California auditor looks at favoritism, corruption in marijuana permitting process

Andrew Sheeler
·4 min read
3

Good morning and welcome to the A.M. Alert!

AUDIT RECOMMENDS ACTION ON CANNABIS PERMITTING

Via Vik Jolly...

A state audit triggered by instances of corruption and graft at the municipal level in permitting cannabis businesses has come up with recommendations that California cities and counties can use to boost public confidence and stem illegal schemes. The auditor urges steps to prevent favoritism and encourage transparency.

With local officials setting permitting and operating regulations and the state handling the licensing of cannabis businesses after voters in 2016 approved recreational or nonmedical use of cannabis by people 21 and older, the industry and some officials have been swept up in bribery schemes and other illegalities documented in a Los Angeles Times investigation and other media reports.

After zeroing in on two counties and four cities, selected with a mix of geography, size, number of licenses and a variety of permitting processes in mind, recommendations for all California municipalities by State Auditor Grant Parks in his recently released report include:

  • Preventing favoritism and reducing corruption risk by adopting laws and policies to implement processes that consider requiring blind scoring — removing all identifying information during the review process — of cannabis business applicants. The auditor also suggests creating an appeals process, requiring all reviewers to pledge impartiality and declaring they do not have a conflict of interest

  • Protecting public health and safety by requiring all applicants to pass a background check

  • Increasing transparency in issuing permits for applicants and the public by using best practices observed in the cities and counties studied to include publishing all permit-related information, step-by-step guides and fees on public websites.

“Allegations of corruption during the awarding of municipal cannabis operating licenses are far from new, especially in California, where tales of backdoor wheeling-and-dealing between companies and public officials have been circulating for years as legislators work to stand up a regulatory framework for honest brokers,” wrote Assemblyman Reggie Byron Jones-Sawyer, D-Los Angeles.

He chairs the Assembly Committee on Public Safety and made the comments in his February 2023 legislative audit request to “evaluate the equity, fairness, and conflicts of local cannabis licensing.”

The assemblyman could not immediately be reached for comment Friday. The state’s Joint Legislative Audit Committee authorized Jones-Sawyer’s request, directing the state auditor to move forward with a review.

The state Auditor’s Office picked Monterey and Santa Barbara counties and the cities of Fresno, Sacramento, San Diego and South Lake Tahoe, publishing its findings late last month. Among other findings, the office noted that the counties and cities examined “did not always include several best practices in their permitting policies that help to ensure fairness and prevent conflicts of interest, abuse, and favoritism.”

CALIFORNIA HAS HIGH TAXES, BUT OTHER STATES HAVE IT WORSE

Via David Lightman...

Bad and not-as-bad news for California taxpayers on the eve of the April 15 federal income filing: They face the nation’s highest individual tax burden, but their overall tax burden is worse in four other states.

WalletHub, a financial services company. has released its annual look at taxes state by state.

California’s individual income tax rates as a share of personal income are the nation’s highest. The top rate is 13.3% for millionaires, though lower income residents pay a much smaller percentage of their qualifying earnings in tax.

Overall, California drops to fifth because its sales and excise tax burden ranks 37th and its property taxes come in at 23rd. California’s 57.9 cents a gallon tax on gasoline is among the nation’s highest.

Taxpayers have it worse in New York, Hawaii, Vermont and Maine. The tax burden is lowest in Alaska, which has no state income tax and whose sales and excise taxes rank 46th. Seven states have no state tax on income.

The tax burden numbers are compiled using property tax as a share of personal income, individual Income tax as a share of personal income and total sales and excise tax as a share of personal income.

QUOTE OF THE DAY

“As part of a final budget agreement in June, California’s leaders must place a robust and equitable climate bond on the November ballot focused on the people and natural resources most at risk. The science is clear and the world is watching.”

- Katelyn Roedner Sutter, California state director for the Environmental Defense Fund, in a statement.

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