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Nick Jo

Audit Finds California Cannabis Regulators Understaffed, Short on Cash

An audit by the California Finance Department reveals that two-thirds of staff positions at the Bureau of Cannabis Control are unfilled and the agency is operating with just a tiny fraction of its expected funding.

Full story after the jump.

About two-thirds of the 219 staff positions in California’s Bureau of Cannabis Control are unfilled, making it difficult for the agency to conduct investigations of companies under its purview, according to a Finance Department audit. Responding to the audit, the cannabis regulation agency said that “unlike most state government programs, the bureau was simultaneously starting from the ground up on multiple fronts.”

The Finance Department report found that just 15 of 68 enforcement unit positions had been filled, which has “severely impacted” the bureau’s ability to perform site inspections and process complaints” and has hindered the work of cannabis testing laboratories.

The bureau is also facing a major cash shortage according to the audit. The bureau expected to collect about $200 million from application and license fees by June 30; however, as of January, regulators had only collected $2 million.

The audit also found communication problems between the three agencies that regulate cannabis in California – the bureau, CalCannabis Cultivation Licensing, and Manufactured Cannabis Safety Branch.

“Enforcement unit staff stated a central contact from the other licensing authorities has not been established,” the audit states.

Christopher S. Schultz, chief deputy director of the Bureau of Cannabis Control, wrote in response that he welcomed the audit’s recommendations for the agency to “strengthen its operations” and that the report recognized that the agency had to develop a complex regulatory system “under challenging conditions.”

The audit reports that the bureau has issued just nine annual retailer licenses while 915 businesses are still operating under temporary permits; two annual distributor licenses while 1,365 businesses are using temporary licenses; and nine annual event organizer licenses, with 92 businesses operating under their temporary licenses. The bureau has not issued any annual licenses for testing labs or micro-businesses, while 49 labs and 289 microbusinesses are doing business under their temporary permits.

The Finance Department report indicates the bureau has received 5,680 total complaints about cannabusinesses and have processed 3,232 and closed 2,582 – leaving 2,448 in progress as of Jan. 31.

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