We set the standard for good government. 1

Colorado’s Medical Marijuana Regulatory System (Part 1)

We set the standard for good government. 2

Office of the State Auditor

• Non-partisan organization in the Legislative Branch

• Performance audits conducted:oWhen required by statute

oWhen requested by legislators

oAt the State Auditor’s discretion (looking at statewide coverage, size/program impact, known problem or risk area)

We set the standard for good government. 3

Rise of MMJ in Colorado

2000 2001 2002 2003 2004 20005 2006 2007 2008 2009 2010 2011 2012 2013 -

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Number of Red Cards

Voters pass Amendment

20

Feds issue Ogden Memo

Major legislation to regulate

industry

Voters pass Amendment

64

We set the standard for good government. 4

Roles and Responsibilities in Regulating MMJ: Department of Public Health and Environment

Patients

Doctors

Caregivers

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Roles and Responsibilities in Regulating MMJ: Department of Revenue

Businesses (about 1500)

Caregivers

Law Enforcement

We set the standard for good government. 6

Scope and Potential for Impact

Responding to Current Events

Broke the report into 2 parts to get timely information to legislators

Included findings to help legislators understand what was not working about MMJ regulation

Included in the report language to help people understand why MMJ regulation is still relevant

We set the standard for good government. 7

What We Found• Chapter 2 – lack of an effective

licensing and monitoring program

• Chapter 3 – lack of effective management of resources

• Chapter 4 – difficulty of regulating an activity that is illegal under federal law

13 Recommendations (42 subparts)

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What We FoundChapter 2 – Licensing and Monitoring• Licensing process did not provide assurance that only

eligible businesses were licensed• Large number of pending licensees operating

• “Seed-to-sale” model did not exist• Weak controls for destroying MJ

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What We FoundChapter 3 – Financial and Strategic Management

• No systematic process for setting fees at levels that correspond to the costs of licensing and monitoring

• Lack of spending and staffing plans

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What We Found

Risk to State EmployeesPotential legal liability in an industry that violates the federal Controlled Substances Act.

“The voters have spoken and we have to respect their will. This will be a complicated process, but we intend to follow through. That said, federal law still says marijuana is an illegal drug so don’t break out the Cheetos or gold fish too quickly.” –John Hickenlooper, Governor of Colorado, responding to passage of Amendment 64, November 2012

Chapter 4 – Compliance with Federal Marijuana Laws

We set the standard for good government. 11

Results

We set the standard for good government. 12

Download the report:

www.state.co.us/auditOSA Audit Reports Department of Revenue

Medical Marijuana Regulatory System Part I

Contact Nina:

nina.frant@state.co.us