State Audit Finds That Regulators Aren't Inspecting Marijuana Kitchens

Nate Nichols
Arizona's medical marijuana program inadequately investigated complaints against dispensaries, misallocated funds, and failed to revoke in a timely fashion registration cards from patients who broke the law, according to a report from the State Auditor's office.

The audit also found that the Department of Health Services, which oversees the program, has not been conducting health inspections at the 36 "infusion kitchens" in Arizona that make edibles, despite them being licensed as "food establishments."

"The Department’s failure to regularly inspect infusion kitchens places qualifying patients at risk of purchasing and consuming food products without adequate oversight to prevent foodborne illnesses," the report found.

In spite of that finding, the DHS claimed in its response to the audit that it has no authority to conduct unannounced inspections at cannabis kitchens.

Published on Tuesday, the report lists 12 recommendations for the government agency responsible for regulating more than 100 dispensaries and 90 marijuana cultivation sites in Arizona, as well as the registration cards of nearly 200,000 qualifying patients.

Most of the audit's findings dealt with inadequacies in the way state employees handle routine inspections of dispensaries and investigations of complaints.

The program did not always meet its informal goal of inspecting dispensaries and grow sites at least once a year. Among a random sample of 17 facilities reviewed by auditors, five had gone longer than a year without an inspection. Infrequent inspections could pose public health concerns, the report states.

For example, one grow site that had not received an inspection in a year was later found to be storing cultivation equipment in a bathroom, "which could result in bacteria and germs from the equipment transferring to medical marijuana at the cultivation site."

The program also showed deficiencies in its handling of complaints against dispensaries, the audit found. Of a random sample of 30 complaints, the program failed to investigate two because employees wrongly found them to be outside of their jurisdiction.

One of the ignored complaints dealt with a dispensary that allegedly claimed to be permanently closed when the law states that a dispensary must be open for 30 hours weekly. The other un-investigated complaint alleged that a dispensary mislabeled products.

For eight of the complaints reviewed, employees did not adequately document how they conducted their investigations, meaning auditors could not determine whether they were properly handled.

The program was also inconsistent in how it responded to dispensaries with violations. Some noncompliant dispensaries got a meeting with regulators. Others were asked to submit a written plan for improvement. Even dispensaries who violated the same rules were met with different responses.

For example, the audit reviewed two cases of dispensaries that illegally allowed a person under the age of 21 to volunteer on-site.

In the first case, the dispensary owners met with regulators and agreed to two unannounced compliance visits. In the second case — involving a dispensary that had a 16-year-old working with patient records — the owners were only asked to write a plan for improvement. Five months later, that dispensary was found to be employing staffers without registration cards.

On top of issues with the program's regulation of dispensaries, the audit found found that state employees did not revoke in a "timely" fashion the medical marijuana cards of patients who broke the law. Reviewing a random sample of 10 cases of patients who violated the Medical Marijuana Act, the audit found that the program took between 21 to 243 working days to revoke cards.

The DHS agreed with most of the auditor's findings, but notably disagreed with two of them.

Most significantly, the department rejected the notion that the program can conduct inspections at kitchens that cook marijuana edibles. The department noted that it agrees with the "reasoning and recommendation" of the auditor in this instance, but does not believe the program has the statutory authority to order unannounced inspections.

The department also disagreed with a finding that the program misallocated taxpayer dollars. The report found that 31 employees did not work full time on medical marijuana, but were still paid solely in funds appropriated to the program, totaling $603,600.

In an inverted example of misallocation, funds that were appropriated for the medical marijuana program also benefited other programs within the Health Department. The biggest example in the audit report was $600,000 spent on fees to allow doctors to access more easily a database of prescriptions of controlled substances.

The database includes prescriptions for marijuana as well as other substances such as opioids. But the medical marijuana program still swallowed all of the $600,000.

In its response to the audit, the department claimed that it "believes 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."

Still, the department stated that it would establish more formal rules on using funds.