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Procurement Oversight in Cannabis Regulatory Bodies

An Audit and Oversight Report — Updated February 2026

EXECUTIVE SUMMARY

Author RN Collins

Contact RN Collins: https://www.linkedin.com/in/rn-collins/

Procurement decisions made by state cannabis regulatory agencies—covering information technology infrastructure, third-party tracking vendors, financial services contractors, and public-private fund managers—represent among the highest-stakes, least-scrutinized expenditure categories in state government. This report examines procurement oversight in five major cannabis regulatory agencies: the Massachusetts Cannabis Control Commission (CCC), New York’s Office of Cannabis Management (OCM) and the Dormitory Authority of the State of New York (DASNY), the California Department of Cannabis Control (DCC), the Washington State Liquor and Cannabis Board (LCB), and the Illinois Cannabis Regulation Oversight Office (CROO) and associated agencies.

The findings reveal four categories of recurrent procurement dysfunction. First, seed-to-sale tracking software contracts have been both the largest individual expenditure categories for cannabis agencies and, in two major states, the sites of failed procurements, inadequate vendor management, and years-long data voids that compromised regulatory effectiveness. Second, public-private financial services contracts—most notably New York’s $200 million Cannabis Social Equity Investment Fund arrangement with DASNY and Chicago Atlantic Group—have allowed private contractors to extract significant returns from public programs designed for social equity, with terms that agency officials themselves warned were likely to harm the borrowing licensees they were designed to help. Third, internal financial controls at cannabis agencies have in multiple cases failed to meet basic standards, producing uncollected revenues, double billing, and undocumented fee waivers. Fourth, vendor consolidation in the seed-to-sale market—now approaching duopoly conditions following the August 2025 Metrc-BioTrack strategic partnership—poses structural risks to competitive procurement in every state that has not locked into long-term contracts.

The Massachusetts CCC audit, published August 14, 2025, is the most comprehensive recent documentation of internal procurement and financial control failures at a cannabis regulatory body.¹ The New York DASNY-Chicago Atlantic procurement, documented in investigative reporting by THE CITY and Senate statements, presents a case study in how public contract structures can produce private gain at the expense of the program’s intended beneficiaries.² Washington LCB’s decade-long failure to procure and implement a functional seed-to-sale tracking system—documented in the 2024 Washington State Auditor follow-up report and further confirmed by the JLARC May 2025 Cannabis Market Study Preliminary Report—illustrates how inadequate project management and leadership turnover can produce cascading procurement failures that persist for nearly twenty years.³ And the emerging market structure of seed-to-sale software, where two Florida-based firms now collectively serve the overwhelming majority of state cannabis markets, raises systemic questions about long-term competitive procurement viability.⁴

[GAP UPDATE — February 2026]: Since the original report, several materially significant developments have occurred. In California, an Orange County Superior Court judge ruled in December 2025 that the DCC’s Metrc-based tracking system does not comply with state law requiring it to flag irregularities indicating possible diversion—directly corroborating concerns raised in the Estes whistleblower litigation.⁵ In Massachusetts, the CCC has been operating under a hiring freeze since May 2025 due to budget constraints, and its FY 2026 budget request for portal replacements remained unfunded as of early 2026, even as the agency reported record adult-use sales of $1.65 billion in 2025 and reached a cumulative $8 billion gross sales milestone at the end of June 2025.⁶ New York’s cannabis market continued its rapid expansion—with combined adult-use and medical sales reaching approximately $1.6 billion in 2025—but the state’s CAURD licensees face a new crisis involving an OCM location-proximity error affecting 152 dispensaries.⁷ President Trump’s December 18, 2025 Executive Order directing expedited rescheduling of cannabis to Schedule III adds a further fiscal variable: the elimination of IRC Section 280E would materially improve operator economics, which could in turn strengthen state fee fund solvency—but final rulemaking was not expected until sometime in 2026 at the earliest.⁸

I. THE PROCUREMENT LANDSCAPE IN CANNABIS REGULATORY AGENCIES

A. Structural Context

State cannabis regulatory agencies occupy a unique position in state government procurement. Their operating budgets are typically funded through cannabis licensing fees, excise tax revenues, and appropriations from cannabis-specific funds rather than general revenue—a self-financing structure that reduces legislative scrutiny of expenditures while making agencies heavily dependent on industry growth to fund their own operations. Massachusetts CCC, for example, received total appropriations of $15,217,877, $19,218,649, and $19,763,742 in fiscal years 2022, 2023, and 2024, respectively—all funded through the Marijuana Regulation Fund rather than the general fund.⁹

These agencies also operate in a domain where the underlying regulated product remains federally prohibited, which creates procurement complications absent from other regulatory contexts. Standard government contractors—banks, accounting firms, IT vendors—may be reluctant to provide services to state cannabis agencies given federal Schedule I classification. The pool of qualified vendors for cannabis-specific functions (tracking software, compliance systems, payment processing) is therefore structurally narrow, with only a handful of specialized firms willing and able to operate in the space.¹⁰ This vendor scarcity, combined with aggressive timelines for standing up new regulatory programs, has repeatedly led states to procure cannabis IT and financial services under conditions that compromise competitive bidding and post-award oversight.

