The June 2019 Arizona Department of Health Services—Medical Marijuana Program (Program) performance audit found that the Department did not timely, consistently, or adequately perform several medical marijuana regulatory activities and misallocated some Medical Marijuana Fund (Fund) monies.
As of this 36-month followup, the Department had implemented all 9 recommendations from Findings 1 through 5 that address the timely revocation of registry identification cards, as well as medical marijuana facility inspections, complaints, and noncompliance. However, the Department had not fully implemented the 4 recommendations from Finding 6 related to assessing and setting medical marijuana fees to ensure they reflect Program costs, including determining direct and indirect costs for providing the Program, periodically evaluating its fees, and if appropriate, modifying its fees.
For example, although the Department developed a Department-wide policy for establishing user fees, including medical marijuana registry identification card fees, the Department has not yet completed a documented analysis of its Program costs.
Without this analysis, the Department does not have the information it would need to set its fees at amounts that would allow it to recover its costs for operating the Program and not accumulate unnecessary fund balances.
The Department also reported that it does not yet have enough information to determine whether Program fees should be modified due to recent changes that impact the Fund’s balance, such as the legalization of recreational marijuana and statutory requirements that have required the Department to transfer monies from the Fund for various purposes (see Tables 2 and 3, pages 5 through 9, for more information on required transfers).
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