Overview
We determined that the Cannabis Control Commission (CCC) did not consistently administer prorated license fees during the audit period. Since this process was not administered consistently, CCC’s prorated fee process was inadequate and procedurally inequitable, which led to missed revenue collection for the Commonwealth.
Inadequate Process
On August 11, 2022, CCC’s executive director sought a delegation of authority from CCC commissioners to administratively extend license expiration dates up to 120 days, which would provide applicants with time to resolve issues with their applications.
The formal delegation to the executive director to authorize license extensions was granted during CCC’s vote on August 11, 2022. As of this date, CCC required a prorated fee to be paid for license extensions. However, CCC did not approve a formal standard operating procedure outlining the extension process until November 24, 2023, over a year after extensions began. As a result, there were no consistent procedures in place during that time, and documentation supporting CCC staff members’ decision-making on license extensions was minimal. The licensing team maintained a Microsoft Excel spreadsheet to monitor these extensions.
On May 23, 2024, CCC’s acting chief of investigations and enforcement sought to expand the prior delegation of authority to further increase the length of license extensions. The purpose of the expansion was to provide licensees and host communities with more time to negotiate compliant host community agreements (HCAs), as HCAs were now subject to review, approval, and certification by CCC. CCC commissioners unanimously approved the additional request for delegation of authority, and licensees could now extend their licenses for up to an additional 240 days, after the initial 120 days (up to 360 days in total). As of May 23, 2024, CCC staff members acknowledged that no prorated fees had been collected from any extended licenses since the delegation of extension authority began in August 2022.
Formal/Documented Extensions—Requested via Email
Licensees could submit a formal/documented request for license extensions from CCC by sending an email. Some licensees followed CCC’s process for license extension requests and submitted their requests for extension via email to CCC’s Licensing Department. These requests were subject to prorated fees and were identified by CCC in its prorated fee list that contained 161 extensions with associated fees totaling $555,671.
Informal/Administrative Extensions12
Informal/administrative extensions were initiated in one of two ways: Either licensees would request extensions verbally (instead of formally documenting their requests with written confirmation) or CCC would itself execute extensions that were not first requested formally in writing (or at all) by the licensees. CCC did not identify many of these extensions in its review of outstanding extensions, and the corresponding licensees were not required to pay prorated fees.
CCC inconsistently administered the above procedures and failed to determine whether all license expirations were considered during its processing of prorated license fees. Additionally, CCC’s failure to implement adequate procedures resulted in noncompliance with applicable regulations, including the following:
- Section 6(a) of Chapter 94G of the Massachusetts General Laws, which generally requires licenses to be renewed annually;
- Section 500.103(4)(a) of Title 935 of the Code of Massachusetts Regulations (CMR), which mandates submission of renewal applications and license fees before expiration; and
- CCC’s policy decisions, as reflected in its public meeting minutes and documented delegated authority resolutions.
Inadequate procedures created procedural inequity, favoring the licensees who did not participate in CCC’s process for license extension as it penalized licensees who followed CCC’s extension process and submitted requests for extensions via email, while those who did not submit requests in line with CCC’s process benefitted from informal/administrative extensions for which they were not required to pay prorated fees.
Procedural Inequity
CCC’s inconsistent administration of procedures, combined with the absence of a formal policy or procedure governing fee assessment, resulted in the inequitable treatment of licensees.
During the audit period, CCC employed multiple methods to process license extensions, and in many cases, multiple extensions were granted under the same license number without documented extension requests or assessed fees.
Missed Revenue Collection
The methodology CCC used to quantify prorated fees for license extensions did not take into account all available data when the prorated fee issue was identified. Additionally, CCC did not have adequate, consistent, or appropriate processes or controls in place to properly administer license extensions. Further, the Massachusetts Cannabis Industry Portal (MassCIP) did not have the functionality to calculate and invoice prorated fees. These issues led to CCC’s failure to process extensions accurately and completely, resulting in uncollected fee revenue for the Commonwealth.
Failure to Administer Prorated Fees
Following a May 2024 public meeting, and after nearly two years of not collecting prorated fees, CCC began the process of identifying outstanding fees. This effort led to the creation of the CCC Licensing Team’s prorated fee list, which included 161 license extension fees, totaling approximately $555,671.13
CCC provided us with data indicating that there were hundreds of extensions approved before the start of the audit period on July 1, 2022. See Other Matters for more information.