[GAP UPDATE — Rescheduling and Vendor Pool]: President Trump’s December 18, 2025 Executive Order directing the DOJ to reclassify cannabis to Schedule III is expected, when finalized, to reduce some of the federal-conflict frictions that have constrained the vendor pool. The final rescheduling rule is expected in the first half of 2026, though litigation challenges are anticipated.¹¹ Even so, the cannabis-specific IT vendor market—dominated by Metrc and BioTrack—is unlikely to change substantially in the near term. States procuring new systems or renewing contracts in 2026 should explicitly plan for a post-280E operating environment in which better-capitalized operators can support higher-quality compliance systems.

B. Principal Procurement Categories

The major procurement categories for state cannabis regulatory agencies include: (1) seed-to-sale tracking and compliance software; (2) licensing management systems and portals; (3) laboratory testing certification and standardization; (4) public-private capital fund management; and (5) internal audit, legal, and settlement services. Each presents distinct procurement oversight challenges, and each has been the site of documented failures in one or more major cannabis states.

II. SEED-TO-SALE TRACKING PROCUREMENT: WASHINGTON’S DECADE-LONG FAILURE

A. The LEAF Procurement and Its Collapse

Washington State’s cannabis tracking procurement history represents the most extensively documented case of procurement and project management failure in any state cannabis regulatory agency. In 2018, the Washington State Auditor’s performance audit found the LCB was implementing a tracking system “sophisticated enough to highlight risk areas for further investigations by enforcement officers,” capable of automatically flagging suspicious activity such as excessive product donations.¹² That system, known as LEAF, was procured through vendor MJ Freeway (subsequently rebranded as Akerna) and was intended to replace the existing BioTrackTHC platform.

The LEAF procurement failed almost immediately upon launch. The project was overseen by three different sponsors and three different deputy directors in three years, a governance instability that the 2024 Washington State Auditor follow-up report cited as a principal cause of failure.¹³ MJ Freeway “suffered a number of project management and implementation issues,” acknowledged LCB staff in a November 2024 Joint Legislative Audit and Review Committee (JLARC) hearing.¹⁴ The system experienced serious glitches that prevented businesses from making or reporting sales shortly after launch.¹⁵

The Washington State Office of the Chief Information Officer (OCIO) issued a detailed lessons-learned report in 2020 documenting multiple failings at every point in the procurement and implementation of LEAF.¹⁶ Among the project management shortcomings identified were inadequate requirements definition, poor vendor management, lack of clear success metrics, insufficient agency oversight during implementation, and failure to maintain continuity of institutional knowledge through leadership changes.¹⁷ Any one of these issues could have compromised a major software procurement; taken together, they contributed to more than three years of deficiencies in LCB’s primary cannabis tracking tool before the agency abandoned the project entirely.¹⁸

Current LCB leadership inherited these historical problems following significant leadership turnover in multiple essential roles.¹⁹ The 2024 audit found that new leaders were not made aware of the existence of the prior performance audit or the OCIO lessons-learned report—a knowledge gap that directly contributed to the repetition of project management errors in subsequent IT planning.²⁰

B. CCRS: A Stopgap That Became the System

Following the collapse of LEAF, agency executives in 2021 decided to cancel the LEAF project altogether and repurpose an existing data backup system for tracking purposes.²¹ This repurposed system—dubbed the Cannabis Central Reporting System (CCRS)—was described by agency officials as intended to be a temporary measure “for perhaps just one year” until a new system could be procured.²² Instead, CCRS remains the primary tracking system for Washington’s cannabis industry as of 2026.

