Audit: Problems tracking Denver marijuana tax money

Posted at 7:31 PM, Oct 20, 2016
and last updated 2016-10-20 21:31:46-04

DENVER -- Denver's City Auditor released an audit Thursday stating that the office in charge of the city's marijuana sales needs to do more to track the use of tax revenue and improve its public outreach.

“Regardless of your opinion on marijuana, it’s hard to deny the significance of additional tax revenue in the city’s coffers,” said Auditor O’Brien in a statement.  “We made suggestions on how to report that tax revenue for greater transparency.  Because legalized marijuana is brand new, and because commitments were made to voters when they approved additional sales taxes, it is vital that the public knows exactly how those tax dollars are being spent.”

The report raises questions about where Denver's marijuana money goes once it is in the general fund, citing "a lack of transparency related to the city's use of marijuana -related revenue."

Of the nearly $80 million in marijuana-related revenue generated between 2014 and 2016, only $20.6 million has gone to pot-related expenditures.  The rest, $59 million, has gone into the general fund.

"It's not possible to track how those funds are used beyond supporting city operations once they're in the general fund," said Emily Owens, the lead auditor, during the Independent Audit Committee Meeting Thursday. "This practice may make it difficult for voters to see how tax dollars are spent, an important factor for many voters who opted to legalize recreational marijuana."

The audit does not indicate the city misspent any taxpayer money, but it does recommend starting a special revenue fund similar to that at the State level.

Another audit recommendation was to improve communication with marijuana businesses and neighborhood organizations.  

The Office of Marijuana Policy (OMP) agreed to implement these recommendations by adding more industry participants to existing “check-in” meetings, increasing the number of marijuana businesses who receive OMP-generated bulletins, keeping the OMP website updated, and hosting a “Citizens’ Academy” in 2017 for community representatives. 

OMP also recently hired an additional employee to assist with community engagement.

 “I’m pleased to say that OMP accepted these recommendations in the spirit in which they were intended,” continued O’Brien in the statement.  “OMP is already engaged in industry and neighborhood outreach.  But we felt its efforts could be improved, and the agency agreed.”

For now, the Office of Marijuana Policy has also agreed to include more specific information tracking funds in next year's budget.

The Denver Office of Marijuana Policy Released this statement:

We are pleased that the Auditor found that we are already engaging in best practices and that Denver is ahead of the benchmark cities. Given that the city has built this regulatory structure and management model from the ground up with no roadmap, we are pleased that the audit recommendations are administrative in nature. Our office already has many strategies in place to engage our community and work with our industry and we are amenable to adding a few more to ensure Denver's continued position as a global leader in the implementation of legal, commercial marijuana.


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