The extensions granted before and during the audit period are summarized in the table below.
| Extensions | Number of Licenses* | Number of Extensions |
|---|---|---|
| Processed before the audit period** | 353 | 479 |
| Processed during the audit period | 487 | 942 |
| Total | — | 1,421 |
* This column represents unique license numbers. Therefore, it does not add up to the total number of extensions, as license numbers can be extended multiple times during any one period of time.
** See Other Matters for more information.
In order to determine whether CCC managed the calculation, collection, and accounting for prorated fees on an equitable basis and in accordance with applicable regulations, we compared CCC’s prorated fee list to the MassCIP list.
CCC’s Prorated Fee List
CCC’s prorated fee list contained 161 license extensions, granted to 136 unique license numbers, with a value of $555,671. The list of 161 licenses included only extensions that had been formally requested by licensees via email and did not include extensions that had been categorized as informal/administrative because they were executed by CCC staff members without first being requested by the licensees. According to CCC management, such informal/administrative extensions were not subject to prorated fees.
MassCIP List
The MassCIP list of extensions contained 942 extensions, granted to 487 unique license numbers. We determined that many of these extensions were processed as informal/administrative extensions, although there was some overlap with CCC’s prorated fee list.
Comparison of CCC’s Prorated Fee List to MassCIP List
We determined that 114 out of 136 unique license numbers from CCC’s prorated fee list matched the MassCIP list. The remaining 22 out of these 136 unique license numbers from the prorated fee list were not on the MassCIP list. The 22 unique license numbers not on the MassCIP list included information on the different types of licenses (e.g., medical marijuana facilities) and the licenses granted before the delegation of authority that allowed CCC staff members to provide extensions.
Cross-Comparison of MassCIP List to CCC’s Prorated Fee List
We compared the MassCIP list of 487 unique license numbers to CCC’s prorated fee list and determined that 373 (77%) out of 487 license numbers from the MassCIP list were not on CCC’s prorated fee list. See the table below for more information.
Extensions Processed During the Audit Period Number of Licenses Number of Extensions In Both MassCIP’s and CCC’s Prorated Fee Lists 114 244 Only In MassCIP’s List 373 698 Total 487 942 Because these 373 unique license numbers were included on the MassCIP list but not CCC’s prorated fee list, the fees associated with the license extensions were not included in the $555,671 in outstanding fees.
We performed testing on the 114 unique license numbers that were on both the MassCIP list and CCC’s prorated fee list. Additionally, we performed testing on the 373 unique license numbers that were on the MassCIP list but not on CCC’s prorated fee list.
Regarding the 114 unique licenses: We determined that 21 license extensions out of a sample of 35 contained discrepancies because calculations did not include informal/administrative extensions. The value of the 21 discrepancies was $29,983.
Regarding the 373 unique licenses: We determined that 23 license extensions out of a sample of 40 contained instances of noncompliance. Of these 23 instances, 22 were caused by informal/administrative extensions not being included in the prorated fee calculations, and 1 instance was due to a requested license extension that was omitted from the list of 161 prorated fees but should have been included.
We were unable to determine the total amount of prorated fees associated with the 373 license numbers not included in CCC’s prorated fee list because of CCC’s use of multiple procedures for identifying and calculating prorated fees during the audit period. However, we exercised due diligence by testing our sample of 40 extensions. Of these 40 extensions, 17 (43%) had prorated fees that were correctly charged and collected by CCC under the new procedures for manual extensions. This indicates that CCC did not fully identify the total population of prorated fees in its initial prorated fee list, which included 161 extensions, totaling $555,671 in fees.
Because CCC lacked a complete population of prorated fees and the sample size was below the threshold for statistical projection, we conducted an additional analysis of the population of 373 licenses. As a result, our analysis of the prorated fees and their total value differs from CCC’s incomplete list.
