Auditor: Gov. Walz’s office ‘departed from its standard operating procedures’ in picking cannabis director who backed out the next day

Auditor: Gov. Walz’s office ‘departed from its standard operating procedures’ in picking cannabis director who backed out the next day

Auditor: Gov. Walz’s office ‘departed from its standard operating procedures’ in picking cannabis director who backed out the next day

The debacle that saw the appointee for the state’s first cannabis director back out of the job a day after being selected was caused, at least in part, by the governor’s office failing to follow normal procedures for the appointment process, a newly released report says.

On Thursday, the Office of the Legislative Auditor (OLA) publicly released its preliminary assessment of the process that led to the selection of Erin Dupree to lead the Office of Cannabis Management back in September.

“The Office of the Governor and Lieutenant Governor departed from its Standard Operating Procedure,” the auditors wrote, adding that three deviations related to the typical process for background checks led the governor’s office to appoint Dupree “without having full and complete information.”

OLA’s report notes that state law doesn’t require the governor to follow any specific selection process or even check a candidate’s criminal history. However, the governor’s office does have several standard operating procedures it uses for making appointments for various roles.

A total of 150 people applied for the cannabis director job last summer before staff from the governor’s office and human resources officials within the Minnesota Department of Agriculture trimmed that list to 25 candidates who met the minimum qualifications and 10 who met at least five of the eight preferred qualifications, the report adds. Those top 10, plus two “recently separated veterans” were offered first-round interviews.

Background checks were started for the final two candidates for the job, per usual. However, OLA says staff from the governor’s office then departed from its normal procedures by only sending the release forms to the Minnesota Bureau of Criminal Apprehension (BCA). Typically, the Alcohol and Gambling Enforcement Division (AGED) is involved in the background checks and the release forms are also sent to the Department of Revenue.

While the BCA conducted its review, it largely did so without involvement from AGED, and with systems separate from the Department of Revenue. Staff from the governor’s office told OLA that they assumed BCA would coordinate with the Department of Revenue and would consult with AGED since AGED “did not have statutory authority to perform the background study” for the cannabis director role.

As a result, the background check failed to review all information maintained by the Department of Revenue and didn’t flag the reported unpaid tax liens and noncompliance issues that the media reported on after Dupree was selected.

The report says the governor’s office then relied on the summary reports, which didn’t identify any issues with Dupree, in making the selection, assuming the information was complete. Staff told OLA they typically rely on the summary report rather than the complete background check reports in making those selections. That also contributed to staff not realizing the BCA hadn’t reviewed Department of Revenue information until after they’d already chosen Dupree, as the complete background report wasn’t produced until Oct. 4 — two weeks after her appointment was announced.

Going forward, OLA recommended the governor’s office independently confirm that all requested background checks include all tax, criminal and court history information, and wait to make appointments until after reviewing the complete background check reports.

In response to the OLA report, Mary Fee, the general counsel for the governor’s office, said staff opted for a more rigorous background check than normal since the cannabis director position was newly created but reiterated that staff didn’t realize it didn’t have full information.

“Immediately following the DOCM appointment, the Governor’s Office reviewed its processes and implemented changes, including, among others, the recommendations listed in your memorandum. We’ve also increased Governor’s Office capacity for research about potential appointments,” Fee’s response said in part.

RELATED: As search for state cannabis director restarts, Walz says lesson learned

Walz previously said he wanted someone from inside the industry to lead the agency because of how new it was but, after the Dupree debacle, said he’d be “looking at the whole process” and thought that looking for someone inside the industry may have “limited our ability to maybe find the right person.” He ultimately said the debacle “ends up on me” and said his team was shifting and looking for a regulatory leader.

Charlene Briner, the Office of Cannabis Management’s interim director, is continuing to lead the agency while the search for a permanent director continues. It’s unclear how long that could take, although Walz’s office just expanded the application process for the job on Thursday, which will allow applications to be accepted through Feb. 26.

The governor appoints more than 300 people to state agencies, boards, commissions and other roles each year, OLA said, and made more than 750 such appointments in 2023.

OLA said in its report that it considers the matter closed and won’t conduct a special review. Click here to read the full report.