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Tuesday, August 9, 2022

Arizona medical marijuana regulators must review fee policies, according to an auditor’s review

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“What happens when there is a lack of transparency is that it affects our ability to set our legislative agenda.”

Written by David Abbott, Arizona Mirror

The auditors said in a report last month that the Arizona Department of Health Services had not enacted needed changes to how it manages the state’s medical marijuana fund recommended by state auditors three years ago.

The Auditor General of Arizona issued Modernization In its 2019 review of ADHS’s management of a medical marijuana fund, it found that ADHS had been slow to enact changes that would address the misallocation of funds that were used to pay some of the department’s salaries.

While ADHS followed most of the recommendations laid out in 2019 — such as timely addressing the revocation of medical marijuana certification for patients who violated the 2010 Arizona Medical Marijuana Act (AMMA); Conducting inspections of medical marijuana facilities, handling complaints and non-compliance issues – The department has not yet adequately reviewed the fee structure and treatment of funding allocations for specific uses outlined in cannabis legislation.

The review found that, under the leadership of former Director Kara Christ, ADHS did not put in place enough written policies and procedures that could “help determine whether spending is permitted and whether it should be allocated to the fund,” and ensures employees document the time they spend on tasks related to its management.

The auditors reported that “Management paid some employees’ salaries from the fund even though they worked on non-program responsibilities during at least one of the pay periods we reviewed.” “The extent and effect of improperly allocated payroll expenses to the fund is unknown, as improperly allocating expenses leads to a further reduction in funds available in the Program Operations Fund and other legally required or permitted uses, such as legally authorized clinical trials and clinical trials. Efficiency, for which the Ministry did not allocate or spend the funds of the Fund in the 2022 fiscal year.”

ADHS has also not evaluated or modified its fee structure since the introduction of the AMMA Act in 2011.

The report states that “without this analysis, management would not have the information it would need to determine its fees in amounts that would allow it to recover the costs of operating the program and not accumulate unnecessary fund balances.” “The administration also reported that it does not have enough information yet to determine whether the program fees should be adjusted due to recent changes affecting the fund’s balance, such as the legalization of recreational marijuana and legal requirements that require management to transfer funds from the fund for various purposes.”

The AMMA Act, which legalized the use of medical marijuana in Arizona, was passed by voters in 2010. Because it was a voting initiative, the money in the medical marijuana fund is protected and can only be used for the purposes described in the AMMA. Funds are provided primarily through medical certificates and dispensary licensing fees, as well as imposed civil penalties and donations, in accordance with the law.

In 2020, voters approved Proposition 207, which legalizes adult use of cannabis. But this has increased pressure on the medical marijuana fund by funneling $45 million to various government agencies, from law enforcement to teacher grants to public safety. These funds were largely intended to implement the adult use program.

According to the report, the fiscal year-end balance in a marijuana fund increased every year between fiscal years 2016 and 2020, peaking at more than $91.7 million at the end of fiscal year 2020.

Since then, it has fallen to an estimated $48.2 million for the fiscal year ending June 30. Because of expenses and transfers, that number is expected to drop to about $22 million.

“A combination of reduced revenue; outflows, consisting of expenditures and required transfers to other agencies or funds, which exceed revenue; and recent legal changes restricting the use of some fund funds to specific purposes have reduced the funds available for AMMA purposes” As stated in the report.

Revenue for fiscal year 2022 is estimated to total about $12.4 million, but fiscal year 2023 forecasts come down to $10 million. According to ADHS reports, the number of eligible patients in the medical marijuana program dropped from 299,054 in January 2021 to 191,682 in May 2022.

In the middle of 2020, ADHS implemented a rule to extend the life of medical marijuana cards to two years in order to reduce costs to patients, and this also affected the amount of money in the fund.

Another major potential pressure on the fund is the 2021 law that will allocate $25 million over five years to marijuana research into the effectiveness of cannabis in treating pain and a myriad of other diseases.

Medical marijuana fund problems can have negative effects on consumers and cannabis advocates who are working to enact a policy that benefits both adult cannabis users and patients.

The executive director of the Arizona National Marijuana Law Reform Organization (AZNORML), Mike Robinet, says a “lack of transparency” can affect the organization’s legislative agenda when it’s not clear how much is in the box.

“What happens when there is a lack of transparency is that it affects our ability to set our legislative agenda,” he said Arizona Mirror. “One of the big things we’ve tried to do this year is reduce card fees, but not knowing (the size of) the fund makes it impossible.”

For example, Robinette pointed to the most recent legislative session, where AZNORML defended legislation that would have eliminated certification fees for Arizona veterans, which failed in the final minutes of the hearing.

It could also affect the future of research in Arizona.

“Since HB 2298 contained $5 million in annual funding for legitimate clinical trials, we have to ask the question, is this an unfunded mandate?” He said, referring to the 2021 law that earmarked $25 million for research. “We didn’t know where the fund was, so we didn’t know if 2298 had been funded.”

In a statement to MirrorADHS spokesperson Tom Hermann wrote, “We are continuing to implement the recommendations of the Auditor General and will work with the Auditor General to ensure that our management meets the points in the report.”

The Office of the Auditor General will conduct another follow-up of the department’s progress within six months.


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