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$1M Missing from Arizona’s Medical Marijuana Program, Audit Shows

$1M Missing from Arizona's Medical Marijuana Program, Audit Shows

Medical Marijuana

$1M Missing from Arizona’s Medical Marijuana Program, Audit Shows

Arizona’s Auditor General says the Medical Marijuana Program is misspending money and not inspecting dispensaries. The Department of Health disagrees.

Arizona’s Medical Marijuana Program isn’t performing up to par, according to a newly released report from the Arizona Auditor General’s office. In the report, the Auditor General concludes that the Arizona Department of Health Services (DHS), which oversees the Medical Marijuana Program, struggled to meet its regulatory duties and responsibilities in a number of areas, from patient registration to dispensary inspections. But the report also found that DHS misallocated nearly $1 million in funds meant to benefit the Medical Marijuana Program. In its response to the Auditor General’s report, DHS disagreed with many of the key findings and said it would only make small changes to address the report’s recommendations.

Arizona’s Medical Marijuana Program is Coming Up Short

The Arizona Auditor General’s office has just released its report on a performance audit of how well Arizona’s Department of Health Services is managing the state’s Medical Marijuana Program. And the report’s findings don’t paint a very flattering picture of DHS’s performance in 2018.

Arizona legalized medical marijuana in 2010, when voters passed a ballot initiative approving the Arizona Medical Marijuana Act (AMMA). That Act gave DHS a range of regulatory and health and safety responsibilities. DHS is responsible for issuing—and revoking—medical marijuana patient registry identification cards. It’s responsible for inspecting dispensaries, cultivation sites, “infusion kitchens” and other cannabis industry infrastructure. And DHS is also responsible for investigating complaints, licensing businesses and administering the state’s Medical Marijuana Fund.

With nearly 200,000 qualifying patients, 2,022 designated caregivers and 8,179 dispensaries, managing Arizona’s large Medical Marijuana Program is no small task. But in nearly every area, the Auditor General’s report found that DHS was falling short.

The report says that DHS failed to perform some of its regulatory activities in a timely, consistent or adequate manner. For example, DHS is supposed to inspect every facility at least once a year. But the audit found that some dispensaries and cultivation sites hadn’t been inspected in over a year. The audit also found that DHS inadequately investigated and monitored complaints about dispensaries and cultivation sites. That it failed to consistently address facilities that didn’t follow the rules. And that it did not inspect medical marijuana “infusion kitchens” as food establishments. All of these issues put Arizona patients and the wider public at risk, according to the report.

Arizona Health Department Disagrees with Audit Findings

The kicker, however, is the nearly $1 million DHS misspent on other programs and staff salaries. Sampling just 65 of the 7,177 total transactions that spent Arizona’s medical marijuana fund money, the audit found 30 of them that shouldn’t have received approval because they didn’t benefit the program. Those 30 transactions totaled $962,000. Given the small sample size, it’s possible DHS misspent even more money.

Specifically, the audit found that money went to pay two employees with salaries of about $131,000 per year. But those employees spent between five and 15 percent of their time working for other state programs. Other expenditures also failed to proportionately benefit the program. So in effect, that $1 million is missing from the Medical Marijuana Program.

But in response to the numerous problems identified in the audit, DHS refused to concede. Instead, the department challenged nearly all of the Auditor General’s findings. DHS also strongly disagreed that it had misspent funds. In fact, DHS went on to claim that the misspent funds were actually benefiting Arizona residents. “ADHS is confident that all Medical Marijuana funds were spent in an allowable manner,” said DHS spokesperson Chris Minnick. “While some expenditures may have benefitted other programs in addition to the Medical Marijuana program, the Department sees this as an advantage that also improves public health capacity for the citizens of Arizona.”

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