SAGUACHE COUNTY — An independent researcher believes s/he has verified serious problems with at least eight different marijuana applications filed with the state and in Saguache County and has identified several irregularities in associated key licenses and other filings.

Bill Case, who has access to the research, took the applications matter up with Saguache County Commissioners at their Dec. 5 meeting. He is on the agenda again for Dec. 19 and Jan. 9 to reveal more findings to commissioners.

Primary licensees for marijuana operations must reside in Colorado, but associated key license holders may live out of state. The regulations published by the state regarding associated key licenses is listed below.

R 204.5 – Disclosure, Approval and Review of Business Interests (page 33):

Control

Any other Person who exercises control or is positioned so as to enable the
exercise of control over the Retail Marijuana Establishment must hold an Associated Key
License. A natural person who exercises control or is positioned so as to enable the
exercise of control over a Retail Marijuana Establishment shall include but shall not be
limited to a natural person who:

1. Bears the risk of loss and opportunity for profit;
   b. Has final decision-making authority over any material aspect of the operation of
   the Retail Marijuana Establishment;
   c. Manages the overall operations of a Retail Marijuana Establishment or its
   Licensed Premises, or who manages a material portion of the Retail Marijuana
   Establishment or its Licensed Premises;
   d. Guarantees the Retail Marijuana Establishment’s debts or production levels;
   e. Is a beneficiary of the Retail Marijuana Establishment’s insurance policies;
   f. Receives the majority of the Retail Marijuana Establishment’s profits as
   compared to other recipients of the Retail Marijuana Establishment’s profits; or
   g. Acknowledges liability for the Retail Marijuana Establishment’s federal, state or local taxes.

The following rule shows where 50 percent of the money collected from each application is supposed to go.  Associated Key licenses, especially for an out-of-state person, can be very expensive to obtain.

R 1401 – Instructions for Local Jurisdictions and Law Enforcement Officers (page 209)

1. Division Protocol for Retail Marijuana Establishments
2. The Division shall forward half of the total application fee with the copy of the Retail

Marijuana Establishment application to the relevant local jurisdiction.

It is not clear if Saguache County collects this 50 percent cut from the state or not. The paper trail for recording payments received by Land Use for marijuana revenues has not been produced for the public to view. Reportedly, cash payments from marijuana producers paying excise tax are taken to Land Use then turned over to the treasurer’s office. It is not clear how other marijuana related revenues are reported or documented by Saguache County administration.

Treasurer Connie Trujillo was not available for comment on Tuesday.

During the county’s audit in September, Wall, Smith and Bateman (WSB) did list several findings and commented that a lack of internal controls over financial reporting “is a repeat over several years.” Some date this back as long ago as 2009. This is cited in the audit findings as a non-compliance material to financial statements and a financial material weakness. She listed these as not reconciling various financial accounts.

Accounts are not reconciled to what the county clerk has, which has the potential to become a material misstatement, A WSB representative told commissioners and administration.