A highly critical audit from the state auditor found a lack of funding and planning contributed to problems at the Colorado Department of Revenue that led to lack of consistent enforcement, discipline and a 23-month delay in reviewing license applications.
The problems uncovered included a failure to quickly review applications, a failure to follow state law and removing marijuana from dispensaries under disciplinary review and a failure to make sure seized marijuana is destroyed properly.
The blistering report also said that the department spent too much money on capital projects, and had to lay off the “majority” of its staff, leading to long delays and mistakes in reviewing applications.
“For 13 of 35 new business application files we reviewed, we found evidence of potentially disqualifying information about the applicants,” the report said. “Ten licenses were issued; however, four were questionable, based on this evidence.”
The division was also cited for not developing the “seed to sale” model proposed – it fell short of implementing the program last year by $400,000, but says it will implement the tracking system by the end of this year.
- The division does not use the prescribed statutory process when taking marijuana related to disciplinary actions against medical marijuana businesses. It has inadequate controls to ensure that seized marijuana is destroyed properly.
- The division has not developed a systematic process for setting fees that correspond to its costs to provide regulatory oversight.
- The division laid off a majority of its staff due to revenue shortgfall, thanks to losses of about $2/3 million because of large capital purchases. Weaknesses in the division’s fee-setting, strategic planning, expense controls contributed to its funding problems.
- Tax revenue from 36 dispensaries was underreported by about $760,000.
People inside the industry are asking the state to adequately fund the enforcement division, said representatives from the Medical Marijuana Industry Group.
“The Medical Marijuana Industry Group calls upon the state to properly fund the enforcement division responsible for oversight of the medical marijuana industry,” said Michael Elliot, executive director of the group. “The responsible business owners who are members of MMIG are doing their part to make sure the system works. Our members follow the law and expect state officials to give the Medical Marijuana Enforcement Division the budget it needs to ensure proper enforcement. We want more inspectors and oversight of the industry.”
Elliot said he had no problem with the regulatory structure put in place by the Legislature, but that it needed to be funded properly.
“These are serious business owners with serious investments,” he said. “Their freedom is dependent on staying in unambiguous compliance with state law.”