2025-048 Cannabis Business Licensing
The State’s Grant Funding Assisted Businesses, but a Lack of Preparedness Limited the Grant’s Impact
Published: November 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.
Recommendation to the Legislature
Recommendation 1
To increase the ability of state agencies that may lack the existing infrastructure to effectively administer legislative grant programs, the Legislature should consider directing DGS or another state agency with the appropriate expertise to create and make available statewide guidance for grant administration, including guidance for subgrantee monitoring. Such guidance might include the following:
- Clear instructions for departments on how to define both allowable and unallowable costs in grant agreements, and the types of supporting documentation required.
- Examples of common grant monitoring controls to prevent or detect improper spending and delays in grant execution.
- An overview of the potential risks state departments face when they advance state grant funds, and when doing so may create a high risk of fraud, waste, or abuse of grant funding.
Agency response status:
Pending
Recommendations to the Department of Cannabis Control
Recommendation 2
To provide transparency into the effectiveness of the Grant Program and accountability for the use of public funds, DCC should immediately implement a process for publicly reporting on its website the final amounts of Grant Program funding it disbursed to each local jurisdiction, the amounts each jurisdiction used, as well as the amounts DCC determined jurisdictions may have used in unallowable ways and that are subject to recapture, and the amounts DCC will return to the General Fund after it has determined these amounts.
Agency response status:
Not fully implemented
Date of implementation:
Winter 2026
State Auditor assessment status:
Pending
60-Day Agency Response
As of January 2026, DCC continues to analyze the expenditures of the eight (8) remaining local jurisdictions who have yet to return unspent and ineligible grant program funds to the department. To date, DCC has recovered $6,033,057.21 in unspent and ineligible grant program funds from nine (9) local jurisdictions. DCC remains committed to publishing these amounts on its website beginning Winter 2026.
Public Reasoning Behind State Auditor 60-Day Assessment
Full implementation of this recommendation will require DCC to implement a process to report on its website the final amounts of Grant Program funding it disbursed to each local jurisdiction, the amounts each jurisdiction used, as well as the amounts DCC determined jurisdictions may have used in unallowable ways and that are subject to recapture, and the amounts DCC will return to the General Fund after it has determined these amounts.
Recommendation 3
To reduce the risk of fraud, waste, and abuse of future grant program funds, DCC should, by June 2026, use best practices to develop guidance that grant recipients can use when making grant awards to subgrantees, including direction about limiting advance payments to the minimum amounts subgrantees need and timing those payments to the subgrantees’ actual, immediate cash requirements.
Agency response status:
Not fully implemented
Date of implementation:
March 2026
State Auditor assessment status:
Pending
60-Day Agency Response
DCC expects to modify its existing Grant Administration Manual to include a general requirement that any subgrants awarded by grantees must first be authorized through a Scope of Work and Budget Form reviewed and approved by the department. Grantees would be required to identify: (1) each subgrantee; (2) a budget for the awarded funds; and (3) a schedule of specific, time-bound deliverables relevant to the grant agreement. Additionally, in the absence of grant-specific funding requirements, subgrants will be required to be administered on a reimbursement basis with advance funding being strictly limited to a given subgrantee’s immediate cash need. DCC remains on track to complete these modifications by March 2026.
