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7 key takeaways from the Mass. Cannabis Control Commission audit
Diana DiZoglio’s office found repeated mismanagement, violations from the 2022-2024 audit. Here's what to know.
Massachusetts’ Cannabis Control Commission (CCC), the agency responsible for overseeing the state’s $8 billion marijuana industry, has been plagued by mismanagement, noncompliance with state regulations, and potential favoritism, according to a sweeping audit by Auditor Diana DiZoglio’s office.
The audit, released last week, covered the commission from 2022 through 2024, and detailed repeated failures in enforcing regulations and maintaining adequate internal controls and records.
Auditors reported that the commission not only overlooked regulatory obligations but also created inequities in how cannabis businesses were treated.
In the scathing report, the auditor outlined seven key findings from the review. We break down each of them – and their accompanying recommendations – below.
Uncollected cannabis license fees showed ‘potential favoritism’
One of the audit’s most serious findings was the “appearance of potential favoritism and/or impropriety.”
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According to the report, some marijuana companies were compelled to pay prorated fees for license extensions while others were inexplicably excused, with no records kept of when or why fees were waived. The audit estimated that $530,000 in prorated fees remain uncollected.
“These procedural inequities created the appearance of potential impropriety, which could erode the public’s trust in CCC,” the audit said.
DiZoglio recommended the CCC improve its internal process for administering prorated fees and urged the agency to “conduct a full reconciliation to identify the total population of all uncollected license extension fees.”
Delayed enforcement put cannabis customers at risk
The CCC violated state regulations by failing to assess and collect fines within the timeframes established by its own policies, the audit found. The agency also lacked a hearing officer to oversee administrative hearings for fines and sanctions against marijuana establishments.
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Both the delay in enforcing fines and the lack of a hearing officer may have allowed noncompliance issues at marijuana businesses to continue or worsen, the audit said – to the potential detriment of customers.
“Lengthy timeframes, especially around enforcement action, put customers at potential risk either of purchasing and consuming contaminated or expired marijuana products or of being exposed to other public health risks. Additionally, the lack of a hearing officer may have compromised due process rights for licensees subject to fines and enforcement actions,” the audit said.
DiZoglio recommended the CCC establish, document, and follow specific timelines for fine collection during inspections, and to appoint a hearing officer.
Host Community Agreements favored big cannabis operators
The commission also neglected to review Host Community Agreements (HCAs) between cannabis operators and the municipalities they serve, allowing noncompliant agreements to remain in place.
Some marijuana businesses with noncompliant HCAs paid “excessive or improper fees” as a result of the faulty agreements. In one case, a new business was required to pay over $100,000 in Community Impact Fees to the municipality before making their first sale.
This created an environment that favored larger, multi-state marijuana businesses capable of paying such large sums, while putting smaller, Massachusetts-based businesses at a disadvantage, the audit found.
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The audit also found inconsistencies in HCAs between businesses of the same license type in the same municipality.
In Brookline, for instance, one business was obligated to contribute $975,000 to charity under its agreement, while another faced no such requirement.
The audit recommended the CCC review all of its existing HCAs to make sure they do not contain noncompliant terms.
Lack of transparency in employee settlements
Transparency issues were also cited. The audit noted that the commission had no formal process for documenting employee settlement agreements signed between 2019 and 2024, including one worth nearly $93,000 tied to allegations of defamation, invasion of privacy, family medical leave violations, and infliction of emotional distress.
The audit recommended the CCC develop an employee settlement policy in line with guidance from the Office of the Comptroller of the Commonwealth (CTR).
Structural failures in leadership, personnel
During the audit period, the CCC experienced a significant “breakdown in its management and personnel structure,” the audit found, particularly among high-level staff members, administrative personnel, and legal staff.
As a result, the agency relied on outside legal counsel to address employment problems and assigned remaining employees “multiple high-level roles without appropriate support or succession planning.”
In 2024, State Treasurer Deborah Goldberg fired former CCC chair Shannon O’Brien over “gross misconduct.” O’Brien is challenging her termination in court.
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The audit recommended the agency have a succession plan for general and executive staff member turnover.
Weak internal controls left CCC unable to manage risks
The audit found “significant deficiencies” with the CCC’s internal control system.
The commission did not review their monthly revenue reconciliations for the Marijuana Regulation Fund (MRF) – which consists of all the funds received by the Commonwealth from marijuana businesses, such as application fees, licensing, penalties, taxes, and interest – nor could CCC supervisors provide documentation that they approved final application checklists and licensing background checks.
The commission also lacked a sufficient internal control plan, which is required by the Office of the Comptroller’s Internal Control Guide. This contributed to “several operational and financial risks,” the audit found.
As a result, the audit found the commission “unprepared to address emerging risk posed by an unstable organizational structure.”
The audit recommended CCC implement controls for both the MRF and HCA review process and urged the commission to conduct an annual risk assessment.
Weak financial oversight led to double payments for license fees
Financial oversight proved equally weak. The agency failed to catch duplicate license fee payments, misclassified revenue, and did not properly track waivers or uncollected payments.
DiZoglio’s office warned these lapses resulted in “several risks and inefficiencies,” and created opportunities for “undetected financial mismanagement, revenue loss, and/or fraud.”
Earlier this year, the state inspector general criticized the commission for failing to collect $550,000 in prorated license fees and up to $1.2 million in potential provisional licensing fees from August 2022 to August 2024.
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Inspector General Jeffrey S. Shapiro called the CCC’s poor management “an egregious operational breakdown.”
What’s next for the CCC?
DiZoglio said her office will conduct a follow-up review to check in on the agency’s progress implementing the audit’s recommendations.
“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 news release. “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.”
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