A recent state audit of the Alabama Medical Cannabis Commission identified five areas of noncompliance with state laws and regulations, including overpayment of more than $200,000 for a legal contract and failure to follow proper procedures in establishing various fees.
The Alabama Examiners of Public Accounts routinely audits state agencies. Its report released late last week also noted open meeting law violations and record-keeping issues.
The audit period was May 17, 2021, through September 30, 2025. The commission was created in 2021 when lawmakers approved legislation allowing for the limited sale of cannabis products to patients who have a doctor’s approval.
John McMillan, a former state treasurer and commissioner of agriculture and industries, was appointed executive director of the commission by Gov. Kay Ivey.
On Monday, McMillan told Alabama Daily News most of the findings in the report were the result of a learning curve in setting up a state agency from scratch.
He said the mistakes are being remedied by staff or will be addressed at next month’s commission meeting. That includes properly setting a variety of fees not determined by state law, including business license transfer and annual renewal fees.
The issues of noncompliance with the Alabama Open Meetings Act stemmed from the review of minutes from 62 commission meetings. The minutes didn’t always reflect the location of the meeting, commission members in attendance or whether they attended the meetings in person or virtually and when an executive session began and ended.
But the audit finding that gave the commission heartburn, McMillan said, was about the $204,000 overpayment for legal fees. He said that was beyond the commission’s control.
“We had the contract, we knew the contract approved by (the Legislative Contract Review Committee) was $400,000,” he said. “And when we got the bill from the law firm that put us over the $400,000, we didn’t pay it. We said, we can’t pay this, it exceeds the amount of the contract.
“So, the attorneys had to go to the Board of Adjustments — they did the work, there was no question about that — and the Board of Adjustment approved paying the additional amount.”
The commission has had multiple legal contracts and state records show multiple payments to the Webster Henry law firm and separately to attorney William Webster since 2022.
The audit also breaks down the commission’s funding and spending. It received $21.7 million from the state’s General Fund budget during the four-year audit period. The commission also received $2.77 million in licensing fees.
It has spent $22.1 million, including $3.4 million on personnel costs and $4.6 million on professional services, including attorneys.
The state law says the marijuana products must be grown and processed in Alabama. The commission was charged with licensing cultivators, processors and dispensaries, but the application process for the lucrative licenses was delayed for years by scoring errors and lawsuits.
Licenses have now been issued for the three individual business categories. McMillan said products could be on the shelves for patients by mid-April.
Licenses are still pending for five integrated “seed-to-sale” licenses where companies grow, process and operate their own dispensaries. Those could be issued this summer, McMillan told ADN.
Meanwhile, the Alabama Board of Medical Examiners has approved so far 29 physicians across the state to issue medical cannabis cards to patients.
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