Medical and recreational marijuana overseers need to boost their efforts in testing, inspections and providing more oversight to prevent diversion to the illegal market, according to an audit by the Oregon Secretary of State.

The audit makes 23 recommendations for both the recreational market controlled by the Oregon Liquor Control Commission, and the Oregon Health Authority that oversees the medical marijuana program.

The recommendations range from hiring more inspectors to bumping up enforcement of medical growing facilities.

The medical program currently has four inspectors for 14,000 grow facilities, the auditor pointed out.

The report revealed that 3 percent of the retailers and 32 percent of the recreational growers have had compliance inspections.

“With no cap on the number of licenses, and more applications than expected, staffing and inspections have not kept pace,” the auditor wrote.

The auditors are also concerned about microbiological contaminants and heavy metals present in marijuana. “These contaminants could pose a risk to consumers,” the audit states.

The auditor suggested that both agencies develop baselines and other data monitoring practices.

Both agencies recognized that there were places in their programs where oversight was spotty. To address these, the OLCC recently paused the processing of new recreational license applications and lowered the daily amount medical patients could purchase at an OLCC retailer. The OLCC also took over seed-to-sale tracking for medical growers of more than three patients.

“We are in agreement with the recommendations of the audit,” said Andre Ourso, Oregon Health Authority administrator for health protection. “We’ll work on addressing the issues, but some will require policy actions that we cannot do without statutory assistance.”

Since the OLCC cannot by law limit the number of licenses granted for retail, growing, or processing of recreational marijuana, it hit the pause button last year while it worked to clear the backlog of applications.

As of this week the OLCC has issued 2,101 active licenses, has 617 licenses under review, 867 licenses processed and 541 waiting for county land use approvals.

In Deschutes County there are 194 OLCC licensed facilities.

Jeremy Kwit, owner of three retail outlets in Bend called Substance, approved of the audit recommendations.

“As a retailer, I get a number of surprise visits, audits and check ins,” Kwit said. “That’s not surprising because it’s easier to check up on retailers, but harder to do random inspections at the farm or processor level.”

Both the medical and recreational cannabis regulators use fees to pay for their programs and to hire investigators. The recreational marijuana market generated $207 million in tax revenue as of November 2018.

Some fixes will require legislative approval, said Robb Cowie, Oregon Health Authority communications director.

“Overall our response is that the findings are consistent with our internal review that we conducted last year,” Cowie said. “Some of the gaps in reporting will require statutory changes. We’re looking forward to working with the Legislature on this.”

Mark Pettinger, OLCC spokesman, said that while the state has done a good job of regulating the recreational market, there is more that can be done. The OLCC and health officials agreed with the audit findings, and acknowledged that last year steps were already put in place to limit diversion into the illegal market.

“The OLCC’s 2019 budget request anticipates the recommendations made by the Secretary of State — more staff to reinforce lab oversight, scrutinize (seed to sale) data to a greater degree, and conduct more physical site inspections,” Pettinger said in an email.

— Reporter: 541-633-2117,