State Auditor Finds Local Cannabis Permitting Practices Need Improvement

Late last week, California State Auditor Grant Parks released the results of an audit requested last year in the wake of a sprawling cannabis permitting corruption scandal in Southern California. Coming on the heels of January’s two federal guilty pleas for bribery in the Bay Area, this audit confirms how improvement is needed at the local level, finding at least one deficiency in each of the six reviewed local jurisdictions with regard to taking reasonable steps to ensure fairness and prevent conflicts of interest, abuse, and favoritism. According to the audit, not one of the six local jurisdictions could demonstrate that it consistently documented following its own policies requiring criminal background checks for permit applicants, with one of the six local jurisdictions unable to demonstrate that it followed its own process for verifying the completeness of an application. The audit singled out the City of Fresno for a lack of transparency during the approval process, for not having an appeals process, and for no blind scoring of cannabis permit applications during its review process. The audit further found that only two of the six reviewed jurisdictions require individuals involved in reviewing applications to agree to impartiality statements asserting that they do not have personal or financial interests that may affect their decisions. To reduce the risk of corruption, the State Auditor recommends that local jurisdictions: (1) require blind scoring as an additional safeguard for competitive permitting processes; (2) create an appeals process to allow applicants to appeal the denial of their permit application to an impartial decision-maker; and (3) require that all individuals involved in reviewing cannabis applications sign impartiality statements. To protect health and safety, the State Auditor recommends that local jurisdictions: (a) require the relevant law enforcement office to certify that all individuals have passed background checks by providing a letter to the cannabis-permitting office, confirming the individuals’ names and whether they passed the background checks; and (b) create a tracking and documentation process for verifying that applicants have submitted a complete application. To increase the transparency of the cannabis-permitting process for potential applicants and for the public, the State Auditor recommends that local jurisdictions: (i) publish permit-related ordinances, permit information, and permit application forms on the relevant public website; (ii) create supplemental communications about the cannabis-permitting policies and procedures, such as step-by-step guides and frequently asked questions; (iii) develop a web application through which applicants can apply; and (iv) publish cannabis-related fees on the relevant public websites.