Based on the analysis, we estimated the unbilled prorated fees for the 373 license extensions not listed. This estimate considers the number of extensions, the number of licenses, the average extension length by license type, the average calculated prorated fee by license type, and the proportion of extensions in the sample that resulted in paid prorated fees. The estimated total value of these unbilled prorated fees is approximately $246,000. The actual total value could be higher or lower, depending on what process and procedure CCC would have used, had it appropriately and equitably collected fees in these instances.
| License Type | Number of Extensions (Population of 373 Licenses) (A) | Average Length of Extension (B) | Average Length of Extension (C) | Average Extension Value (D) | Estimated Fee (E) (AxD÷CxB) |
|---|---|---|---|---|---|
| Marijuana Cultivator | 171 | 25.56 | 92.32 | $2,405.94 | $ 113,905.83 |
| Marijuana Product Manufacturer | 159 | 25.26 | 98.62 | $2,463.51 | 100,327.46 |
| Marijuana Retailer | 288 | 30.46 | 85.88 | $2,090.14 | 213,503.86 |
| Other | 80 | ||||
| Total Licenses | 698 | ||||
| Total Estimated Fees | $ 427,737.15 | ||||
| Estimated Fees Paid (42.5%) | $ 181,788.29 | ||||
| Estimated Fees Not Billed (57.5%) | $ 245,948.86 |
We determined that CCC’s prorated fee list of 161 license extensions, totaling $555,671 in fees, did not consider all the informal/administrative extensions that were contained in the MassCIP list of extensions.
We determined that the 373 license extensions that were on the MassCIP list but were not on CCC’s prorated fee list contained a combination of informal/administrative extension fees, unassessed fees, and fees that were later collected by CCC but were not identified by CCC on the original list of 161 license extensions that totaled $555,671. We estimated that these 373 extensions could total approximately $246,000 in fees.
Overall, we estimated that $530,000 in prorated fees remain uncollected (see Other Matters for more information). CCC was required to collect appropriate fees for license renewals and extensions. Due to time constraints, our office was unable to test years before the audit period; however, using the same methodology we applied to our calculations regarding the unbilled fees accrued during the audit period, we estimated that the potential uncollected fees could be approximately $530,000. Although its statute (see the "Authoritative Guidance” section below for more information) allows CCC to increase the time between license renewals, it does not address CCC’s choice to simply not collect license fees.
CCC management failed to take appropriate steps and institute procedures to fully quantify and accurately administer license extensions. A lack of supervision and minimal accountability over licensing staff members contributed to a significant breakdown of the internal controls over requests for and approvals of extensions. As a result, not all fees were billed, which resulted in uncollected fee revenue for the Commonwealth. Furthermore, these procedural inequities created the appearance of potential impropriety, which could erode the public’s trust in CCC.
Authoritative Guidance
Section 76(j) of Chapter 10 of the General Laws states,
The commission shall appoint an executive director. The executive director shall serve at the pleasure of the commission, shall receive such salary as may be determined by the commission, and shall devote full time and attention to the duties of the office. The executive director shall be a person with skill and experience in management, shall be the executive and administrative head of the commission and shall be responsible for administering and enforcing the law relative to the commission and to each administrative unit thereof.
Regarding license terms, Section 6(a) of Chapter 94G of the General Laws states, “Unless the commission authorizes the renewal of a license for a longer period, all licenses under this chapter shall be effective for 1 year from the date of issuance.”
According to 935 CMR 500.103(4)(a), “No later than 90 calendar days prior to the expiration date, a Marijuana Establishment shall submit a completed renewal application to the Commission in a form and manner determined by the Commission, as well as the required license fee.”
Reasons for Issue
CCC management stated that no formal procedures for the administration of license extensions and prorated fees existed during the first 16 months of the audit period, July 1, 2022 through November 23, 2023. Additionally, CCC management stated that manual processing, limited staffing, and insufficient oversight contributed to the inconsistent administration of the prorated fee process. Plus, CCC lacked standardized tracking and billing for the prorated fee extensions.
Recommendations
- CCC should improve its internal processes around the administration of prorated fees to ensure that all money owed to CCC, and therefore the Commonwealth, is collected appropriately, consistently, and equitably.
- CCC should conduct a full reconciliation to identify the total population of all uncollected license extension fees.
- CCC should implement a standardized, written procedure for administering license extensions to ensure equity and compliance with applicable regulations.
