May 3, 2016

Auditor raises concerns about med pot audits

The New Mexico State Auditor’s Office called on two state agencies to look into a medical cannabis executive director who is accused of a conflict of interest related to audits.An Initiative To Legalize Marijuana In California To Appear On Nov. Ballot

In letters to the Department of Health and the Public Accountancy Board, a group within the state’s Regulation and Licensing Department that oversees public accountants, the state Auditor’s office expressed concern that Vivian Moore, a certified public accountant, may have created a conflict of interest by conducting independent audits of medical cannabis producers. This is because Moore also is the executive director of Doña Ana County-based Mother Earth Herbs, Inc.

Mother Earth Herbs, Inc. is a medical marijuana distributor licensed by the state.

The letters came from Special Investigations Director Kevin Sourisseau.

Sourisseau wrote that his office was made aware of “independence issues” concerning Moore and the audits she has allegedly performed for other producers. The letters also ask both agencies to look into an allegation that Moore “may be paid through the exchange of cannabis product.”

In a conversation on Monday morning, Moore defended her audits.

Moore told NM Political Report that there is a lack of CPAs who are qualified or willing to perform audits on licensed non-profit producers.

“In order to accept an audit engagement the CPAs must have specialized knowledge,” Moore said.

The Department of Health requires all cannabis producers to submit an independent audit, but the state Accountancy Board did not offer guidance to CPAs on how or if they should provide audits to businesses that operate against federal law. The board only advised public accountants to seek the opinion of legal counsel.

Moore said it’s this ambiguity among state agencies that creates a void of willing auditors.

“I wish there was another CPA that was heavily involved [in the medical cannabis industry] to look at Mother Earth,” Moore said.

Moore said she remains independent when she conducts audits and doesn’t “nitpick” but also holds producers to a high standard and doesn’t give preferential treatment.

“I’m harder on these guys,” Moore said of her cannabis producer clients.

In a statement, Keller stressed that the medical cannabis program needs independent audits, free of conflicts.

“The Medical Marijuana program is at its core about providing assistance to patients in need with a well-functioning system,” Keller wrote. “The Department of Health is responsible for administering the program in a fair and accountable manner, part of which means ensuring the independence of the audits of cannabis producers.”

In the letter to Accountancy Board Executive Director Jeanette Contreras and DOH Secretary Lynn Gallagher, Sourisseau wrote that an investigation into the specific allegation of payment by cannabis products is not in the scope of his office.

The state’s medical marijuana program has been under increased scrutiny in recent months.

Until this year, the names of medical cannabis companies were kept secret under DOH rules. After a legal battle between the state and independent journalist Peter St. Cyr, the state released the names of all licensed producers.

NM Political Report previously reported on mostly blank site inspection forms, prompting at least one producer to question whether the DOH has staff knowledgeable in producing medical cannabis.

Moore also said she believes DOH officials and many auditors are not very well-versed in the marijuana industry.

“I don’t think they really know what to look for,” Moore said.

NM Political Report reached out to officials from both the Accountancy Board and DOH, but did not receive any response by press time.

Moore told NM Political Report that DOH has hired new compliance officers and safety experts, but the department’s website does not offer a list of employees who work in the medical cannabis program.