Audit rules a worry for Md. marijuana regulators

State regulators tasked with developing Maryland’s medical marijuana program are wrestling with questions about how best to vet the financial histories of those seeking licenses.

The policy committee of the Natalie M. LaPrade Medical Cannabis Commission heard public comment Tuesday on a slew of proposed revisions to the nascent program.

Many of the revisions are technical or to correct typographical errors, but others deal with the complexities of a process that’s sanctioned by the state but still forbidden by the federal government.

“All of our honorable applicants are coming to us seeking a license to commit a federal felony,” said Commissioner Eric E. Sterling, who chairs the policy committee. “We think it’s incumbent on us to [make sure] these risk-takers are nevertheless the most honorable people who can do this work.”

That means making sure not only that applicants have the money to run their operations but that the money was obtained “honorably,” Sterling said.

As written, the proposed change would have given applicants 30 days to submit an audited financial statement and “equivalent detailed financial statements from any proposed grower agent.”

But representatives of the medical marijuana industry told the commission that 30 days is too short a time to obtain an audit from a certified accountant and that the term “grower agent” could potentially apply to any employee or even a volunteer.

Obtaining detailed financial statements could also cost thousands of dollars per person – an exorbitant cost for the applicants, said Darrell Carrington, executive director of the Maryland Cannabis Industry Association.

Starting the audit process early – before getting pre-approval from the commission – carries too much financial risk, said Sharon Sample, CEO of Maryland Earthworks Inc. The company hopes to obtain the needed licenses to grow and dispense medical marijuana in Charles County.

Later in the meeting, committee members discussed extending the time frame of the audits and requiring only that only the owners, officers and directors of the applicant companies provide financial statements – but opted to table the matter until their next meeting so more research could be done about how extensive those statements should be.

The committee is scheduled to continue its discussion of the proposed revisions at a meeting June 28, after which members are expected to present their recommendations to the full commission.

Philip Goldberg, CEO of Green Leaf Medical, a Montgomery County company that wants to grow and dispense medical marijuana, said he thinks the best solution is to require only those who own 5 percent or more of the applicant companies to provide financial statements.

Though concerned about further complications to the program and the licensing process, Goldberg said he recognized that the all-volunteer commission was trying to move the program forward.

Revisiting and adjusting regulations after their implementation is a normal part of the law-writing process, said Sterling.

One of the proposed changes that committee members rejected was a requirement that patients and caregivers acquire special identification cards to get their medical marijuana; the law currently deems other state-issued forms of identification to be sufficient, and commissioners decided there was no reason to change that.

Still to be discussed by the committee is a proposal to allow the use of testing laboratories that have been accredited by for-profit groups. Current regulation allows only accreditation from nonprofits.

Maryland law allows the commission to license 15 growing operations and 94 dispensaries around the state. While the licensing process began in November, decisions are not expected until later this summer.

Staff writer Bryan P. Sears contributed to this report.