1. We set the standard for good government. Colorado’s Medical Marijuana Regulatory System (Part 1) 1

2. We set the standard for good government. Office of the State Auditor Non-partisan organization in the Legislative Branch Performance audits conducted: 2 o When required by statute o When requested by legislators o At the State Auditor’s discretion (looking at statewide coverage, size/program impact, known problem or risk area)

3. We set the standard for good government. Rise of MMJ in Colorado 3 Voters pass Amendment 20 Feds issue Ogden Memo Major legislation to regulate industry Voters pass Amendment 64

4. We set the standard for good government. Roles and Responsibilities in Regulating MMJ: Department of Public Health and Environment Patients Doctors Caregivers 4

5. We set the standard for good government. Roles and Responsibilities in Regulating MMJ: Department of Revenue 5 Businesses (about 1500) Caregivers Law Enforcement

6. We set the standard for good government. Scope and Potential for Impact Responding to Current Events 6 Broke the report into 2 parts to get timely information to legislators Included findings to help legislators understand what was not working about MMJ regulation Included in the report language to help people understand why MMJ regulation is still relevant

7. We set the standard for good government. What We Found Chapter 2 – lack of an effective licensing and monitoring program Chapter 3 – lack of effective management of resources Chapter 4 – difficulty of regulating an activity that is illegal under federal law 7 13 Recommendations (42 subparts)

8. We set the standard for good government. What We Found Chapter 2 – Licensing and Monitoring Licensing process did not provide assurance that only eligible businesses were licensed Large number of pending licensees operating 8 “Seed-to-sale” model did not exist Weak controls for destroying MJ

9. We set the standard for good government. What We Found Chapter 3 – Financial and Strategic Management 9 No systematic process for setting fees at levels that correspond to the costs of licensing and monitoring Lack of spending and staffing plans

10. We set the standard for good government. What We Found Risk to State Employees Potential legal liability in an industry that violates the federal Controlled Substances Act. 10 “The voters have spoken and we have to respect their will. This will be a complicated process, but we intend to follow through. That said, federal law still says marijuana is an illegal drug so don’t break out the Cheetos or gold fish too quickly.” –John Hickenlooper, Governor of Colorado, responding to passage of Amendment 64, November 2012 Chapter 4 – Compliance with Federal Marijuana Laws

11. We set the standard for good government.Results 11

12. We set the standard for good government. Download the report: www.state.co.us/audit OSA Audit Reports Department of Revenue Medical Marijuana Regulatory System Part I Contact Nina: nina.frant@state.co.us 12