In wake of critical audit, Cannabis Commission shares progress

An audit of the Cannabis Control Commission found widespread mismanagement, procedural inequities and violations of state regulations, and the agency says it is eager to share updates on its progress toward addressing those concerns over the next six months.

The 60-page audit published last week by Auditor Diana DiZoglio's office found that the CCC mismanaged prorated fees, resulting in lost revenue and an "appearance of potential favoritism and/or impropriety"; violated state regulations by not ensuring fines were assessed and collected in a reasonable amount of time; and allowed noncompliant requirements on small businesses to stay in place longer than they should have.

The audit concluded that a "breakdown of management structure and role consolidation" at the state agency led to operational and compliance risks.

"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. "We encourage the Cannabis Control Commission to adopt our office’s recommendations for improvement and will be revisiting the Commission’s progress in roughly six months as part of our post-audit review."

The audit looked at the CCC from July 1, 2022, through June 30, 2024, a time of upheaval at the agency that regulates an industry that has gone from illegal to roughly $8 billion in legal sales in less than a decade.

Shannon O'Brien was hired as CCC chairwoman in September 2022, suspended in September 2023 and fired in September 2024 amid accusations of contributing to a hostile work environment. Recently unsealed court documents showed that distrust and bickering were rampant among senior employees at the agency, and that the organization withered under pressure from Beacon Hill and the cannabis industry and struggled to make progress on key issues.

The multi-faceted concerns with the CCC forced action earlier this year, when the House of Representatives voted unanimously to entirely overhaul the agency in part due to the perception of it as an ineffective regulator and as an organization beset with personnel conflicts and scandals.

The CCC pointed out that it has hired new "key leaders" including an executive director and general counsel since DiZoglio's audit period ended in June 2024. The recent reappointment of Acting Chair Bruce Stebbins for another five-year term provides a measure of stability (though the entire structure of the CCC could change if a House-approved bill becomes law), and agency officials have long touted the importance of a new governance charter to clear up issues between commissioners and agency staff.

"These developments have allowed the agency to continue its transition from a start-up to a more mature and established organization and to strengthen inter-departmental collaboration," the CCC said in its response to the audit.

The agency added, "Beyond making progress with personnel and organizational structure, Commission staff have reviewed and amended existing Standard Operating Procedures (SOPs) during and since the audit period relating to many of the issues raised. The Commission has an Internal Control Plan that is certified annually. The plan has been reviewed by the Statewide Risk Management Team of the Office of the Comptroller (the Comptroller) and was found to comply with their policies and regulations. The Commission is committed to an annual review of policies and procedures to continue to bolster internal controls and mitigate risk."

On its website, the CCC offered detailed responses to DiZoglio's findings and additional information on the changes instituted in the year since the audit snapshot ended. The agency said it "looks forward to its continued work with the Auditor’s team to address any outstanding recommendations and provide any updates" over the next six months.

"The Commission agrees with the Auditor’s goal of assessing performance to ensure government continues to improve," the CCC response said. "There is no question that the organizational structure and operations of the agency have done just that as it has grown and matured since inception in 2017 — and over the course of significant transitions in leadership in recent years — alongside the expansion of the now-$8 billion regulated industry."

A number of DiZoglio's findings revolved around fee collection processes at the CCC, including a number of administrative license extensions that were granted to companies without requiring payment of applicable fees. By not properly collecting those fees, DiZoglio's audit said the CCC allowed $555,671 in fee revenue to go uncollected.

The CCC said it began billing for uncollected fees once the issue was identified and has "collected more than two-thirds of identified fees and continues to pursue collection of the remaining balance." DiZoglio's office said that approximately $170,000 of the original $555,671 remained uncollected as of March 2025.

The CCC said it processes 35,000 payments through its IT platforms annually, generating $20 million in annual revenue from fines and licensing and agent fees. Leaders at the CCC were unsuccessful this year in convincing Beacon Hill to boost the agency's budget in part to address IT infrastructure recommendations from the inspector general.

"Existing technology needs to be updated to grow with the industry. To that end, in both Fiscal Year 2025 and 2026 state budget requests, the Commission sought funds to update or replace" its adult-use and medical marijuana industry portals, the agency said.

"Although those requests were not met, Commissioners and staff continue to work with the executive branch and legislators in order to secure the funding that will enable necessary upgrades and improvements. Ultimately, any investment in updated infrastructure will require a public procurement process, which has already begun, despite existing budget shortfalls."