CCRS’s limitations are severe and well-documented. Enforcement officers lack real-time tracking information. The system is vulnerable to data entry errors, including misplaced decimals in reported sales prices—errors significant enough that CCRS reported annual cannabis sales of approximately $7.7 billion in 2022, while the Department of Revenue independently estimated the same-period figure at approximately $1.3 billion.²³ Licensed cannabis businesses cannot view their own data in the system after upload and must submit a public records request to verify the accuracy of their own submissions.²⁴ Products do not have single identification numbers, complicating product recall tracking.²⁵ CCRS has no API, meaning third-party software providers cannot access the system programmatically.²⁶

LCB does not expect to fully implement a more robust tracking system until 2031—nearly twenty years after Washington voters legalized recreational cannabis.²⁷ The JLARC May 2025 Cannabis Market Study Preliminary Report found that 88 percent of adult-use states use one of two commercial seed-to-sale traceability systems, making Washington a notable outlier that cannot produce the data quality its regulatory responsibilities require.²⁸

[GAP UPDATE — LCB Traceability Planning, 2025–2026]: The JLARC May 2025 preliminary report included a specific recommendation that the LCB submit a plan to legislative committees by December 31, 2025, identifying resources and funding needed to collect accurate data from licensees by December 31, 2026. The LCB’s traceability modernization is structured across three phases: supply chain tracking for 2025–2026; tracing distribution to retail channels for 2027–2028; and full sales and revenue tracing from 2029–2031.²⁹ In parallel, Governor Inslee’s office declined to include new traceability system funding in the proposed FY 2026 budget, prompting Cannabis Observer to note that the “lump of coal” from the Governor may “finally fire up CCRS API development.”³⁰ As of early 2026, LCB had recruited a dedicated Traceability Project Manager but had not yet issued a competitive procurement solicitation for a replacement system. The agency’s ability to achieve the JLARC’s December 2026 data-quality milestone absent a funded procurement remains uncertain.

C. Procurement Lessons from Washington

The Washington LCB experience yields several procurement lessons applicable across state cannabis regulatory contexts. Vendor due diligence must assess not only technical capability but also post-award implementation capacity; MJ Freeway’s ability to contract for LEAF did not predict its ability to deliver it. Contract governance structures—including oversight continuity, escalation pathways, and performance milestones—must be specified in procurement documents and enforced post-award. Leadership turnover within the procuring agency must not be allowed to create knowledge voids about ongoing contracts, and institutional memory about lessons learned from prior procurements must be systematically preserved and transmitted to incoming executives.³¹

III. SEED-TO-SALE MARKET CONSOLIDATION: THE METRC-BIOTRACK DUOPOLY

A. Market Structure and Contract Concentration

The seed-to-sale tracking software market for state cannabis regulatory programs has consolidated into near-duopoly conditions dominated by two Florida-based firms: Metrc, headquartered in Lakeland, and BioTrack, headquartered in Fort Lauderdale.³² As of August 2025, Metrc held contracts with 29 states requiring licensed cannabis operators to use its RFID-tag-based tracking software.³³ BioTrack held contracts with approximately eight states.³⁴

On August 5, 2025, Metrc and BioTrack announced a “strategic partnership” under which a new entity—BT Government—would take over BioTrack’s government-facing operations and operate independently from both Metrc and BioTrack.³⁵ The terms of the deal were not publicly disclosed.³⁶ Following the announcement, Metrc is positioned to operate tracking systems in the overwhelming majority of legal cannabis states. The partnership left state cannabis regulators and licensed operators uncertain about the implications for existing contracts and future competitive procurement.³⁷

New York, previously under contract with BioTrack and in the process of transitioning its BioTrack-based seed-to-sale system, was particularly disrupted. The OCM temporarily halted track-and-trace compliance requirements following the partnership announcement and ultimately delayed implementation from its planned rollout date until at least 2026.³⁸ New York’s deal with BioTrack, signed in late 2022, was worth approximately $1.2 million over five years—a fraction of the $113 million California agreed to pay Metrc for a four-year contract beginning July 1, 2024.³⁹ The extreme disparity in contract values reflects both the scale differences between the two markets and the difference in leverage available to a state procuring a new system versus one extending an established vendor relationship.

B. Illinois: Competitive Procurement and Vendor Transition

Illinois offers a contrasting model of competitive procurement that yielded a vendor transition away from BioTrack to Metrc. After a competitive procurement process, the Illinois Cannabis Regulation Oversight Office issued a Notice of Award to Metrc to provide the state’s seed-to-sale tracking solution.⁴⁰ The proposed solution contemplates transitioning from incumbent BioTrack to Metrc over a 180-day period following contract execution.⁴¹ Illinois’ system is designed to maintain and enhance core IT and business functionalities while adding a regulatory portal for state users, a business portal for licensees, and a consumer portal for public access.⁴² The Illinois experience suggests that competitive procurement is achievable even in a consolidated market, though the outcome—a move to the market-dominant vendor—itself reflects the constraints imposed by a duopolistic market structure.

