Arizona Auditors Uncover Medical Cannabis Regulatory Failures

A report from Arizona’s State Auditor’s Office asserts that medical cannabis regulators inadequately investigated complaints against dispensaries, failed to revoke registration cards from law-breaking patients in a timely manner, did not conduct health inspections at edible processing facilities, and misallocated funds, the Phoenix New Times reports.

In all, the Auditor’s Office made 12 recommendations for the state Department of Health ranging from how to handle patient card revocations to bookkeeping.

According to the report, the agency identified two employees with salaries totaling approximately $131,000 who worked on other non-medical cannabis related programs 5 and 15 percent of their time, respectively. In all, 31 employees did not work exclusively on the medical cannabis program but were paid a total of $603,600 – all from funds derived from medical cannabis sales.

“Additionally, we reviewed a judgmental sample of 65 of the 7,177 fiscal year 2018 Fund expenditure transactions, totaling approximately $2.6 million,” the report states. “For 30 of these 65 transactions, totaling approximately $962,000, the Fund paid the full cost of the transaction, but other Department programs also benefited from the expenditures.”

The office indicated that in addition to regulators never inspecting edibles kitchens – which the Health Department maintained was not within its purview – many dispensaries and grow sites went more than a year without an inspection. In one instance, a grow site that had not been inspected in a year was found to be storing cultivation equipment in a bathroom, which could result in a transference of bacteria and germs to medical cannabis plants.

On the dispensary side, regulators found that one uninspected dispensary had mislabeled products, and another had permanently closed, while the law requires them to be open for at least 30 hours per week. Another dispensary was found to have employed a 16-year-old who was working with patient records – the law requires all employees and volunteers to be 21 with industry registration cards.

The audit also discovered that $600,000 of medical cannabis program funds was spent on a database to allow physicians to access a database of prescriptions of controlled substances – which includes cannabis and opioids – however, the cost was solely taken from the medical cannabis program budget.

Responding to the report, the Health Department told the New Times they believe “that monies for the [medical marijuana fund] were spent in an allowable manner, and that payroll costs for the Fund were only charged for work employees performed on the program.”

The Health Department said it would establish formal rules on using cannabis-derived funds.