Governor departed from normal background check procedure for Cannabis director, audit finds

Governor departed from normal background check procedure for Cannabis director, audit finds

Thursday’s audit report focused on the governor’s office’s failure to learn of Erin DuPree’s financial issues.

A report from Minnesota’s Legislative Auditor released Thursday found Gov. Tim Walz departed from normal background check procedures when picking the head of a new state cannabis office.

In September, the governor’s office announced it had selected Erin DuPree, owner of an Apple Valley cannabis business, to head the Office of Cannabis Management, an agency tasked with regulating newly legal recreational marijuana in Minnesota.

She would have been tasked with building and running an agency that would regulate Minnesota’s legal marijuana marketplace when the state starts allowing businesses to sell, likely next year.

But DuPree ended up not taking the job after it emerged she had tax liens and that her business carried products that were illegal in Minnesota because they had too much THC — the psychoactive part of cannabis.

Minnesota legalized “low-dose” edible cannabis products in 2022, placing limits on THC levels. Minnesota Public Radio reported her business advertised products that exceeded the limits, though DuPree said she removed them from inventory after learning they didn’t comply with the law.

Thursday’s audit report focused on the failure of the governor’s office to learn of DuPree’s financial issues, which are standard in any background investigation for the head of an executive agency. Those issues included tax liens and outstanding court judgments.

“Three differences from the Standard Operating Procedure, in particular — all related to the background check — contributed to Governor Walz appointing Ms. DuPree as Director of the Office of Cannabis Management without having full and complete information,” wrote Legislative Auditor Julie Randall.

Erin DuPree, owner of Loonacy, a hemp product store in Apple Valley, in her store on Thursday, July 27, 2023. Gov. Tim Walz named DuPree as the first executive director of the Office of Cannabis Management on Sept. 21, 2023. (John Autey / Pioneer Press)

The governor asked the Bureau of Criminal Apprehension to investigate DuPree’s background, but the agency didn’t loop in the Alcohol and Gambling Enforcement Division, which typically is involved, the report said.

Additionally, the governor’s office assumed the BCA would check with the Department of Revenue, and did not ask both departments to investigate. The auditor said standard procedure calls for the governor to send materials on a candidate directly to the Department of Revenue.

Finally, the BCA did its financial background checks with information and systems separate from the revenue department, so the agency never reviewed revenue department information, which likely would have included the liens.

The audit also found the governor’s office relied on summary background reports rather than full information — though this was similar to past practice. Staff in the governor’s office didn’t review the complete report until Oct. 4, after DuPree had withdrawn from the job and two days after her planned start date. A closer review of the complete report would have shown the BCA did not review the revenue department information, the audit said.

The governor appoints more than 300 people a year to head state agencies and made more than 700 appointments in 2023. Most of those are noncontroversial, though jobs like director of the state’s new cannabis management office, are “especially sensitive and subject to additional scrutiny,” Randall wrote.

While the report found issues with the background check, the auditor considers the matter closed. The audit was requested by an unnamed legislator. Randall made recommendations for improvement in future backgrounding.

In a written response to the audit attached to the report, the governor’s office said it had opted to conduct a more rigorous process than standard background checks.

Mary Fee, general counsel for the governor’s office, said the office was “unaware it lacked full information” and there were issues with the BCA’s review.

“We appreciate and value the thorough and professional review conducted by the OLA and believe that our processes could always improve,” Fee said.

Months after DuPree’s withdrawal, Walz continues to search for a person to head the new state cannabis management office.

Soon after the release of the Legislative Auditor’s report, the governor’s office said it plans to expand its search for a new director. Walz asked Minnesota Management and Budget to use a dedicated recruiter to do a national search for a new director.

In the meantime, the governor named Charlene Briner, a consultant working to implement Minnesota’s new legal cannabis law, as the office’s interim director.

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Region: Minnesota

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