C. The Metrc Whistleblower Litigation and the California Court Ruling

A federal whistleblower lawsuit filed on April 4, 2025 in the U.S. District Court for the District of Oregon by former Metrc executive vice president Marcus Estes raised significant questions about the adequacy of Metrc’s performance of its state contracts.⁴³ Estes alleged that Metrc possessed the technical capability to automatically identify and flag irregularities in its tracking data—including what he characterized as widespread “burner distro” operations facilitating illegal interstate cannabis diversion in California—but was choosing not to exercise that capability in order to protect its lucrative RFID revenue streams and maintain favorable contractual standing with state clients.⁴⁴

Estes claimed that despite Metrc’s approximately $40 million-per-year contract with California containing a requirement to “flag irregularities,” the company’s executives dismissed his internal concerns, telling him that flagging irregularities was “not our job.”⁴⁵ Metrc disputed the characterizations and described Estes as a terminated employee engaged in retaliation after being dismissed for performance issues.⁴⁶ The Oregon case was dismissed without prejudice on June 9, 2025 by Judge Karin J. Immergut on the ground that the claims overlapped with related litigation Metrc had filed against Estes in U.S. District Court for the Middle District of Florida; that Florida litigation remained pending as of early 2026.⁴⁷

[GAP UPDATE — California Court Ruling, December 2025]: In December 2025, an Orange County Superior Court judge independently ruled that the DCC’s current Metrc-based tracking system does not comply with California state law, which requires the track-and-trace system to flag irregularities that signal possible diversion of legal product to the illicit market.⁴⁸ The lawsuit was brought by a large California cannabis retailer alleging that the DCC had failed to adequately implement the flagging requirements. The ruling—echoing the core allegation in Estes’ whistleblower complaint—suggests that contractual vendor obligations to identify diversion signals are not self-executing and require active state oversight. The DCC had not yet announced changes to its Metrc implementation as of early 2026, though the ruling is expected to prompt contractual and regulatory adjustments.⁴⁹ The allegations, if further substantiated through ongoing litigation, would represent a category of procurement performance failure—a vendor declining to perform core contractual obligations without detection or consequence—with implications for every state relying on Metrc’s platform.

D. RFID Tag Cost-Shifting

A structural feature of Metrc’s and BioTrack’s government contract models that procurement oversight has inadequately addressed is the cost-shifting of RFID tag purchases to licensed operators. Under most state Metrc contracts, the state pays a software-as-a-service fee to the vendor, but licensed operators are additionally required to purchase RFID tags from the vendor to affix to plants and products.⁵⁰ This creates a dual revenue stream for the vendor—government contract payments and mandatory tag sales to regulated businesses—that effectively compels operators to subsidize the vendor’s profit beyond the contracted government fee.

New York operators were particularly vocal about BioTrack’s tag pricing requirements during the state’s attempted transition, noting that a proposed requirement to affix 10-cent identifying tags to nearly every individual product—including individual pre-rolls—would impose costs at a scale inconsistent with the economics of legal cannabis retail.⁵¹ Critics also pointed out that the “sublot” requirement underlying the per-unit tagging mandate was not specified in New York state law.⁵² The OCM ultimately covered up to $250,000 in initial inventory tag purchases as an operator support measure when the BioTrack system first launched in November 2024.⁵³

[GAP UPDATE — New York Metrc Litigation, December 2025]: A lawsuit filed in December 2025 in the Supreme Court of the State of New York challenges the OCM’s implementation of Metrc without public comment or legislative authorization, arguing that the mandatory unique-identifier-per-product requirement (rather than per-batch tracking) will dramatically increase costs for small operators and work against the MRTA’s goals of reducing the illicit market.⁵⁴ The litigation highlights the persistent tension between operational tracking granularity and economic burden on small, equity-focused licensees that has characterized New York’s repeated tracking system delays.

IV. MASSACHUSETTS CCC: INTERNAL FINANCIAL CONTROLS AND FEE COLLECTION FAILURES

A. The August 2025 State Auditor Report

The Massachusetts State Auditor’s Office, under Auditor Diana DiZoglio, published a comprehensive sixty-page audit of the Cannabis Control Commission (CCC) on August 14, 2025, covering the period from July 1, 2022 through June 30, 2024.⁵⁵ The audit documented seven major findings, all of which relate directly to internal financial controls, fee collection, revenue classification, and contract administration.

