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Tepid Tempest

A 'devastating' audit of Denver's medical marijuana regulation isn't the big deal opponents claim it is

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It seems the Mile High City is a mile off target when it comes to medical marijuana business regulation, but the situation might not be as bad as an auditor's report (http://www.denvergov.org/Portals/741/documents/Audits%202013/Medical_Marijuana_Licensing_Audit_Report_07-18-13.pdf) and subsequent media attention make it sound.

Denver, where competition is thriving among hundreds of medical cannabis shops, recently gained a new ass when the elected city auditor ripped it one over cannabis business regulation. Dennis Gallagher and his colleagues snooped around in the city's books for a while, then in a report issued July 18 excoriated the Department of Excise and Licenses for poor record keeping, unenforced or nonexistent deadlines, poor management and insufficient staffing in the medical marijuana licensing program, all of which leave the city at "high risk" in some areas.

"The audit found that the Department's medical marijuana licensing practices are inefficient and ineffective," Kip Memmott, the director of audit services, wrote in the July 18 report.

The media have been jumping all over this story for a week, arming cannabis naysayers for I Told You So verbal attacks on a system that much of the nation has looked toward as a model. The Denver Post's headline over the story was, "Denver reels from 'devastating' audit of medical marijuana program." Other news outlets were also quick to jump on the criticism bandwagon.

But I'm not so sure it's a big deal. There is a tempest in this teapot, methinks. Let's take a look at what they actually found.

The audit is rife with harsh language, referring to the department's "ineffective governance" and lack of a "basic control framework." Some records were hard to find, there was confusion over how to apply for licenses (no report that anyone was prevented from applying, just that it's confusing) and there were no deadlines for things like fire and zoning inspections (no mention that they didn't happen, just that there are no deadlines). The worst result of all these inefficiencies is that some dispensaries are operating without city licenses, although most probably have state licenses.

The department let the record keeping and procedural problems slide for three years, the report says, and the problems are the result of "intentional decisions made by Department management." Well, I hope they make decisions intentionally. Just sayin'.

The audit revealed conflicting information on the city website concerning what forms are required for licensing, poor coordination between the city and state MMJ systems, arbitrary fees (not based on the cost to administer the program) and a lack of standard licensing procedures. The situation especially worried auditors, because cannabis licensing is a significant revenue generator, they said.

The city program brings in about $16 million annually. Yes, get a handle on that, please, but don't make it sound like medical marijuana centers (the city's new term for dispensaries) are selling crack to children.

The report notes that the poor oversight is largely the result of the city assigning one person to manage the program. One person for hundreds of licenses. OK, so that means there will be problems, duh, but the city knew that going in.

Ultimately, what does all this add up to? Is it really devastating? No, it isn't. All the audit did was basically expose what I will assume everyone there already knew—that bureaucrats let things slide, because they had to. The city, as cities often do, slashed budgets.

The auditor's report notes that the problems exist because the city managers prioritized. In other words, they decided—presumably intentionally and with honest, genuine good intentions—that medical cannabis licensing wasn't a high priority. They decided that other things were more important than making sure medical cannabis businesses got their fire inspections on schedule, like maybe police and fire department staffing and budget. They decided the cannabis licenses were a low priority.

I think we should believe them.

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