“We’ve also increased Governor’s Office capacity for research about potential appointments.”
By Peter Callaghan, MinnPost
Gov. Tim Walz (D) and his staff didn’t follow standard procedures before they appointed—and then accepted the resignation of—the state’s first Office of Cannabis Management director.
That’s the conclusion of the Office of Legislative Auditor that reviewed the September appointment of Erin DuPree to be the state’s first-ever cannabis czar. Walz had admitted previously that the appointment was not “the finest hour” of his administration. He has yet to fill the vacancy.
The report concluded that the governor’s office and the Bureau of Criminal Apprehension failed to include the state Department of Revenue in its checks into DuPree’s background. Such an effort would have shown that DuPree had unpaid tax liens and outstanding court judgements related to previous businesses.
The governor’s staff then reviewed the summary of the report, and not the full report, before the appointment was announced. The full report would have let the staff know that no checks of Revenue records were conducted.
“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,” the report signed by legislative auditor Judy Randall concluded. “Three differences from the Standard Operating Procedure, in particular—all related to the background check—contributed to Governor Walz appointing Ms. DuPree as Director of the Office of Cannabis Management without having full and complete information.
“OLA considers this matter closed and will not conduct a special review,” Randall wrote.
Also Wednesday, Walz reopened applications for the job and said it would use a professional recruiter from Minnesota Management and Budget to conduct a national search. Walz also made formal the appointment of Charlene Briner as interim director. Briner has been running the office since it opened last summer.
The auditor conducted the review at the suggestion of a “requesting legislator” without identifying who that legislator is.
DuPree’s tenure as the state’s first cannabis director was short. In the days after Walz announced the appointment, news coverage and complaints from others in the fledgling legal cannabis industry revealed that her hemp store in Apple Valley was selling products not authorized by state law. She also had financial problems with previous businesses that were not related to cannabis.
Walz said at the time that there were flaws in how his office conducted background checks on the finalists for the job.
“Not the finest hour,” Walz said during a September program at MinnPost Festival in Minneapolis. “In this case the process did not work, and we got this wrong.”
Walz said he wanted to pick someone who understood the fledgling industry in Minnesota. But he said people expect regulators will “follow the rules.”
“I own this one, we’ll get the right person in there,” he said. Four months later, there is still no permanent director in the office, though several top positions have been filled and the office is proceeding with the necessary rulemaking. The first non-tribal retail sales are expected in March of 2025.
In her resignation letter to Walz, DuPree said she had “become a distraction that would stand in the way of important work that needs to be done.”
“I have never knowingly sold any noncompliant product, and when I became aware of them I removed the products from inventory,” DuPree wrote.
When she announced the investigation, Randall said it appeared senior Walz administration staff was unaware of DuPree’s background.
“The fact that she was appointed and then information came out that it appears that the governor’s office wasn’t aware of, that then caused the candidate to step down and the governor to acknowledge problems with the process, caused us to have questions about the thoroughness of the process,” Randall told MPR in October.
The audit released Wednesday notes the broad authority of governors to appoint top officials. And while governors are permitted to request criminal background checks, they are not required to.
Walz’s office asked the Bureau of Criminal Apprehension to look into the background of DuPree and one other finalist. Contrary to standard procedure, the governor’s staff only forwarded the request to BCA, assuming that the law enforcement agency would ask the Department of Revenue for help. It did not.
“Among other things, BCA’s background check included a review of criminal history, driving records, civil judgments, and employment history,” the audit stated. “It also included a review of credit reports and net worth. It did not include a review of all information maintained by the Department of Revenue. As a result, the BCA background check did not identify any unpaid tax liens.”
One reason for the errors could be that BCA “had never performed a background study for the Governor’s Office,” the audit states. “As a result, it is possible that some assumptions the Governor’s Office made about the background checks—such as assuming that BCA was reviewing Department of Revenue information—were incorrect.”
BCA also “conducted the background check largely without the involvement of the Alcohol and Gambling Enforcement Division.”
The final failure was that the governor’s staff reviewed a summary of the background check that concluded the applicant did not have any noteworthy financial obligations or debts. But if the staff had waited for the full report, it might have noticed that the Department of Revenue was not involved in the report. They didn’t review the full report until Oct. 4, after the appointment had been announced and DuPree had resigned.
“In the end, Governor’s Office staff said they believed that they had the full and complete background information for Ms. DuPree when the Governor appointed her to be Director of the Office of Cannabis Management,” the audit states. As such, the audit recommends that future appointments wait for full background checks and not rely on the summaries.
In a response letter, Walz’s general counsel Mary Fee said the office actually used an enhanced background check for the cannabis director job, “a comprehensive Bureau of Criminal Apprehension background study, the same background review that BCA conducts on its own prospective agents.
“This background study is rigorous and takes weeks to complete,” Fee wrote. “However, there were several issues identified subsequently that were not included in the BCA review, and the Office was unaware that it lacked 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,” Fee wrote. “We’ve also increased Governor’s Office capacity for research about potential appointments.”
The audit details the process for filling the job considered key to a successful launch of the state’s recreational cannabis program:
Twenty-five candidates met the minimum qualifications, and 10 of those 25 also met at least five of the eight preferred qualifications.
Ultimately, 12 candidates were offered first-round interviews—the 10 identified through the review of minimum and preferred qualifications, and 2 additional candidates who were “recently separated veterans.”
A panel composed of seven senior staff from the Office of the Governor and Lieutenant Governor, the Minnesota Department of Agriculture, Minnesota Management and Budget, and the Office of Cannabis Management conducted the first round of interviews.
Based on the interviews, the panel forwarded the five top-scoring candidates to the second round. One of the five candidates withdrew, and therefore four candidates moved forward to the second round of interviews.
The second-round interviews were conducted by five senior staff (again from the Governor’s Office, Minnesota Department of Agriculture, and the Office of Cannabis Management), three of whom had also been on the interview panel for the first round of interviews.
In addition to the interview, candidates who participated in the second round were asked to deliver a presentation highlighting their anticipated milestones and challenges during their first year in the role.
The panel advanced the three top-scoring candidates to the third round. One of the three candidates withdrew, and therefore, two candidates moved forward to the final round of interviews.
The final interview panel included Governor Walz, Lieutenant Governor Flanagan, five members of the Office of the Governor and Lieutenant Governor (two of whom had served on the previous interview panels), and the Interim Director of the Office of Cannabis Management (who had moderated the first two interview panels).
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