MN cannabis management appointment failed standard processes, audit says

ST. PAUL, Minn. (FOX 9) - Following the first appointment by Gov. Tim Walz for the head of the Office of Cannabis Management (OCM) going up in smoke, an audit found the process leading up to her hiring failed to follow normal background check procedures and effectively communicate between departments.

On Sept. 21, 2023, Erin DuPree was appointed to lead the department that would regulate and govern Minnesota’s newly legalized recreational cannabis industry.

But two days later, DuPree submitted a resignation letter to the Walz administration, following accusations that the small business owner and consultant had sold illegal products in the state through her Apple Valley-based company Loonacy Cannabis Co., for which she was vice president of sales and operations. Unpaid tax liens were also later discovered.

On Sept. 25, 2023, the Office of the Legislative Auditor (OLA) was requested to conduct a review to examine the due diligence and background checks that the Walz administration had conducted throughout its hiring process. A conclusion of the audit found that "The Office of the Governor and Lieutenant Governor departed from its Standard Operating Procedure for Executive Director Appointments in its process for selecting Erin Dupree as the Director of the Office of Cannabis Management."

During its background checks process, the Minnesota Bureau of Criminal Apprehension (BCA) conducted the background check largely without the involvement of the state Alcohol and Gambling Enforcement Division (AGED) – a department typically part of checks on behalf of the Governor’s Office.

According to AGED, "The Governor’s Office staff told us that because AGED did not have statutory authority to perform the background study for the Office of Cannabis Management, [the] BCA performed the background study instead, and the Governor’s Office worked directly with BCA," the audit states.

As a result, the audit found that assumptions the Governor’s Office made about the background checks – such as assuming that BCA was reviewing Department of Revenue information – were incorrect. The Governor’s Office then sent candidate consent release forms to the BCA, and assumed the BCA would work directly with the state Department of Revenue, which departed from the Standing Operating Procedure of sending them directly to the Department of Revenue themselves.

The BCA’s background check included a review of criminal history, driving records, civil judgments, and employment history, but didn’t include a review of all information maintained by the Department of Revenue, and as a result, did not identify any unpaid tax liens. The Governor’s Office relied on the summary background report, rather than waiting to review the full background report, according to the audit. The summary report did not identify the issues reported by media outlets.

Walz announces expanded application process for cannabis director

Following the release of the audit report, on Jan. 25, the Governor’s Office announced it had opened an expanded application process, including the use of a dedicated professional recruiter from Minnesota Management and Budget (MMB), to complete the national search for the new position.

In the meantime, Charlene Briner has been formally announced as interim director for the OCM.

"I’m excited to have Charlene Briner leading this office while we continue our national search for a permanent director," Gov. Walz said in an announcement statement. "For the last eight months, Charlene has worked tirelessly across state agencies to build the new Office of Cannabis Management from the ground up. I’m grateful for the work being done to not only revamp our vetting process but also expand our recruiting process."

Office of Cannabis Management hiring process

The Minnesota Constitution establishes authority for the governor to make appointments but does not require a governor to utilize any specific selection processes. However, the Governor’s Office has an established Standard Operating Procedure for making appointments.

The position of the Office of Cannabis Management Director opened June 30, 2023, and closed on July 31, 2023, with 150 individuals applying for the position. Ultimately, 12 candidates were offered first-round interviews, with four moving forward to the second round.

A final interview panel for two candidates included Gov. Walz, Lt. Gov. Flanagan, five members of the Office of the Governor and Lieutenant Governor, and the Interim Director of the Office of Cannabis Management.

The final candidates — which included Dupree — signed consent forms authorizing the Department of Public Safety (DPS) and the Department of Revenue to conduct checks for information relevant to the appointment to the role. At this point, the process began.

Minnesota became the 23rd state to legalize adult-use cannabis, after its passage during the 2023 legislative session. In part, the passed law established the Office of Cannabis Management to regulate cannabis products and dispensaries, including for the adult-use market, the Medical Cannabis Program, and lower-potency hemp edibles.