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Health director says no intent to misallocate Medical Marijuana funds

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Days after an unflattering performance audit found the state Department of Health Services had misallocated money from the Medical Marijuana Fund, the agency’s director said she will ensure requests for those dollars will face more scrutiny.   

DHS Director Cara Christ disagreed with the state auditor’s finding that her staff had misspent nearly $1 million, but the process of approving expenditures from the fund meant to keep the state’s Medical Marijuana Program functioning is getting a facelift nonetheless, starting with improved records maintenance.

“It’s not so much that we’re changing it because we agree that we misallocated [money]. We did find areas that we can improve in,” Christ told the Arizona Capitol Times Thursday.

The core issue seems to be in the program’s record-keeping – or lack thereof.

Christ pointed to the audit’s qualm with two employees whose salaries were paid for entirely through the Medical Marijuana Fund though they also worked on other programs at the department.

“We couldn’t go back and show why we felt that it was OK to pay 100 percent of that person’s [salary] because we didn’t have the records,” she said. “Had we had the records, we probably would have been able to.”

Moving forward, the program will be documenting expenditure decisions clearly, both with regard to approvals and denials.

“We do take a careful look at everything that’s being used by that fund because we are highly aware that if it is used inappropriately as determined by a court of law or the Legislature, we’ll have to pay that back,” she said, adding that “obviously, we’re not going crazy spending money.”

And she emphasized that there was no intent to misallocate any of the funds.

“It was disappointing to see the way that it was phrased,” she said of that finding in particular. “When you know the team and you talk to them on a daily basis and you know that they’re good people, it’s just a little concerning.”

Still, she said improvements are being made with regard to the Medical Marijuana Fund and other recommendations made in the audit.

DHS intends to come into compliance with all recommendations that were agreed to within six months, she said.

Of course, that leaves out those recommendations included in the audit released Tuesday that DHS did not agree to. 

DHS and the Auditor General’s Office still have a fundamental legal disagreement over whether the department can conduct unannounced inspections of kitchens within dispensaries that are making marijuana edibles for sale to patients.

Each of those kitchens is licensed as a food establishment, which can be subject to unannounced inspections, according to the audit. But the dispensaries that house the kitchens are licensed separately, and state law does not allow DHS to inspect dispensaries without providing advance notice.

And inspectors have no way of simply entering the kitchens without going through the dispensaries first because dispensaries are required to have a single, secure entrance.

“We can show up to do the unannounced inspection, but we still have to cross the threshold of the dispensary. And that’s where we can be told ‘no,’” Christ said.

The original intention was to inspect the kitchens for food safety during compliance inspections, she said. But when state inspectors show up to a dispensary with a kitchen, they’ve been told it’s simply not being used that day.

“To date, we have not witnessed an operating kitchen,” she said.

In a word, the program has been challenging. Christ said it’s a particularly litigious program, one that raises new legal questions constantly.

The audit highlighted some of those challenges, and she said another audit, this time specifically on procurement, is expected to be released in the next few months.

In the meantime, the program will be using a new system to track dispensary inspections, another trouble area noted in the audit, and written policies for ensuring facilities are in compliance with the law.

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