- CCC should prioritize adequate staffing, oversight, and automation of the billing process for license extension fees.
- CCC should update its procedures to ensure that they are demonstrably fair, equitable, and transparent to help increase the public’s trust and prevent the appearance of potential impropriety.
Auditee’s Response
CCC’s Recommendation 1 response was as follows:
The Commission implemented new Standard Operating Procedures for the collection of pro-rated fees in April 2025, including creating a MassCIP extension application and the release of several informational bulletins regarding pro-rated fees in 2024, including the one linked here: https://masscannabiscontrol.com/2024/11/bulletin-extension-application-in-masscip-november-18-2024/
The main discussion between the Agency and the [Office of the State Auditor] (as well as recent discussions with the [Office of the Inspector General]) centered on the Agency’s licensing software (MassCIP) and medical program software ([Medical Use of Marijuana Program Online System (MMJOS)]) which are in need of upgrades or replacement to achieve the functionality desired. This must follow a public procurement process (which has begun), however, the cost to implement improvements or replace these systems was requested in the Agency’s [fiscal year] 2025 and [fiscal year] 2026 budget requests, and ultimately has not been funded to-date. The Agency continues to explore a variety of other funding options, including [the Executive Office of Technology Services and Security], as this [information technology] Infrastructure is a priority for the Agency.
CCC’s Recommendation 2 response was as follows:
On May 23, 2024, the Licensing department notified the interim Chief of Investigations and Enforcement (CIE) that prorated fees were not collected following the Commission’s vote on August 11, 2022, to delegate authority to extend licenses to the [executive director] for up to 120 days. After identifying that there may be gaps in determining whether Licensees paid their prorated fees to cover previously approved extensions, the CIE directed Enforcement Counsel staff and members of the Licensing team to investigate the extent of the issue.
In response, a Licensing staff member provided a list of Licensees that were granted administrative extensions to their awareness. Through this tracker, the team discovered that as of July 11, 2024, one hundred and sixty-one (161) administrative extensions were requested by Licensees but did not pay the prorated fee for the extension. The total amount of money owed for these extensions was initially calculated at $555,671.23. Upon further review, the amount was reduced to $535,914.49 to account for an inaccurate fee calculation in the original estimate. At that time, the CIE learned that the Licensing team did not have a process for collecting prorated fees for administrative extensions. As a result, by November 2024, [Investigations and Enforcement] staff identified solutions such as implementation of an automated mechanism by which licensees could request administrative extensions and submit the appropriate fee through a third-party vendor platform (MassCIP).
Data Discrepancies between [the Office of the State Auditor] and the Commission
Upon review of a data sample from MassCIP, the [Office of the State Auditor (SAO)] utilizes a process to extrapolate that there were hundreds of additional administrative extensions for which pro-rated fees were not collected. There are numerous shortcomings with this approach and the Commission believes the SAO method overestimates the amount of uncollected fees. Of the 161 administrative extensions identified above, the Commission has billed $535,914.49 in uncollected fees, and collected $367,777.45. The SAO has identified approximately $249,000 [(The $249,000 figure referenced by CCC was part of the draft version of the report sent to CCC for response. After figures were finalized, we arrived at $246,000.)] in uncollected fees related to administrative extensions in its report. The Commission does not dispute that the previous administration did not have processes and internal controls in place to collect administrative extension fees pursuant to the August 11, 2022 delegation motion but it does take issue with the SAO’s $249,000 estimate and the method by which it is calculated. First, the SAO estimate fails to account for the number of licensees that were granted extensions but are no longer operational. Second, the estimate does not account for extension fees that were actually collected. Third, the estimate does not factor in that certain licensees qualify for fee waivers or discounts (e.g., [Social Equity Program], [Economic Empowerment Priority Applicants] and [Diverse Business Enterprises]). Fourth, the approach does not account for Medical Marijuana Treatment Centers (MTCs) which are not captured in the MassCIP data, since MTCs are managed in the [Medical Use of Marijuana Program Online System] platform. Several MTCs were billed for extensions as noted above, however, this data is unaccounted for in the SAO analysis.
