Audit - City and County of Denver

Without clear, consistent, and up-to-date information, MM applicants cannot easilynavigate the MM application process, and the Department is at risk of collectinginaccurate and incomplete information from applicants. Accordingly, the Departmentshould update its website and ensure the content and the forms provided to applicantsare consistent, complete, and updated. Further, the Department should develop aformal method for collecting landlord consent from applicants seeking to operate onleased properties. Use of the formal method should be mandated unless a leasingcontract contains a designated area for documentation of the landlord’s consent and isproperly executed.Not all Applications Have Date Stamps – Although the Department does not haveformalized and written MM application procedures, Department personnel indicatedthat they stamp MM applications with the date and time received. To confirm thereliability of this activity, the audit team reviewed a sample of MM application files. Ofthe forty-one files, nineteen (46 percent) applications were not date stamped.Additionally, the date stamp is not consistently used as the application date. A datestamp is the most accurate record of when the application was received by theDepartment. Accordingly, the Department should consistently date stamp each MMapplication and use this date as the application date to be entered into the system.Date stamping provides assurance to the arrival date of the application foradministrative purposes.License Fee Amount Was Set with No Cost Analysis – Department management reportedthat when the City implemented the MM licensing process, the amount of the license feewas established based on the type of liquor license with the highest fee. In other words,the highest liquor license fee at the time was for a cabaret license, which was $3,000,and the City arbitrarily used that amount to set the MM license fee. 13 The Departmentwas not asked to and did not conduct any analysis at the time to determine the costsassociated with licensing MM businessesNo cost analysis of medicalmarijuana licenses wascompleted. Rather, it wasarbitrarily established based onthe highest liquor license feehighest fee.and has not undertaken such analysis sincethen. As a result, the Department does notknow the extent to which the MM licensefees cover the costs of administering theMM licensing function.If the costs of licensing MM businesses arenot covered by the licensing fees, then theCity’s taxpayers are essentially subsidizingthe City’s activities undertaken to licenseMM businesses. Although City code does not require that the Department cover thecosts of the City’s MM licensing function, doing so might provide taxpayers with moreassurance that the City has developed a robust regulatory program regarding MM, andthat MM businesses are bearing the costs of the program. Conversely, if the fee amountexceeds costs for administering the program, the city is at risk of being perceived asinequitably using an unjustified high fee to raise revenues for other non-related purposes.13 A Cabaret license is a type of liquor license a business can obtain in the City and County of Denver.City and County of DenverP a g e 14