State Auditor’s report shows shortcomings in cannabis industry

OLYMPIA – A recent performance audit by the Office of the Washington State Auditor has unveiled shortcomings in the state’s oversight of its cannabis industry, nearly twelve years after its legalization for recreational use. The report, led by State Auditor Pat McCarthy, serves as a follow-up to a 2018 audit, revealing persistent issues that have impacted effective regulation and data management. 

The audit indicates that the Washington State Liquor and Cannabis Board, responsible for regulating the cannabis market, has struggled significantly with its data tracking systems. Despite initial promises to develop a robust "seed-to-sale" tracking system, the agency has failed to implement an effective solution, with a new system not expected until 2031. This gap in technology compromises the board's ability to monitor compliance, track cannabis products and prevent illegal distribution. 

The report highlights the failure of the LEAF system, initially intended to replace the BioTrack software. Poor project management, leadership turnover and vendor issues led to the abandonment of LEAF in 2020, necessitating a makeshift solution known as the Cannabis Central Reporting System. However, the CCRS has also been criticized for its limited capabilities, including lacking real-time tracking information and secure data input controls that contribute to data inaccuracies. 

The audit reveals that LCB's enforcement division has made some progress, such as prioritizing high-risk complaints and employing compliance consultants for proactive inspections. However, it continues to face challenges due to staffing shortages and outdated technology, limiting its capacity to respond to risks effectively. The audit reports an alarming turnover rate of around 50% among enforcement officers, leading to more operational inefficiencies. 

The auditors have issued several recommendations, emphasizing the need for improved data management practices, automated alerts for risk identification and a structured approach to project management. The agency's leadership acknowledges these challenges and has outlined plans to enhance CCRS and prepare for a more comprehensive tracking system.