The CCC regulates what has become an approximately $8 billion cannabis industry in Massachusetts—a cumulative gross sales milestone crossed at the end of June 2025, with the commission also reporting $1.65 billion in adult-use sales in calendar year 2025, a new annual record.⁵⁶ It received total appropriations of approximately $19.8 million in fiscal year 2024, funded through the Marijuana Regulation Fund.⁵⁷ The audit period coincided with a period of extreme institutional dysfunction at the agency: former CCC Chairwoman Shannon O’Brien was hired in September 2022, suspended in September 2023, and fired in September 2024 amid accusations of racially, ethnically, and culturally insensitive statements, as well as contributing to a hostile work environment.⁵⁸ Unsealed court documents showed widespread distrust and interpersonal conflict among senior agency employees during this period.⁵⁹

B. The Prorated Fee Crisis

The audit’s first and most extensively covered finding involved the CCC’s failure to consistently collect prorated license extension fees. On August 11, 2022, CCC commissioners voted to delegate authority to the executive director to administratively extend license expiration dates by up to 120 days, with licensees required to pay a prorated fee to cover the extension period.⁶⁰ CCC licensing staff did not implement this directive. For almost two years—from August 2022 through at least June 2024—the licensing director continued granting extensions without collecting fees, despite the commission’s explicit authorization.⁶¹

The CCC’s own Office of the Inspector General (OIG) investigation, initiated in July 2024 following a hotline complaint, found more than $550,000 in foregone revenue from 159 license extension requests for which prorated fees were not collected.⁶² Inspector General Jeffrey S. Shapiro described the failure as “an egregious operational breakdown” and noted that the “inability of CCC staff to implement a key commission initiative should have been readily apparent to supervisors and commissioners in real time.”⁶³

Additionally, the OIG 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 who were permitted to hold provisional license approvals beyond the 90-day payment deadline without consequences.⁶⁴ As of March 2025, the CCC had collected approximately $320,681 of the originally identified $550,000 in prorated fees, with approximately $170,000 remaining uncollected.⁶⁵ The CCC agreed to retain independent audit firm Clifton Larson Allen to complete a comprehensive fee review, with that engagement expected to conclude in July-August 2025.⁶⁶

The audit’s investigation also found that the prorated fee collection failures were not uniformly distributed—some cannabis businesses were required to pay extension fees while others inexplicably were not, with no records kept of when or why fees were waived.⁶⁷ Auditor DiZoglio’s office characterized this as creating “the appearance of potential favoritism and/or impropriety” that “could erode the public’s trust in CCC.”⁶⁸ In Brookline, for example, the audit found that one cannabis business was required under its host community agreement (HCA) to make a $975,000 charitable donation, while a second business operating in the same municipality faced no such requirement.⁶⁹

C. Financial Reporting and Revenue Classification Failures

Beyond the fee collection deficiencies, the audit found the CCC failed to identify double payments for license fees and did not ensure that revenues were properly coded and classified.⁷⁰ These failures produced financial misstatements and reporting inaccuracies, increased noncompliance risk, and “potential for financial loss or fraud” according to the auditor.⁷¹ The agency did not maintain records of instances when fees were waived, making it impossible to retrospectively reconcile total foregone revenue.⁷²

D. Host Community Agreement Oversight Failures

Chapter 180 of the Acts of 2022 gave the CCC oversight responsibility over Host Community Agreements (HCAs)—contracts between cannabis businesses and the municipalities in which they operate, which may specify hours of operation, security plans, community impact fees (CIFs), and charitable contributions.⁷³ The CCC’s HCA oversight authority became effective November 10, 2022.⁷⁴ However, the CCC did not begin reviewing HCAs until March 1, 2024—more than fifteen months after its oversight authority was established.⁷⁵ Noncompliant HCAs containing unenforceable language and impermissible provisions remained in effect for between four and sixteen months longer than permitted under state law.⁷⁶

The CCC opted to begin reviewing Community Impact Fee (CIF) documentation within HCAs at least six months after starting the HCA review process—not until November 2024.⁷⁷ State law caps CIFs at three percent of gross sales; the audit found HCAs requiring mandated charitable donations or municipal contributions above the statutory cap were not identified and remediated in a timely manner.⁷⁸

E. Settlement Agreement Documentation Deficiencies

The audit identified a lack of documented process for at least three employee settlement agreements entered into between 2019 and 2024, one of which was for nearly $93,000.⁷⁹ As an agency of the Commonwealth, the CCC is subject to Chapter 258 of the General Laws and the Comptroller’s “Settlements and Judgments Policy” requiring documentation of settlement processes and approvals.⁸⁰ The absence of documentation for these agreements—involving allegations related to defamation, invasion of privacy, and family medical leave rights—raises concerns about the adequacy of authorization and review for public expenditures on employee litigation.⁸¹

