The Alabama Medical Cannabis Commission repeatedly violated the state’s Open Meetings Act and allowed a law firm to significantly exceed its original contract amount, a recent state audit found, among other violations.
The audit was conducted by the Alabama Department of Examiners of Public Accounts and released on Friday. The findings also show that the AMCC implemented a rule that violates state law and that it failed to follow guidelines of the Alabama Administrative Procedures Act.
The findings are significant because, while differing in some specifics, they appear to generally support the claims contained in a number of lawsuits filed against the Commission by cannabis companies who were denied licenses.
Those lawsuits, which have held up the distribution of products to patients, claimed the AMCC violated the AAPA and the Open Meetings Act. Nearly five years after Governor Kay Ivey signed Alabama’s medical cannabis act into law, the state is yet to see the first patient receive cannabis.
The Examiners’ audit released Friday found five general issues:
- The AMCC failed to comply with key provisions of the Alabama Open Meetings Act.
- The AMCC made payments to a vendor for legal services that exceeded the total amount of the contract.
- The AMCC did not adopt rules in accordance with the Alabama Administrative Procedures Act to establish a fee schedule.
- The AMCC failed to comply with legal requirements to ensure its public records are properly maintained.
The finding certain to get the most attention – and one that, according to three sources familiar with the events, drew heated responses from AMCC staff present at an exit interview, at which personnel from the Examiners of Public Accounts office went over the audit’s findings – concerns the overpayment of legal fees to the Commission’s outside counsel, William Webster.
The audit cited the AMCC for failing to properly monitor the billing of legal expenses, resulting in $604,197.55 being paid on a $400,000 contract. The law firm, Webster, Henry, Bradwell, Cohan, Speagle & DeShazo, P.C., filed a claim with the Alabama Board of Adjustments, which ordered the AMCC to pay the additional $204,197.55.
The finding will draw scrutiny because the AMCC has been plagued by legal troubles, most of which were self-inflicted by the Commission’s legal counsel.
For example, among the many issues that unsuccessful applicants sued the AMCC over, violating the Open Meetings Act was one of the first and one of the most obvious violations. During the first attempt to select the winners of five licenses, the commissioners entered into executive session to hold discussions about the applicants and to select the winners. The Open Meetings Act plainly requires both actions to be taken in open, public meetings.
The legal challenge of that process resulted in the first delay of licenses and opened the door to an onslaught of other legal issues. Almost all of those issues were related to the AMCC’s selection process, which violated numerous tenets of the Alabama Administrative Procedures Act (AAPA). That Act sets very clear and concise procedures for public bodies to award limited licenses to multiple applicants.
Instead of following the AAPA guidelines, however, the AMCC relied on its own complicated selection process, which was apparently developed by a combination of Commission attorneys and Webster. That selection process involved a convoluted exercise in which applicants were judged by inexperienced and supposedly randomly selected individuals at the University of South Alabama.
The result was a bungled mess of results, in which some applicants were given wildly different scores in the same category by different graders. There was often no rhyme or reason provided for the large fluctuations in scores, and the entire system, plaintiffs alleged in lawsuits, appeared to be designed to ensure certain applicants were selected for licenses.
In addition to those problems, the state audit also found that the AMCC has failed over the last five years to set eight specific fees for licenses and registrations. Those fees were required to be set by the AMCC because the state law creating the Commission did not set them.
The audit also found that the AMCC violated the AAPA by failing to amend its rules to lower the scheduled fee amounts for licenses in 2024.
