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Denver Auditor: Marijuana Policy Office Needs More Transparency

The City of Denver should be more transparent in the way it spends our tax dollars, specifically money from legal cannabis revenue, according to Denver Auditor Timothy O'Brien.

In 2016, O'Brien and his team audited the Office of Marijuana Policy, an extension of the Denver Department of Excise and Licenses created by Mayor Michael Hancock to oversee the city's cannabis programs and regulations. The audit found that the Office of Marijuana Policy needed more transparency in how it spends cannabis tax revenue, as well as more community outreach and the documentation of the progress.

“The department is working to improve transparency and outreach efforts,” O’Brien said at the time. “It could still improve disclosure around specific planned uses of recreational marijuana tax revenues, to ensure the money is used as many voters wanted when they approved legalization of recreational marijuana.”

The proposed 2018 budget shows more than $21 million in pot tax revenue would be spent by the City of Denver.
The proposed 2018 budget shows more than $21 million in pot tax revenue would be spent by the City of Denver.
City of Denver

The 2016 report found that Denver's pot-tax revenue went into the city's general fund with little transparency to show if the money was used as directed by voters for marijuana regulation, education, enforcement, public health and other expenses related to operating the city and its facilities. The 2017 followup shows that Excise and Licenses had implemented some of the audit recommendations, but others were still in progress past their deadlines; O'Brien called on the department to further detail what program and initiatives received pot money.

Denver's proposed 2018 budget accounts for approximately $21 million of cannabis sales-tax revenue, but O'Brien says that information is only part of what the Office of Marijuana Policy should have shared. "Auditor O’Brien found the Department of Excise and Licenses should provide increased transparency on how all marijuana revenues will be spent to support various programs and initiatives," according to the announcement of the new audit.

The city's budget for 2018 includes 115 references to marijuana, with pot money earmarked for different city funds, including $10 million to the Capital Improvement Fund, $5 million for transportation maintenance, $1.8 million for affordable housing and $4 million for Denver Parks and Recreation.

Over $1.8 million of Denver's budget could be spent on affordable housing in 2018.
Over $1.8 million of Denver's budget could be spent on affordable housing in 2018.
City of Denver

Daniel Rowland, director of public affairs for Excise and Licenses, which includes the Office of Marijuana Policy, says the audit shows progress: "We are pleased that the auditor continues to find that we are already engaging in best practices and that Denver has effectively implemented its marijuana regulations, built a collaborative structure for that implementation, and is ahead of its benchmark cities."

"The auditor gave us two options for reporting on finances — a special revenue fund or listing it in the budget book," Rowland continues. "We listed it in the budget book, and as has always been the case, the info is available 24/7 online in our annual report."

Although the auditor's follow-up report found that Denver could improve on its cannabis tax transparency, it also praised city officials for building relationships with neighborhood organizations and legal-cannabis stakeholders. Attendance at the city's quarterly industry check-ins has almost doubled, while industry bulletins from the office have increased significantly.

“I’m pleased to see the proactive relationship-building in neighborhoods across Denver,” O’Brien says. “It’s important to keep residents involved and informed as our city continues to adapt to this unique new industry.”

Read the original audit for 2016 here; find the full follow-up report below:

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