Colorado Audit Finds Lax Cannabis Industry Oversight by State

The enforcement division failed to inspect nearly one-third of new marijuana businesses in their first year.

A Colorado state audit requested by lawmakers on inspections of marijuana dispensaries found that regulators hadn’t lived up to their mandate, with oversight spotty and incomplete between 2019 and 2022.

The state Department of Revenue’s Marijuana Enforcement Division (MED) violated internal policy in several instances, including not inspecting every new store opening within a year of launch. During the four-year time frame the audit covered, only 74% of new shops – or 72 out of 112 – were inspected, the audit found.

“Between fiscal years 2019 and 2022, one in five (20%) of the licensed retail marijuana stores in the state did not undergo one of the 11 targeted inspection types typically conducted in person, and the stores that were inspected did not always meet the prioritization factors listed in policy,” the audit reported.

Not only that, the audit found, but the MED also failed to inspect roughly one-third of the 567 licensed retail marijuana stores on a monthly targeted inspection report.

“Of those 182 stores, 75 stores appeared in a monthly report because the division had not conducted a targeted inspection of them previously,” the audit reported. “While these 75 stores had never been inspected, the division inspected other stores multiple times during this time period. For example, we found that the division inspected one store 19 times during that four-year period.”

The MED in addition failed to conduct “underage compliance checks” on some businesses that had been noted as having high-risk factors, the audit found.

Those who escaped oversight included 34% of shops that “appeared on a report because the Division had never completed an underage compliance check for that business.”

The MED also declined to issue citations to a number of companies that didn’t actually do age verifications, the audit found. Out of seven shops that were cited for selling cannabis to minors, only six were also cited for failing to verify the customer’s age, and five of those were cited for allowing an underage operative of the MED into the dispensary’s “restricted access area.” Three even sold to underage operatives who didn’t have any ID.

Deptartment of Revenue Executive Director Mark Ferrandino told a legislative committee on Monday that he knows there’s “room for improvement,” Colorado Politics reported.

Ferrandino said the agency prioritizes business compliance over enforcement, and said Colorado marijuana businesses are 99% compliant, which the state doesn’t get in the alcohol or tobacco industries.

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.

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