F. Technology Procurement and Infrastructure Needs — Updated Status

The CCC’s existing technology infrastructure was identified in the audit as inadequate for an agency regulating an industry that has now reached $8 billion in cumulative gross sales. The commission sought funds in both its fiscal year 2025 and fiscal year 2026 state budget requests to update or replace its adult-use licensing portal (MassCIP) and its medical marijuana platform (MMJOS), but neither request was granted.⁸²

[GAP UPDATE — Hiring Freeze and Procurement Status, 2025–2026]: The CCC confirmed in response to the audit that it has been operating under a hiring freeze since May 2025 through the beginning of FY 2026 due to a reduction in its operating budget. The agency stated it is “not able to achieve adequate staffing or invest in automation due to the ongoing budget restraints,” while simultaneously proceeding with a public procurement process for IT infrastructure upgrades and exploring potential funding through the Executive Office of Technology Services and Security (EOTSS).⁸³ The commission’s FY 2026 budget request of $30.08 million—which would have funded 21 new positions, expanded product testing, updated platforms, and social equity programming—was not funded at that level, deepening the agency’s operational squeeze.⁸⁴ Standard Operating Procedures for prorated fee collection were created in April 2025, and the CCC completed preparation for a System and Organization Control (SOC) 2 audit using end-of-FY 2025 available funding.⁸⁵ Additionally, in December 2025, the CCC unanimously approved final regulations for on-site cannabis consumption, creating three new social consumption license types—Supplemental, Hospitality, and Event Organizer—with regulations taking effect January 2, 2026.⁸⁶ This expansion of the regulatory mandate further increases the operational and technology demands on an agency already constrained by budget shortfalls and inadequate IT infrastructure.

V. NEW YORK: THE DASNY-CHICAGO ATLANTIC PROCUREMENT CONTROVERSY

A. The $200 Million Cannabis Social Equity Investment Fund

New York’s most consequential cannabis procurement was not a software contract but a public-private financing arrangement: the New York Cannabis Social Equity Investment Fund, authorized by statute and administered by DASNY, designed to finance the construction and lease of retail dispensary storefronts for CAURD licensees.⁸⁷ Reuben McDaniel, then-head of DASNY, proposed and designed the fund, projecting a $200 million vehicle with private equity participation to finance the first 150 dispensaries.⁸⁸

DASNY selected Chicago Atlantic Group—a Chicago-based private equity firm—as the fund’s private capital partner, committing $50 million in private financing.⁸⁹ As of May 1, 2024, approximately $27 million had been funded.⁹⁰ The state was responsible for repaying Chicago Atlantic at a 15 percent interest rate even as CAURD licensing approvals stalled and the fund failed to deploy capital at its planned pace.⁹¹

B. Terms That State Officials Warned Were Predatory

Investigative reporting by THE CITY, published April 24, 2024, based on confidential documents obtained from the fund, revealed the specific terms of the Chicago Atlantic deal and documented internal agency objections that were apparently disregarded.⁹² According to THE CITY’s reporting, OCM’s own legal counsel warned internally about a high likelihood of defaults that the state would be on the hook for.⁹³ Internal emails showed state officials raising flags about inflated construction costs and loan terms that made repayment unrealistic given projected revenue.⁹⁴

In one documented case, a dispensary build-out with construction and design costs of approximately $1.7 million resulted in a total loan obligation of approximately $2.1 million after additional fees and expenses—approximately double the high end of the range that DASNY and the fund had previously communicated to licensees.⁹⁵ CAURD licensees were not informed of the final lending rate before being expected to accept a DASNY-selected location or join the program.⁹⁶ Construction work was done by ten firms pre-selected through DASNY’s request-for-proposal process, removing operators’ ability to negotiate costs or select contractors.⁹⁷

State Senators Liz Krueger and Gustavo Rivera issued a statement characterizing the fund terms as “clearly predatory loan agreements,” noting that CAURD licensees faced “an impossible choice: enter the market without financial support, or sign a deal that offered zero control of design, buildout, or auxiliary costs with loan amounts that ballooned beyond realistic revenue projections.”⁹⁸ Reinvent Albany senior policy advisor Rachael Fauss observed that “the state is taking on all of the risk,” with the private entity—Chicago Atlantic—capturing the benefits.⁹⁹

