Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Health
Office of Medical Cannabis

Minnesota is one of 33 states that allows qualifying patients the legal access to medical cannabis for health care treatment. Derived from the cannabis plant, medical cannabis has been reported to help treat some illnesses and symptoms.

The Minnesota Department of Health (MDH) oversees Minnesota’s medical cannabis program and must ensure that participants and medical cannabis manufacturers comply with eligibility, payment, and other legal requirements. In Fiscal Year 2019, 17,200 patients were enrolled in the program, and MDH expenditures totaled $1.57 million.

The Office of the Legislative Auditor conducted this audit to determine whether MDH had adequate internal controls and complied with significant finance-related legal requirements. The audit scope included MDH’s oversight of patient eligibility, participating health care practitioners, and fee revenues. We also examined the department’s oversight of manufacturer and laboratory processes to ensure a tested and reliable supply of medical cannabis for patients. Our work did not include a comprehensive audit of medical cannabis manufacturers and laboratories or their compliance with legal requirements. The period we examined was from July 1, 2016, through December 31, 2018.

Conclusions

Internal Controls

OLA found that the Minnesota Department of Health’s internal controls were generally not adequate to safeguard financial assets and ensure compliance with selected legal requirements for the medical cannabis program.

We identified the following weaknesses in internal controls related to authorizing participants, processing fees, tracking and testing medical cannabis, and preventing and detecting diversion of the drug. We discuss these more thoroughly in the findings and recommendations in the report.

• Finding 1. The Minnesota Department of Health did not verify for all new patients that the license of their health care practitioner was active and in good standing.
• Finding 2. The Minnesota Department of Health did not keep valid documentation of the eligibility of parents or legal guardians for the medical cannabis program.
• Finding 4. The Minnesota Department of Health did not adequately reconcile some medical cannabis patient fees or ensure employee separation of duties when handling these payments.
• Finding 5. The Minnesota Department of Health did not ensure that each of the two medical cannabis manufacturers had a formal contract with a testing laboratory.
• Finding 6. The Minnesota Department of Health did not have adequate controls to ensure manufacturers accurately tracked and tested medical cannabis prior to sale.
• Finding 7. The Minnesota Department of Health did not have adequate controls to help prevent and timely detect diversion or loss of medical cannabis by a manufacturer.

Legal Compliance

The Minnesota Department of Health generally complied with most legal requirements that we tested, although we noted some exceptions related to the authorization of health care practitioners, some fee payments, and manufacturer contracts.

OLA found the following issues of noncompliance, discussed more thoroughly in the findings and recommendations in this report.

• Finding 1. The Minnesota Department of Health did not verify for all new patients that the license of their health care practitioner was active and in good standing.
• Finding 3. The Minnesota Department of Health charged some medical cannabis patients a lower registration fee than permitted in state statutes.
• Finding 5. The Minnesota Department of Health did not ensure that each of the two medical cannabis manufacturers had a formal contract with a testing laboratory.