Massachusetts cannabis regulators demonstrated “potential favoritism and/or impropriety” in their dealings with some marijuana businesses, according to a review by the state auditor’s office.
State Auditor Diana DiZoglio also found that the Cannabis Control Commission violated state regulations and mismanaged fee collection, which resulted in lost revenue.
“Our audit identified a number of issues that undermine and negatively impact the Cannabis Control Commission’s mission to equitably and effectively oversee the cannabis industry in Massachusetts,” DiZoglio said in a statement to MassLive.
According to the audit, the CCC’s actions “created the appearance of potential impropriety, which could erode the public’s trust in” the agency.
Scathing audit of Massachusetts cannabis regulators
The audit produced seven main findings.
According to the audit, the CCC:
- Mismanaged prorated fees for license extensions.
- Violated state law by “failing to ensure that fines were assessed and collected within reasonable time frames.”
- Failed to review controversial “host city agreements,” which cost one Brookline store $975,000, while another store in the same city “had no such requirement.”
- Did not have a “documented and transparent process” for employee settlement agreements.
- Had a “breakdown of management structure and role consolidation” that led “critical personnel” to leave the agency, leading to “operational and compliance risks” as well as overworked staff and an “increasing reliance” on expensive outside legal counsel.
- “(F)ailed to identify double payments for license fees.”
In addition, the audit found the CCC failed “to collect prorated license fees before July 1, 2022, leading to uncollected revenue.”
Cannabis regulators cooperated, promise to improve
DiZoglio said the CCC cooperated throughout the investigation, and her report included the commission’s description of its efforts to correct the issues.
In a statement, a spokesperson for the CCC said improvements were already underway.
“Over the course of the audit period and since, the commission has hired key leaders, made progress to address many of the issues referenced and begun to move forward in a constructive way,” the spokesperson told MassLive.
The audit found that smaller cannabis businesses with money were more likely to be impacted by the commission’s shortcomings than marijuana multistate operators with strong financials.
The audit was released just over a month after the CCC reported that Massachusetts cannabis businesses are surrendering or allowing their licenses to expire at a higher rate than ever.
The CCC has had major turnover at the highest level.
Former CCC chair Shannon O’Brien was controversially removed last summer.
Bruce Stebbins, a former gambling regulator, was recently reappointed to a second term as the agency’s acting chair.
