2024-048 Cannabis Business Licensing
Jurisdictions Have Made Progress to Meet Goals of the Local Jurisdiction Assistance Grant Program, but Some Inappropriate Expenditures Persist
Published: February 20, 2025
Audit Recommendations Disclosure
When an audit is completed and a report is issued, auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them. Below is a listing of each recommendation the State Auditor made in the report referenced and a link to the most recent response from the auditee addressing their progress in implementing the recommendation and the State Auditor’s assessment of auditee’s response based on our review of the supporting documentation.
Recommendations to Dept. of Cannabis Control
Recommendation 1
To ensure that local jurisdictions have time to accomplish the goals of the Grant Program, DCC should monitor local jurisdictions’ spending. If DCC finds that local jurisdictions require additional time to accomplish the Grant Program’s goals, DCC should extend the spending deadline from March 31, 2025, to June 30, 2025.
Agency response status:
Pending
Recommendation 2
To make its process of determining substantial progress more transparent for any future grant programs, DCC should revise its grant administration policies to specifically include the following in its formal written communication to local jurisdictions:
- The criteria DCC used to evaluate local jurisdictions’ progress.
- A detailed explanation of the results of DCC’s evaluation.
- Specific examples of issues DCC identified related to local jurisdictions’ progress, including its rationale for denying additional grant funding, if DCC uses the progress measure to approve or deny local jurisdiction funding.
Agency response status:
Fully implemented
Date of implementation:
April 2025
State Auditor assessment status:
Fully implemented
60-Day Agency Response
For its future grants, DCC has updated its Grant Administration Manual requiring that the Office of Grants Management (OGM) communicates to its grantees the respective standards and criteria to be used by OGM when evaluating the progress of a given grant agreement. OGM is now required to communicate to grantees the following information: (1) the evaluation criteria; (2) the evaluation results; and (3) any identified issues and OGM’s rationale for its decision(s). OGM has updated its Local Jurisdiction Assistance Grant (LJAG) Program Desk Manual with the specific evaluation criteria for the LJAG program along with instructions on how to communicate the results of its evaluations to the remaining grantees.
Recommendations to Sonoma County
Recommendation 3
To ensure that it only uses Grant Program funds for allowable activities and costs, Sonoma County should improve its grant expenditure oversight. Specifically, Sonoma County should do the following:
- Establish a process for regularly reviewing all expenditures it charges to the Grant Program in the future to ensure that they are for allowable activities only.
Agency response status:
Pending
Recommendation 4
To ensure that it only uses Grant Program funds for allowable activities and costs, Sonoma County should improve its grant expenditure oversight. Specifically, Sonoma County should do the following:
- Review all Grant Program expenditures to identify any spending that it may have used for unallowable purposes as stated in state law or DCC’s guidelines.
Agency response status:
Not fully implemented
Date of implementation:
6/30/2025
State Auditor assessment status:
Pending
60-Day Agency Response
The last day for expenditures for the grant was 3/31/2025. County staff has reviewed expenditures and will continue to review all expenditures and provide documentation to DCC prior to the end of the grant term (6/30/2025).
Recommendation 5
To ensure that it only uses Grant Program funds for allowable activities and costs, Sonoma County should improve its grant expenditure oversight. Specifically, Sonoma County should do the following:
- Return to the Grant Program the amounts of any unallowable expenditures it identifies.
Agency response status:
Not fully implemented
Date of implementation:
6/30/2025
State Auditor assessment status:
Pending
60-Day Agency Response
The last day for expenditures for the grant was 3/31/2025. County staff has reviewed expenditures and will continue to review all expenditures and provide documentation to DCC prior to the end of the grant term (6/30/2025). Upon review by and working with DCC, the County will return any funds as requested by DCC.
Recommendation 6
To ensure that it only uses Grant Program funds for allowable activities and costs, Sonoma County should improve its grant expenditure oversight. Specifically, Sonoma County should do the following:
- Work with DCC to correct previously submitted biannual reports to reflect appropriate expenditures.
Agency response status:
pending
Recommendations to City of Oakland
Recommendation 7
To ensure that it only uses Grant Program funds for allowable activities and costs, Oakland should ensure that it appropriately approves any direct payments to cannabis businesses according to state law and DCC’s guidelines. Specifically, Oakland should do the following:
- Establish a process for regularly reviewing all expenditures charged to the Grant Program to ensure that they are for allowable activities only.
Agency response status:
pending
Recommendation 8
To ensure that it only uses Grant Program funds for allowable activities and costs, Oakland should ensure that it appropriately approves any direct payments to cannabis businesses according to state law and DCC’s guidelines. Specifically, Oakland should do the following:
- Include in its Grant Program manual a statement that Oakland should obtain DCC’s approval for direct grants before Oakland authorizes the cannabis businesses to spend the funds.
Agency response status:
pending
Recommendation 9
To ensure that it only uses Grant Program funds for allowable activities and costs, Oakland should ensure that it appropriately approves any direct payments to cannabis businesses according to state law and DCC’s guidelines. Specifically, Oakland should do the following:
- Review all past Grant Program expenditures to identify any spending that it may have used for unallowable purposes.
Agency response status:
pending
Recommendation 10
To ensure that it only uses Grant Program funds for allowable activities and costs, Oakland should ensure that it appropriately approves any direct payments to cannabis businesses according to state law and DCC’s guidelines. Specifically, Oakland should do the following:
- Return to the Grant Program the amounts of any unallowable expenditures it identifies.
Agency response status:
pending
Recommendation 11
To ensure that it only uses Grant Program funds for allowable activities and costs, Oakland should ensure that it appropriately approves any direct payments to cannabis businesses according to state law and DCC’s guidelines. Specifically, Oakland should do the following:
- Work with DCC to correct previously submitted biannual reports to reflect appropriate expenditures.
Agency response status:
pending