Notwithstanding these shortcomings, the Commission is committed to conducting a full reconciliation of all administrative extensions to ensure that no prorated fees were missed in this subcategory. This reconciliation is currently underway. Additionally, in response to a recently received OIG letter (received: March 27, 2025) the CCC accepted a recommendation to engage an external auditor and used end-of-[fiscal year] 2025 funds to procure auditing services (CLA) to review pro-rated fees and provisional fees. This engagement should be completed in July-August 2025.
CCC’s Recommendation 3 response was as follows:
Standard Operating Procedures related to collecting prorated fees from administrative extensions were created in April 2025 and have been provided to the SAO. Additionally, the Agency will proceed with public procurement of a [System and Organization Control (SOC)] 2 audit (assuming available funding), but has started preparation for said SOC audit with end-of-[fiscal year] 2025 available funding.
CCC’s Recommendation 4 response was as follows:
As noted above, the Agency’s immediate prioritization of this issue resulted in updates and configurations to MassCIP to allow for collection of fees within the platform. Additionally, payment of extension fees is now required prior to granting an extension. For [Medical Marijuana Treatment Centers (MTCs)], administrative extensions are still being manually processed by Licensing staff since these Licensees are not housed within MassCIP. The Agency has begun the process to move the older MTC’s licensing management from [Medical Use of Marijuana Program Online System (MMJOS)] to MassCIP in order to be able to manage, track and report on all license from one platform. This transition is actively being worked on.
Regarding the [Office of the State Auditor’s] recommendation of prioritizing adequate staffing, the Agency is currently in a hiring freeze, effective May 2025 for the end of [fiscal year] 2025 and the beginning of [fiscal year] 2026 based on a reduction in the operation budget and a flat or reduced operating budget from [fiscal year] 2024 to [fiscal year] 2025 to [fiscal year] 2026. The Agency is not able to achieve adequate staffing or invest in automation due to the ongoing budget restraints; however, the Agency is prioritizing its current resources for hiring purposes and proceeding with public procurement for [information technology] infrastructure (to enhance or replace MMJOS and MassCIP) despite not receiving the funding requested from the Legislature to-date.
CCC’s Recommendation 5 response was as follows:
See response to FINDING 1, Recommendations 1 through 4. The Commission fosters a fair, equitable, and transparent environment through educational bulletins and regulatory reminder bulletins, listening sessions held with Licensees, and discussions at public meetings. Additionally, the Investigations and Compliance team serves as points of contact for each Licensee, providing timely responsiveness to Licensee inquiries.
Auditor’s Reply
the collection of prorated fees. Based on CCC’s response, it has been taking steps to address the concerns expressed in this finding. As part of our post-audit review process, we will follow up on these matters in approximately six months.
CCC’s reliance on outdated systems (MassCIP) and lack of manual reconciliations between licensing data and the Massachusetts Management Accounting and Reporting System (MMARS) created control failures. Budget constraints are valid concerns and create risks for CCC, but they do not remove CCC’s responsibility to design compensating controls (e.g., manual reconciliations, supervisory sign-offs) to prevent missed revenue.
- CCC stated in its response that the previous administration did not have processes and internal controls in place to collect administrative extensions fees. This admission directly supports our finding that CCC lacked adequate controls. For this reason, we were unable to identify the total amount of prorated fees and instead relied on an analysis based on the data CCC was able to make available to us. Our $246,000 figure is not speculation, but is based on a documented, valid analysis that was applied to the 373 extensions that CCC did not consider when it developed its estimate of lost revenue. CCC’s claims that our analysis overstates the amount due (due to waivers, closed licensees, or Medical Marijuana Treatment Centers [MTCs]). This may be true or not, but reflects CCC’s own failure to maintain accurate extension data in written form that is appropriately collected, managed, and reconciled. We state in our report that the actual amount of lost revenue could be higher or lower as a result of CCC’s failure to assemble and maintain appropriate written records of its licensing activities. If CCC had a complete population of data and an appropriate audit trail, estimation would not have been necessary. We encourage CCC to recognize and resolve its own failure to appropriately assemble and maintain its financial documents. CCC used its time responding to attempt to discredit the estimation, which would not have been necessary if CCC actually assembled and maintained appropriate written documentation. CCC and the public would be better served if CCC instead used its time, energy, and resources to focus on improving its operational and financial management.
