California’s Division of Hashish Management (DCC) faces scrutiny after a state audit revealed important mismanagement of a $100 million grant program meant to streamline hashish enterprise licensing throughout 17 jurisdictions.
Established in 2021, this program was meant to help hashish corporations in transitioning from provisional to annual licenses – a course of that has confirmed complicated and slow-moving. With this system set to run out in June 2025, issues are mounting about whether or not the funds will successfully obtain this purpose.
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Troubling Report
In accordance to Inexperienced Market Report, State Auditor Grant Parks‘ report, launched the week earlier than Labor Day, highlights quite a few deficiencies in this system’s oversight.
By January 2023, practically a yr after the state disbursed the preliminary $100 million, the audit discovered that many cities and counties had mismanaged the funds. This mismanagement probably hindered hundreds of hashish companies from transitioning from provisional to full annual licenses, which they have to full by January 2026.
In keeping with the audit, solely 535 companies out of the hundreds nonetheless awaiting licensing had efficiently obtained their annual permits by 2022, regardless of the DCC distributing roughly $80 million to the taking part jurisdictions.
“DCC’s insufficient oversight and the native jurisdictions’ inappropriate expenditures in the course of the first yr of the Grant Program have weakened this system’s capacity to help sure native jurisdictions needing help in transitioning hashish companies that maintain provisional licenses to acquire annual state licenses,” Parks stated.
“The comparatively small variety of provisional licenses transitioned to annual state licenses within the first yr of the 4‑yr program is just not promising,” he added.
Provisional Licenses: A Non permanent Repair Gone Awry
The difficulty arises from the character of provisional licenses, which had been by no means meant to be everlasting permits. Authorities launched them as a brief resolution to assist hashish companies navigate California’s complicated and sometimes sluggish regulatory setting, together with compliance with the California Environmental High quality Act (CEQA).
Nevertheless, with native governments having the preliminary say in allowing marijuana, the method has turn into cumbersome and inconsistent throughout completely different areas.
The $100 million grant program sought to alleviate these delays, however the audit exhibits that by January 2023, this system had barely made a dent. Parks famous that if the present tempo continues, “greater than half of the provisional license holders within the grantees’ jurisdictions will nonetheless not have obtained an annual state license by 2026.”
Mismanagement And Misuse Of Funds
The audit uncovered a number of alarming points, together with the misuse of grant funds by a number of the cities and counties concerned.
4 jurisdictions didn’t adequately monitor their use of the grant cash, whereas others spent funds on unrelated expenditures. This misuse of funds has raised issues about this system’s capacity to realize its meant outcomes, with the chance that the DCC might demand the return of improperly used cash.
Compounding these points was the DCC’s personal understaffing and inexperience in managing massive grant packages. Initially, simply two part-time workers members had been chargeable for overseeing the $100 million program. Though the DCC has since elevated workers to 4, the audit identified that the division’s lack of expertise performed a big position in this system’s early failures.
Response And Latest Progress
The DCC has acknowledged the audit’s findings and acknowledged that it has already begun addressing most of the issues raised.
“All through the grant program’s operations, the Division has actively labored to implement adjustments to deal with CSA issues and tackle alternatives for enchancment,” the division stated in a press release to KCRA. These adjustments embrace hiring devoted grant administration workers, consolidating licensing programs, and adopting greatest practices for administering comparable grant packages.
Whereas the audit paints a bleak image, there was progress. As of September 3, 2024, the DCC’s licensing database exhibits that the variety of provisional licenses statewide has decreased to 2,594, with 6,201 full annual licenses now lively, bringing the overall variety of lively enterprise permits to eight,800.
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