Massachusetts’ Inspector General is advising the Cannabis Control Commission to conduct an audit after an investigation found that the agency did not collect nearly $2 million in fees over a two-year period.
In a letter sent today, Inspector General Jeffrey S. Shapiro advised the Executive Director and the Acting Chair of Cannabis Control Commission to conduct an audit to confirm that licensees have paid all applicable fees, after an OIG investigation found that the agency did not collect approximately $550,000 in prorated license fees and up to $1.2 million in potential provisional licensing fees from August 2022 to August 2024.
“I recognize that neither of you held leadership positions at the CCC during that two-year period, but as the CCC’s current leaders you must definitively act on the recommendations in this letter,” IG Shapiro said. “Our investigation did not find any suggestion of fraud, but it did reveal an egregious operational breakdown that underscores the need for statutory reform. We are pleased to learn that the CCC has recently worked to update the agency’s payment systems and has begun to recoup previously uncollected fees. It is still important to perform an audit to ensure that all current licensees have paid all applicable fees and fully understand what revenue went uncollected, as businesses ceased operations.”
The OIG launched an investigation in July 2024, after receiving a hotline complaint alleging that the CCC was failing to collect required fees. At that time, it was unclear whether this was an operational issue or if fraud may have been a factor. On August 11, 2022, the CCC commissioners voted unanimously to delegate their authority to extend a license expiration date up to 120 days to the executive director. The licensee would be required to pay a prorated fee to cover the extension period. The OIG found that not only did the CCC staff not collect the prorated fees, but they were also already granting license extensions without the authority to do so. This inaction resulted in approximately $550,000 in foregone revenue during the two-year period. Current leadership has indicated that the CCC has since begun collecting these prorated licensing fees.
The OIG also found that for almost two years the CCC did not collect up to $1.2 million in potential fees from more than 120 provisional license applicants. Once the Commission approves a provisional license application, the applicant must pay the required fee within 90 days to receive a provisional license. Failure to do so causes the license approval to expire, requiring the applicant to begin the application process again. It is difficult to calculate the exact amount of uncollected fees since some applicants opt not to continue the application process and therefore, purposely let their application lapse.
“Perhaps more troubling than the uncollected fees is the fact that CCC staff were granting license extensions without authority, and then, when given the authority, failed to collect the associated prorated fee,” IG Shapiro said.
“The inability of CCC staff to implement a key commission initiative should have been readily apparent to supervisors and commissioners in real time,” IG Shapiro added.
IG Shapiro, who called on the Legislature to appoint a receiver last June, believes the time for a receiver has passed, but the need for reform has not. “I am optimistic that the new executive director is committed to establishing sound operational practices and management,” IG Shapiro said. “However, that will not overcome the fact that the Commission’s enabling statute does not clearly define the authority of the Chair and the Executive Director. Until that issue is addressed, I fear that responsibility and accountability will continue to be elusive, and the Commission will struggle to gain its footing to chart a proper path forward.”