C. Outcomes: 21 Dispensaries for $78 Million — and Continuing Fallout

Against a goal of 150 dispensaries, the SEIF ultimately delivered 21 operational dispensaries at a reported cost of approximately $78 million.¹⁰⁰ DASNY signed leases for only 24 properties by the end of December 2024 and subsequently stopped seeking new leases through the fund.¹⁰¹ In May 2024, DASNY announced a restructuring under which Chicago Atlantic would instead purchase properties for future dispensaries, collect rent from operators, and allow licensees to pursue their own build-outs.¹⁰² New York State Senate Finance Committee Chair Liz Krueger, learning of this structural change during a confirmation hearing for incoming DASNY CEO Robert Rodriguez, stated that the change was “a new concept” she had “never heard of.”¹⁰³

The fund’s failure contributed to the termination of OCM’s executive leadership. OCM Executive Director Chris Alexander did not return when his term expired in September 2024.¹⁰⁴ Acting Executive Director Felicia Reid was pushed out in December 2025 following a separate regulatory management failure involving the OCM’s enforcement case against Omnium, which resulted in a failed product recall and withdrawn disciplinary action.¹⁰⁵

[GAP UPDATE — CAURD Dispensary Location Crisis, 2025–2026]: A new crisis emerged in late 2025 and early 2026 when the OCM notified 152 CAURD dispensaries that an error in how the agency measured school proximity setbacks—switching from front-door to property-line measurements—potentially threatened their license validity. Governor Hochul publicly characterized the episode as “a major screw up” and pledged that existing dispensaries would not be punished for the failures of past OCM leadership.¹⁰⁶ At least one dispensary owner with a DASNY fund loan specifically cited the proximity notification as threatening his ability to repay that loan obligation.¹⁰⁷ Legislation was introduced requiring the OCM to act on proximity applications within 30 days (with automatic approval absent action if setback requirements are met) and requiring DASNY to publish and weekly update a list of executed lease addresses for CAURD licensees.¹⁰⁸ These developments further illustrate how procurement failures—in this case, the SEIF’s financial structure—compound with regulatory management failures to threaten the viability of social equity licensees.

D. Seed-to-Sale: New York’s Repeated Delays

New York launched legal adult-use cannabis sales in December 2022 without a functional seed-to-sale tracking system—a procurement failure that contributed to ongoing product inversion and diversion problems in the state’s market.¹⁰⁹ The state subsequently contracted with BioTrack and required licensees to obtain third-party inventory tracking systems capable of integrating with BioTrack’s API by January 17, 2025.¹¹⁰ The OCM covered up to $250,000 in inventory tag purchases to ease the transition.¹¹¹

Following the August 5, 2025 Metrc-BioTrack strategic partnership announcement—which raised uncertainty about the continuity and governance of BioTrack’s government operations—the OCM delayed the BioTrack system’s mandatory adoption and ultimately shifted to Metrc as its track-and-trace vendor.¹¹² Retail licensees were required to be credentialed in Metrc by December 17, 2025, with existing inventory entered by January 12, 2026.¹¹³ This represents at least the third time New York regulators delayed seed-to-sale tracking.¹¹⁴

VI. CALIFORNIA: THE $100 MILLION GRANT PROCUREMENT OVERSIGHT FAILURE

A. Staffing and Administrative Failures

California State Auditor Grant Parks documented in Report No. 2023-048, published August 2024, that the DCC administered its $100 million Local Jurisdiction Assistance Grant Program with only two people tasked with part-time grant management responsibilities at the time of initial administration.¹¹⁵ This understaffing was a root cause of the audit’s finding that “DCC approved questionable spending plans and advanced grant funds to recipients who were not prepared to receive them” and that “DCC had not scrutinized grantee expenditures and did not monitor grantees’ progress toward defined goals.”¹¹⁶

After the State Auditor communicated concerns to DCC during the audit process, the agency hired four additional staff members, bringing the total to six people working on the Grant Program.¹¹⁷ The follow-up report (2024-048, published February 2025) found continued problems in grant closeout and financial accountability, with $4,094,936.57 in unspent and ineligible expenditures returned from six of seventeen grant agreements as of August 2025.¹¹⁸

The follow-up audit published November 2025 (Report No. 2025-048) directed the DCC to implement a transparency process for publicly reporting on its website the final amounts disbursed, used, recaptured, and returned for each local jurisdiction—a basic accountability measure absent from the program’s original design.¹¹⁹

