State Auditor faults medical cannabis commission contracts

In an audit released to day, the Department of Legislative Audits criticized the Maryland Medical Cannabis Commission’s use of Towson’s Regional Economic Studies Institute to evaluate applicants for medical cannabis licenses, saying the arrangement circumvented “competitive procurement” norms and “resulted in a lack of assurance that these services were obtained at the most advantageous cost to the State.”

In other words, taxpayers were—or may have been—screwed.

The finding came amid a broader audit of the Department of Health and Mental Hygiene Regulatory Services, which also faulted lack of inspections of assisted living facilities, a lack of disciplinary investigations and referrals of professional mental health counselors and therapists, the Board of Nursing’s failure to suspend the licenses of nurses referred by Child Support Enforcement for non-payment of child support, and a raft of other issues. 

The cannabis commission findings could get special attention, though, because the commission is being sued by two companies it initially chose to receive growers’ licenses before reversing course, and because the Legislative Black Caucus is demanding a June special session in order to pass a law to make it easier for minority-controlled companies to obtain medical cannabis licenses—as none were chosen in the initial round.

Last week Governor Hogan directed his Office of Minority Affairs to conduct a racial disparity study, which is the first step in opening the door to racially-based set-asides. 

The audit does not tackle any of these issues, instead concentrating on the nuts and bolts of the screening process, which was done by contractors through RESI. “MMCC significantly understated the number of applications to be evaluated, resulting in an increase in the value of the agreements from $545,000 to $2.4 million,” the auditors write. And, having seen the contract increase by a factor of four, “MMCC relied on Towson University’s Regional Economic Studies Institute to renegotiate prices with the hired evaluators without ensuring the cost increases were reasonable.” 

Or, to put it another way, the auditors think a more independant bean-counter, working directly for a state agency, might have saved the state some money on this deal, but no one like that was in the loop.

In its response, the commission says the law allows inter-agency agreements like the one the auditors criticized. “The Commission’s use of interagency agreements here does not reflect any intent to circumvent state law,” the commission writes. “The Commission has renewed its commitment to the competitive procurement process.”

It says it’s reviewing application procedures now “for a more cost effective and timely system.”

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