Cannabis Business Licensing

CALIFORNIA STATE AUDITOR 113 Report 2025-048 | November 2025 Table A.1 State Auditor’s Assessment of Auditees’ Responses to Recommendations From Report 2023-048 The most updated version of this information and the agency’s responses are available at https://www.auditor.ca.gov/reports/responses-2023-048-all/. STATE AUDITOR NUMBER DEPARTMENT RECOMMENDATION ASSESSMENT 1 DCC To better align its management of grant programs with best practices, by February 2025, Fully DCC should institute a grants management policy. This policy should accomplish the following Implemented actions at a minimum: • Designate the DCC staff member responsible for determining that proposed activities and costs are allowable during the grant review process. • Establish a process to ensure that each element of the policy has been reviewed, such as reviewing costs for allowability. • Establish benchmarks or other criteria in grant agreements for measuring grantee progress toward a grant program’s goals. • Specify the preferred method for disbursing grant funds, taking into account common grant management best practices. • Establish an amendment review process that includes internal and external deadlines to ensure DCC processes amendments in a timelier manner. • Establish procedures for monitoring expenditures and determining their allowability. • Establish a method to track the time that DCC staff spend working on grant-related activities. 2 DCC To provide grantees with timely feedback about whether their spending is allowable or Fully whether they will be required to return funds, DCC should immediately begin reviewing Implemented grantees’ expenditures to determine whether their expenditures are appropriate and begin communicating those determinations to the grantees. 3 DCC To help ensure that state grant funds and related interest benefit only the Grant Program, Fully DCC should immediately recommend that all grantees place any unspent grant funds in Implemented interest-bearing accounts. Further, DCC should direct grantees to track and report to DCC any interest accrued from those funds, and clarify that the accrued interest be used only for the purpose of the Grant Program. 4 City of Commerce To reduce the risk that DCC will require it to repay grant funds, the city of Commerce should Fully immediately cease using grant funds in a manner that may supplant existing funding for its Implemented staff and contractors, review all expenditures it has paid for with grant funds, and reimburse Grant Program funds from its general fund for any unallowable or supplanted expenditures. 5 Humboldt County To ensure that it pays for all grant-related costs from the grant funds it has received, by Resolved February 2025, the county of Humboldt should accurately reconcile its grant expenditures before its fiscal year-end close. 6 City of Long Beach To improve its ability to appropriately budget its grant funds and DCC’s ability to determine Resolved how much of those funds the city is spending and how quickly it is spending them, by October 2024, the city of Long Beach should develop grant management procedures that establish a method for the accurate and timely accounting and reporting of grant-related expenditures. 7 City of San Diego To reduce the risk that DCC will require it to repay grant funds, by October 2024, the city of Fully San Diego should review all expenditures it has paid for with grant funds, clarify with DCC Implemented whether the expenditures are allowable, and reimburse the grant funds from its general fund for any unallowable expenditures. 8 DCC To better monitor the timeliness of its license application process, by February 2025, DCC Partially should identify the steps in the license application process, alter its license tracking systems Implemented as necessary to track relevant data related to that process, and begin analyzing the data to determine how to shorten the average time it takes to issue a license. continued on next page . . . CALIFORNIA STATE AUDITOR 125 Report 2025-048 | November 2025 STATE AUDITOR NUMBER DEPARTMENT RECOMMENDATION ASSESSMENT 9 Legislature To clarify the allowable use of grant funds, the Legislature should amend the definition of a No Action Taken provisional license for purposes of the Grant Program to mean a provisional license issued at any time. 10 DCC To give grantees sufficient time to spend the grant funds, DCC should immediately reassess Resolved whether its March 31, 2025, spending deadline is necessary. If that deadline is not necessary, DCC should change it to the June 30, 2025, deadline established in state law. Source: State Auditor’s website. Fully Implemented: The recommendation is fully implemented. Partially Implemented: The auditee has performed some actions toward implementation. No Action Taken: No action has been taken to implement the recommendation. Resolved: The auditee did not implement the recommendation, but it no longer applies.