State auditor's recommendations following issues with Marijuana Enforcement Division

The Office of The State Auditor has provided a total of six recommendations after it found that the Marijuana Enforcement Division should improve.

One of the key findings was the lack of completing the necessary underage selling compliance checks at stores between the fiscal years of 2019 and 2022.

The Office of The State Auditor found that The Marijuana Enforcement Division did not perform underage compliance checks on 75 stores or 22% of stores that appeared on a report identifying these stores as a risk for underage selling. It should be noted that 554 of the 629 stores listed in the underage monthly compliance check were checked by the state.

The audit also states that division investigators failed to consistently cite marijuana stores for being in violation of selling to underage operatives. The report states that seven of the dispensaries reviewed were cited for selling marijuana to underage operatives.

Furthermore, the Office of the State Auditor found that division investigators reported those underage incidents were not consistent. Out of the seven stores, only six were also cited for failing to check the person's age, five were cited for allowing them into a restricted access area where marijuana is sold, and three were cited for transferring marijuana to a customer without a valid ID.

The investigators should have reported all seven stores for violating all four of these regulatory requirements.

The Marijuana Enforcement Division is responsible for licensing and regulating the medical and retail marijuana industries in Colorado.

The state auditor's office said there is a lack of consistency in how the division enforces marijuana dispensaries across the state.

The audit also found the division failed to inspect 36% of newly-licensed retail marijuana stores within 1 year of approving those licenses. According to the Division policy, it strives to inspect all new stores within 1 year of licensure.

The Division also failed to conduct a targeted inspection for 32% of businesses that met risk factors. 182 of the 567 licensed retail marijuana stores had never been inspected or had not been inspected within the past 2 years. 75 of those stores had never been inspected. On the contrary, the Division has inspected other stores multiple times. According to the audit, the Division inspected on business 19 times during that 4-year period.

Another key finding is that the Division did not take any disciplinary action against some businesses that violated marijuana laws. No disciplinary actions occurred for 23 of 44 violations of stores breaking rules that affect public safety. This includes selling marijuana sales to underage individuals and inventory tracking issues.

Furthermore, in 2018 The Department of Revenue decided to award a sole source contract in 2018 for the METRC system. The decision to pick the METRIC system was made through a competitive bidding process, as required. The audit did not find reasons to justify why METRC was the only system available that could meet the Department’s needs.

The Marijuana Enforcement Division made a statement addressing the performance audit.

They stated the Division has taken action toward full implementation of the audit's recommendations. The Division is taking steps for more transparency in operations, rulemaking, and internal policy review and training.

The division wants to clarify its process for enforcing rules.

• To clarify what factors and how the licensed community and investigators should consider mitigating and aggravating circumstances to inform any enforcement action
• Review of inventory tracking system requirements that can be adjusted in the rule 
• Allow the Division to explore other technologies that accomplish the same degree of tracking that has made Colorado’s regulatory framework successful. 

The division wants to make policies and procedures more precise in order for investigators to have more straight guidelines.
The division also claimed the COVID-19 pandemic affected how they could conduct inspections.

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