Internal control ‘weaknesses’ could delay medical marijuana rollout

This property at 3958 Linden Avenue in Dayton is included on the list of applicants for medical marijuana dispensaries in Ohio. TY GREENLEES / STAFF

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This property at 3958 Linden Avenue in Dayton is included on the list of applicants for medical marijuana dispensaries in Ohio. TY GREENLEES / STAFF

Auditor found two administrators had access to all accounts, folders and passwords.

A clerical error in grower license scoring and a review by the state auditor could delay the Ohio’s medical marijuana program.

In a letter to Ohio Auditor Dave Yost on Thursday, Ohio Department of Commerce Director Jacqueline Williams offered to put the program on hold until issues are worked out.

“Given the reservations raised by your office, the department remains willing to pause any portion of the MMCP’s process that you deem necessary, if appropriate,” she wrote.

Yost’s team identified an internal control weakness in the Medical Marijuana Control Program scoring process: two administrators had full access to all accounts, folders and passwords. This would have allowed them to manipulate scoring documents while logged in as someone else, according to the auditor’s office.

Related: Controversy, legal threats mar Ohio's medical pot launch "Because of this critical flaw in the procedure's design, neither this office, nor the public, can rely upon the cultivator application score results," Yost told Williams in a Feb. 6 letter.

Ohio awarded provisional licenses to 12 small-scale growers and 12 large-scale growers late last year. Some applicants who did not win licenses began to critique the process and Yost and commerce officials began reviewing it.

Related: Ohio announces first set of medical marijuana growers Commerce officials then found that an "inadvertent clerical error" bumped PharmaCann out of contention for a large-scale cultivator license.

“We need to do what’s right by this company,” said Stephanie Gostomski, commerce spokeswoman. “We are not going to let our mistake get in the way of a company that deserves a license.”

Related: Medical marijuana growers vying to do business in Ohio Based in Illinois, PharmaCann operates dispensaries and cultivation facilities in multiple states. PharmaCann's initial lower score bumped the company out of contention for one of the 12 large scale licenses. The company challenged the state's decision to award licenses to two economically disadvantaged applicants, which had scored lower.

PharmaCann general counsel Jeremy Unruh said the company has yet to discuss the matter with state officials. If the result is licenses for PharmaCann as well as the economically disadvantaged applicants, Unruh said it would be a win for his company, the other applicants, the state and patients.

It is unclear whether awarding a 25th license can be done administratively or if it would require a change in state law, which would involve legislators. John Fortney, spokesman for the Ohio Senate, said “Although disappointed with what happened, we’re confident the administration with oversight from the auditor’s office can resolve this.”

Meanwhile, Gostomski said commerce officials made changes to strengthen internal controls and avoid future errors.

Ian James, a spokesman for CannAscend, another company that was not awarded a license, said, “The state needs to step up and suspend the process and state anew, or the court step in, stop the process and require a complete review of the process from top to bottom.”

He said CannAscend plans to file a lawsuit against the state next week.

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