nasdaq.

Regulators in New York have recently selected BioTrack to provide the seed-to-sale tracking software for the state’s new adult-use marijuana market. Companies in over 30 states use the firm’s cannabis software. In a press release, Forian, which trades under the symbol FORA on the Nasdaq, announced that the company would cease offering software solutions to the cannabis market in favor of concentrating on its “healthcare information business.”

The Newtown, Pennsylvania, firm says it will keep a license for certain “cannabinoid-based data” to improve its healthcare information capabilities. To quote Forian Executive Chair Max Wygod from the press release: “This acquisition allows us to focus our efforts on our healthcare information business, which has been the major driver of our growth to date and will further accelerate our path to positive Adjusted EBITDA.”

In order to speed up its multistate commercial rollout, cannabis software developer Alleaves of Deerfield Beach, Florida, received a $40 million Series A fundraising round last year. The company made it clear that it was looking to acquire other businesses in the cannabis industry that developed seed-to-sale and POS systems.

According to a press release issued in July 2018 to announce the fundraising, Alleaves intends to use the money to purchase cannabis tech platforms in order to increase its clientele and develop a “seamless, real-time seed-to-sale software, transaction, and compliance platform.”

In March of 2021, BioTrackTHC, Cannalytics producer Helix Technologies, and Medical Outcomes Research Analytics merged to form Forian. In a press release announcing the acquisition of BioTrack, Alleaves founder Mike Beedles remarked, “The integration of BioTrack and Cannalytics will expedite our aim to provide top-of-the-line ERP solutions to the cannabis business.”

Cannabis Tech Headwinds

This sale of BioTrack highlights the challenges faced by cannabis company software vendors such as Dutchie, the market share leader in point-of-sale systems. In late November, the co-founders of an Oregon firm that controls two of the top POS suppliers were fired, prompting the two of them to sue the marijuana e-commerce platform.

According to Ed Keating, chief data officer and co-founder of Connecticut-based Cannabiz Media, which has released a unique, annual analysis on cannabis POS providers since 2018, “the biggest companies at the top of the leaderboard… have all been under turbulence.”

Perhaps a thinning is just getting started here. As a result of buying BioTrack, Alleaves has vaulted to the forefront of the point-of-sale (POS) and traceability software market, which is dominated by a small number of established players.

All licensed adult-use and medicinal marijuana licensees in New York must connect their inventory and/or sale tracking systems with BioTrack, which was chosen in December by state officials as the seed-to-sale tracking program for the state.

According to a press release, BioTrack has found use in 38 different states and 13 different countries. Especially when smaller competitors fail to garner significant client traction and eager investors seek exits, Keating anticipates further consolidation within the cannabis software market.

“When you have over 70 POS systems all vying for the same 10,000 or so stores in the United States, some of them are certain to fold sooner or later.” According to Cannabiz Media’s 2022 industry report obtained by MJBizDaily, BioTrack, itself the offspring of a 2018 merger with Colorado-based Helix TCS, entered 2023 as the No. 2 cannabis POS provider with its software installed at 531 medical and adult-use retailers, controlling 13.4% market share.

Dutchie’s acquisition of Greenbits in 2021 did not disclose the terms under which Greenbits achieved its dominant position in the market, but the company’s installations may be found in 652 outlets, representing 16.4 percent of the industry.

Friday’s closing of the BioTrack purchase included a $20 million upfront payment, with the remaining $10 million paid in 12 equal monthly installments. CEO and President Daniel Barton resigned from his positions at Forian, the company said on Monday.

Wygod, who will serve in an interim capacity, has taken his place. Forian’s stock price increased by 24 percent to $4.08 on the afternoon of the BioTrack sale’s announcement, giving the company a market value of roughly $133 million.

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