Audit Finds Inconsistencies With Arizona Medical Marijuana Program

By Bret Jaspers
Published: Wednesday, June 26, 2019 - 8:56am
Updated: Monday, July 1, 2019 - 11:35am

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medical marijuana buds in glass jars
Claire Caulfield/KJZZ
Medical marijuana buds in glass jars at a dispensary in Scottsdale.

An audit of Arizona’s medical marijuana program finds several inconsistencies with how the Department of Health Services (DHS) manages it. 

One specific finding was that the department sometimes used equipment and staff for different programs, yet the expense was fully borne by just the medical marijuana program.

Marc Owen, a manager with the Arizona Auditor General’s Office, said that could lead to an inaccurate idea of how expensive the medical marijuana program actually is, and fixing this will help the department set the right price for medical marijuana cards.

“That way, you’re not having either under- or over-charging the cardholders for the cost of the program,” he said.

The Department of Health Services did not agree that it misallocated medical marijuana fund money. “The Department believes that monies for the [Medical Marijuana] Fund were spent in an allowable manner,” DHS said in its response to the audit. “Payroll costs for the Fund were only charged for work employees performed on the Program.”

Even so, the department said it would write a more specific process for spending money from the fund when the expense benefits more than one program within the department.

The Arizona Medical Marijuana Act created the program after voters approved a ballot initiative in 2010. According to the audit, total revenues for the program have outpaced expenditures in the past four fiscal years. It estimates the current Medical Marijuana Fund balance at over $63 million.

An initial medical marijuana ID card for a patient is $150 and $200 for a designated caregiver. Renewing your card costs the same amount. Starting Aug. 27, the renewal period expands from one to two years.

The Department of Health Services agreed with most recommendations of the audit, and vowed to put most of the suggestions into practice. 

One recommendation the department said it would not do is conduct surprise food safety visits to kitchens that make edibles, but the Department of Health Services said it doesn’t believe it has the legal authority to do unannounced inspections on so-called “infusion kitchens.”

Cara Christ, director of the Arizona Department of Health Services, said infusion kitchens are tied to the dispensary and for that reason, the rules that govern them are determined by the Medical Marijuana Act. "They have to have the same single secure entrance, they use the same product, their workers are dispensary agents, and we have to cross the threshold of that dispensary, which by statute requires reasonable notice on inspections," she said.

The text of the Act says dispensaries need reasonable notice for inspections. The law doesn’t mention “kitchens.”

Christ said she has been advised by the Arizona attorney general's office to not do surprise visits on infusion kitchens. That office declined to comment, citing attorney-client privilege.

The auditor general’s office disagrees with that analysis. “The basis for that recommendation is not specifically coming from the [Medical Marijuana] Act itself, but rather their regulatory authority for monitoring food establishments,” Owen said.

A new, different state law will let the state inspect products after they are made, but the details are not yet written and would not be in effect for over a year.

Christ said the department doesn’t know of any food-borne illnesses connected to edibles or extracts containing medical marijuana.

The auditor general will follow up this report in six months with a review of how the recommendations were implemented, with a potential second follow-up report in 18 months. 

Cara Christ
Bret Jaspers/KJZZ
Cara Christ, director of Arizona's Department of Health Services.

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