Overview
The issue of prorated fees has persisted for several years. As part of our data request related to the prorated fees, the Cannabis Control Commission (CCC) provided us with data indicating that there were hundreds of extensions approved before July 1, 2022. During our interviews with CCC staff members, CCC indicated that no prorated fees were calculated or charged for this population of extensions.
May 2020 CCC Discussion
Public meeting minutes from May 7, 2020 show that CCC discussed operational relief measures for licensees during the COVID-19 pandemic state of emergency. These discussions included potential strategies to support licensees affected by business disruptions, such as waiving or reducing license fees, extending license expiration dates, and prorating fees when renewal dates were extended. Although CCC did not vote to adopt any formal policy at that time, this is significant to our audit work because it shows that the concepts of license extensions and prorated fees were present in CCC’s policy environment as early as May 2020. These deliberations indicate that CCC had sufficient opportunity and information to have formalized a process for license extension and proration of fees before and after the August 2022 vote to delegate this authority to the executive director.
Extensions Before August 2022
Before August 2022, CCC was responsible for overseeing license extensions, as the statutory language in Section 6(a) of Chapter 94G of the Massachusetts General Laws grants CCC the authority to extend license terms. This activity falls outside the scope of our audit, so we did not evaluate the process or decisions associated with extensions before July 1, 2022. Additionally, CCC did not clearly establish the fee requirement for extensions before July 1, 2022. On August 11, 2022, CCC voted to delegate the authority to extend license expiration dates to the executive director. In accordance with that vote, the executive director issued an internal memorandum describing how this delegated authority would be exercised. Notably, the memorandum stated that any licensee receiving an extension would also be required to pay a prorated license fee to cover the extended term.
Despite this new requirement, and based on our audit work, CCC did not implement a documented policy or process to ensure that prorated fees were calculated, billed, and collected in a consistent manner. Additionally, CCC data provided to us included 479 license extensions granted between May 2020 and August 2022, corresponding to 353 unique license numbers. Although these extensions occurred before the August 2022 delegation, and thus fell outside the scope of our audit, they provide additional context regarding the volume of manual extensions issued before a documented process was in place.
Potential Financial Impact
To assess the potential financial impact, we prepared an estimate of unbilled prorated fees. This estimate was based on the number of extensions, the number of licensees, the average length of extensions by license type, and the average value of calculated prorated fees by license type in the population of calculated prorated fees. The estimated value of uncollected prorated fees for the 479 extensions is approximately $284,000. See the table below for more information.
| License Type | Number of Extensions (Population of 353 Licenses) (A) | Average Length of Extension (B) | Average Length of Extension (C) | Average Extension Value (D) | Estimated Fee (E) (AxD÷CxB) |
|---|---|---|---|---|---|
| Marijuana Cultivator | 143 | 26.03 | 92.32 | $2,405.94 | $ 97,006.14 |
| Marijuana Product Manufacturer | 107 | 27.20 | 98.62 | $2,463.51 | 72,701.27 |
| Marijuana Retailer | 175 | 26.93 | 85.88 | $2,090.14 | 114,698.50 |
| Other | 54 | ||||
| Total Licenses | 479 | ||||
| Total Estimated Fees | $ 284,405.91 |
* This population represents extensions granted before the audit period.
** This population represents extensions that CCC identified during the audit period as cases where fees were (1) due and (2) either paid already or were not yet paid.
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.”
Section 500.103(4)(a) of Title 935 of the Code of Massachusetts Regulations states,
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 before the audit period. 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 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.
| Date published: | August 14, 2025 |
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