Regarding the data discrepancies mentioned by CCC in its response:
Non-Operational Licensees
CCC states that our analysis fails to exclude licensees who were granted extensions but are no longer operational. However, the data provided by CCC did not identify which licensees had ceased operations. During interviews with CCC management and licensing staff, the audit team was informed that CCC becomes aware of licensee closures only after licenses are not renewed or balances remain unpaid. Additionally, CCC did not update its licensing system to track closures in real time.
Because this data was unavailable and unquantified, it could not be factored into our analysis. While CCC raises this as a limitation of our analysis, it has similarly not provided a breakdown of these closures, either during the audit or in its written response. Moreover, CCC indicated during a meeting that $168,137.04 in outstanding fees out of the $535,914.49 billed were associated with inactive licensees. However, CCC’s own analysis did not adjust for this amount.
Collected Fees
We did account for collected fees in our analysis. A reduction was applied to reflect fees already paid, based on our analysis of the sample tested. This is explicitly documented in the “Estimated Fees Paid” line item in the table on page 25 of our report. We stand by the reasonableness of our analysis in this regard.
Licensees Eligible for Waivers or Discounts
CCC notes that some licensees may have qualified for fee waivers or discounts (e.g., Social Equity Program, Economic Empowerment Priority Applicants, and Diverse Business Enterprises), which were not reflected in our analysis. However, the data provided by CCC did not identify which licensees were eligible for such waivers. Through discussions with CCC staff members and analysis of MassCIP, we understand that the system does not have a built-in capability to flag waiver eligibility. In the absence of this information, it was not possible for the audit team to apply fee waivers or discounts to our analysis. CCC did not provide any quantified data or list of eligible licensees to support its claim.
Exclusion of MTCs
Our analysis did not include MTCs. As noted in our report, the audit scope was limited to the three primary license types tracked within the MassCIP system—retailers, cultivators, and product manufacturers. MTCs, which are managed in a separate platform, were outside the scope of this audit. Therefore, our analysis accurately reflects the subset of license types under review. Notably, inclusion of MTCs in our analysis would have likely increased the total of uncollected fees.
CCC stated in its response that in July/August 2025 it will have completed an engagement with the audit firm Clifton Larson Allen, during which prorated fees and provisional fees will be reviewed. CCC’s decision to engage with Clifton Larson Allen demonstrates that CCC recognizes that failures exist with respect to prorated fees. We are glad to see that CCC is committed to continuing work in order to address this issue. As part of our post-audit review process, we will follow up on this matter in approximately six months.
- CCC stated that standard operating procedures were provided to us in April 2025 and referenced plans for a System and Organization Control 2 audit. While these are forward-looking steps, they were implemented after the audit period and, therefore, do not change the conditions observed during the review. We appreciate CCC’s commitment to strengthening its controls, and we encourage the agency to ensure that its procedures are applied consistently, fairly, and equitably across all licenses. As part of our standard post-audit follow-up, we will review the progress of these measures in approximately six months, once the new procedures are fully implemented and operational.
CCC stated in its response that it has updated its licensing platform to allow for the collection of fees within the platform, as well as requiring payment prior to an extension being granted. Additionally, CCC stated that it has begun the process of centralizing its licensing management software. As part of our post-audit review process, we will follow up on these matters in approximately six months.
We acknowledge that CCC is currently facing budgetary challenges. We encourage CCC to prioritize oversight of its licensing process to ensure that all licensing staff members perform their job responsibilities in accordance with the updated standard operating procedures described in CCC’s response. As part of our post-audit review process, we will follow up on this matter in approximately six months.
- CCC states that it fosters fairness and transparency through bulletins, listening sessions, and public meetings. Our finding addresses operational control failures, not communication with licensees, which is important in its own right. While outreach efforts are valuable, they were not the subject of this particular audit topic and do not constitute internal controls over fee collection or reconciliations. The absence of a consistent, documented extension fee process (pre-April 2025) undermines CCC’s ability to ensure fair and equitable fee collection and creates the potential appearance of favoritism for certain licensees.
| Date published: | August 14, 2025 |
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