The California Bureau of Cannabis Control is woefully understaffed and underfunded, and this has throttled work on licensing and complaint processing. These are key findings of an audit released by the state Finance Department on July 3.

The auditors found that nearly two-thirds of the 219 staff positions at the state Cannabis Control Bureau remain unfilled, which has limited the bureau’s ability to issue licenses, perform compliance inspections and investigate complaints about companies under its jurisdiction. The Finance Department found that most cannabis businesses in California are working under temporary permits. Just 9 firms have been issued annual retailer licenses, while 915 are operating under temporary licenses. Just 2 companies have been issued annual distributor’s license, while 1,365 are operating under temporary licenses. And no licenses have been issued to cannabis labs and microbusinesses, even though 49 labs and 289 microbusinesses are operating in the state.

The Cannabis Control Bureau is keeping up a little better dealing with consumer complaints about cannabis business in the state. About 60% of the 5,000-plus complaints recorded have been processed, and nearly 2,600 have been closed, the Finance Department reported.

The California Cannabis Control Bureau also is facing major cash flow problems. Between 2016 and January 31, 2019, it collected just over $2 million in revenues, while expenditures during that same period totaled nearly $38 million, the Finance Department’s audit found.

Christopher Shultz, Chief Deputy Director of the California Cannabis Control Bureau, in a written response to the Finance Department audit, said the bureau is aware of the problems cited, and is working to rectify them. “The Bureau is actively recruiting and hiring staff and evaluating workload on an ongoing basis,” Shultz wrote.

But Shultz explained that the legal/regulatory environment for cannabis in California has been evolving.

When the bureau was set up, in June 2016, it was charged with regulating medical cannabis in California, but soon after voters in the state approved an initiative legalizing adult recreational use. “The Bureau was now tasked with developing two separate regulatory systems, one for adult use and one for medical use, each with significant differences,” Shultz wrote.

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