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Audit finds 36 percent of Colorado's retail marijuana stores lacked state inspection

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Joe Mueller

(The Center Square) – Inspections of Colorado’s retail marijuana stores could be improved along with enforcement of laws and regulations, according to a report from the state auditor.

A performance audit of the Department of Revenue’s Marijuana Enforcement Division was recently released. The 58-page document made six recommendations, all accepted by the division.

All state departments and agencies must annually undergo performance audits of one or more specific programs or services in at least two departments. 

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The audit found the division did not inspect 36 percent or 40 of 112 newly licensed retail marijuana stores within one year of receiving approved licenses between fiscal years 2019 and 2022. The division also didn’t inspect 32 percent or 182 of the 567 licensed retail marijuana stores appearing on at least one targeted inspection report. Stores without ever being reviewed or without an inspection in the last two years are on the targeted inspection list.

Of the 182 stores not inspected, 75 had never been inspected, while the division checked other stores multiple times. One store was inspected 19 times during the four years, according to the audit.

The audit found regulators checked 88 percent or 554 of 629 retail stores at least once for underage compliance. The stores appeared on at least one monthly underage compliance check report during the review period.

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The audit found investigators didn’t consistently cite marijuana stores for all violations associated with sales to underage individuals. Of seven stores cited for selling marijuana to an underage operative, only six were cited for failing to verify the operative’s age. Five were cited for allowing the operative into a restricted area where marijuana is sold, and three were cited for transferring marijuana to a customer without valid identification.

Colorado voters approved Amendment 64 in 2012, authorizing the personal use of marijuana or “retail marijuana.” The division is responsible for regulating the state’s retail marijuana industry by issuing business licenses, inspecting marijuana stores, investigating alleged violations of marijuana regulations, and pursuing enforcement actions. 

The division conducts targeted inspections focusing on specific compliance of a licensed store. The division’s compliance checks include underage operatives between 18 and 20.5 who attempt to buy marijuana from an authorized store. The division prioritizes these investigations by generating a monthly targeted underage compliance report listing stores at greater risk of noncompliance.

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The audit also found the department didn’t comply with state procurement requirements in 2018 when it renewed an $856,000 contract for eight years with Metrc LLC, the software vendor used for the support, licensing, and hosting services for the state’s seed-to-sale tracking system. 

“The (Department) should ensure that it complies with state procurement requirements when procuring the Marijuana Enforcement Division’s seed-to-sale inventory tracking system by revising its purchasing guidance to explain how staff should determine when a sole source procurement is appropriate, what information is needed to support that decision and what information should be documented in sole source justifications,” the audit stated.