Welfare cash paying for marijuana a reality in Colorado

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DENVER -- Public tax money very likely paid for welfare recipients to smoke the equivalent of about 17 pounds of weed (or approximately 9,000 joints) in 2014. Compared with what the rest of Colorado ingested, that’s a small percentage, but controversial none the less.

Only FOX31 Denver’s investigative team took the time to analyze every ATM cash transaction between Colorado marijuana dispensaries and welfare recipients in the first year of legal pot sales.

We focused on the use of what the Colorado Department of Human Services calls the “Quest” Electronic Benefit Transfer Card under its Temporary Assistance for Needy Families Cash Assistance program. This account is not meant to be used for food, rather “a family's most basic needs.”

It’s essentially a bank debit card, loaded up with from $200 to $1,000 in cash every month for a low-income family or person. While the majority of card holders bought appropriate items such as diapers and fuel for their cars, others bought marijuana.

Using computer matching, FOX31 Denver traced at least $32,275 in welfare cash that was withdrawn from ATMs located inside secure marijuana retail facilities.

Withdrawals inside pot shops ranged from $20 to $400 with a total of at least 465 separate transactions. ATMs in 82 different marijuana dispensaries were used; that`s a quarter of the licensed recreational stores statewide.

When FOX31 Denver first reported on this issue a year ago, the industry complained that it was possible welfare recipients were simply using the high-fee ATMs inside pot shops to acquire money for legitimate purchases.

However, according to Executive Director of Colorado’s Marijuana Industry Group. Michael Elliott, that excuse is no longer a viable option. Both Congress and state lawmakers are demanding something be done to stop the public's dime from being used to buy weed.

Elliott told FOX31 Investigative Reporter Chris Halsne, “I can see the frustration of taxpayers and I think that`s why the industry is going to be a willing participant in solving this issue. We`re not interested in ripping off the taxpayers. We`re interested in this being an accountable industry. We`ve got a problem here and we`re willing to create solutions.”

FOX31 Denver visited dozens of marijuana retailers just to make certain the ATMs were dispensing money only inside secure pot shops and that there was nothing else for sale other than marijuana-related products nearby.

We eliminated transactions from ATMs which might be considered multipurpose.

For example: FOX31 Denver did not count 209 additional welfare card transactions for $23,100 dollars from a machine at Annie Oakley’s in Central City because there is a convenience and liquor store on the property as well.

State records show welfare cash benefits were withdrawn at an ATM inside Flower Power in Fort Collins on 20 occasions last year totaling $2,580 dollars. Both recreational and medical marijuana users had access to the machine.

One of Flower Power’s customers, Patrick Lowery, told FOX31 Denver he was concerned the misuse of a few, could lead to heavier regulation for all.

“We need to move it from the dark to the light. People need to be responsible with it. I don`t think there should be loopholes or avenues where funds being given for other purposes can be used for that because the law was passed to be used as a recreational item.”

The Colorado Department of Human Services has the authority to punish welfare debit card holders buying “nonessential” items with public money. However, we checked and that agency never does.

FOX31 Denver had no trouble identifying thousands of very specific, questionable welfare ATM cash transactions not only at pot shops, but at liquor stores, casinos and strip clubs.

When we asked Human Services if any welfare recipient had privileges suspended in 2014 we received an email that simply said, “To date, none has been revoked.”

Colorado`s Republican state lawmakers last year tried to ban welfare-for-weed cash ATM transactions, but were blocked by Democrats.

State Representative Tim Dore (R-District 64) tells FOX31 Denver he plans to try again in a few weeks, telling Halsne, “The reality is that any abuse of the tax dollar to be used in something that is less than the up and up is concerning.”

Proposed legislation which is scheduled to be revealed next week would not only add marijuana dispensaries to banned places to pull welfare cash from ATMs, but also force ATM owners to rig machines into declining welfare debit or "Quest" Cards. House legislators tell FOX31 Denver they would also like to see bi-annual audits conducted to identify abusers and create a system which would warn, then ultimately financially penalize repeat violators.

The U.S. Congress has sent a letter to Colorado state lawmakers warning them if they do not get a handle on this issue the state risks losing millions in federal grant money.

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