B. The Humboldt County Subgrant Issue

The California audits identified a specific grant procurement compliance issue involving Humboldt County’s use of LJAG funds for subgrants to cannabis businesses that had already obtained annual state licenses—a use the State Auditor concluded did not align with the legislative intent of the program.¹²⁰ The DCC approved Humboldt County’s subgrant approach, determining that it “furthered the intent of the Grant Program.”¹²¹ The State Auditor disagreed, noting that providing subgrants to businesses that had already obtained annual state licenses fell outside the scope for which the Legislature appropriated LJAG funds.¹²²

C. The Metrc Contract and the December 2025 Court Ruling

California’s four-year Metrc contract, beginning July 1, 2024, is worth $113.6 million, at an annual contract value not to exceed $28.4 million.¹²³ With an option for a two-year extension, the full potential contract value is approximately $170 million.¹²⁴ This is the largest cannabis tracking software contract in the country and represents the single largest vendor contract for any state cannabis regulatory body.

[GAP UPDATE — Court Ruling on DCC’s Track-and-Trace Obligations]: In December 2025, an Orange County Superior Court judge ruled that the DCC’s current Metrc-based tracking system does not comply with state law requiring the system to flag irregularities signaling possible diversion of legal product to the illicit market.¹²⁵ The lawsuit was brought by a large California cannabis retailer. As of early 2026, the DCC had not yet announced modifications to its Metrc contract or implementation to address the court’s findings.¹²⁶ The ruling—combined with the Estes whistleblower litigation’s allegations that Metrc executives explicitly declined to flag irregularities as “not our job”—presents a convergent picture of vendor non-performance in a core regulatory function that California taxpayers are paying up to $28.4 million per year to receive. Additionally, the DCC’s FY 2025-26 budget (approximately $169 million) faces a structural deficit: Governor Newsom proposed shifting enforcement funding from the Cannabis Control Fund to the Cannabis Tax Fund—a move designed to relieve the fund balance pressure caused by the fund’s declining trajectory ($154.3 million in FY 2023-24 to a projected $82.4 million in FY 2025-26)—while simultaneously authorizing the DCC to shut down illegal operations and collect background information on properties used for illicit cultivation.¹²⁷

VII. CROSS-CUTTING FINDINGS AND RECOMMENDATIONS

A. The Narrow Vendor Pool Problem

Every major procurement dysfunction identified in this report was materially worsened by the narrow pool of qualified cannabis-specific vendors. Washington LCB’s inability to quickly replace LEAF was partly attributable to the limited supply of cannabis tracking platforms willing to work in the regulated space. New York’s repeated seed-to-sale delays were compounded by disruptions in a market dominated by two vendors, one of which was in the process of restructuring its government-facing operations. Massachusetts CCC’s technology upgrade needs go unaddressed in part because the procurement process for specialized cannabis regulatory technology is complex and slow.

Addressing vendor pool limitations requires states to coordinate procurement planning across agencies, share contract terms, and explore whether federal frameworks—such as a national cannabis regulatory technology clearinghouse, which would require Congressional action—could improve market competition. The December 18, 2025 Executive Order directing cannabis rescheduling to Schedule III, if finalized, may modestly broaden the pool of technology vendors willing to engage the cannabis regulatory sector by reducing federal-conflict risks.¹²⁸

B. Governance Continuity and Institutional Memory

Washington LCB’s procurement failures were demonstrably worsened by leadership turnover that created knowledge gaps about prior audits and lessons-learned reports.¹²⁹ Massachusetts CCC’s fee collection failures persisted for two years partly because supervisors were described as “agnostic” to the issue and focused on other priorities.¹³⁰ Both failures reflect organizational cultures in which procurement and financial control responsibilities were insufficiently institutionalized relative to operational demands. Cannabis regulatory agencies should be required to maintain comprehensive contract management registries and to provide structured briefings on active procurements and prior procurement failures to all incoming senior executives.

C. Public-Private Contract Transparency

The New York DASNY-Chicago Atlantic arrangement illustrates the risk of public-private cannabis contracts that prioritize speed of deployment over transparent terms. The financial terms of the Chicago Atlantic deal—including the 15 percent interest rate and the structure whereby Chicago Atlantic would receive the full return on licensees’ borrowing costs, despite holding only a 75 percent portfolio stake—were not disclosed publicly when the arrangement was announced.¹³¹ State procurement laws governing DASNY financial engagements did not appear to require public disclosure of these terms, and the Legislature learned of a major structural change to the program only by accident during a confirmation hearing.¹³² Cannabis public-private fund contracts should require full disclosure of all financial terms, rate structures, and performance expectations as a condition of contract execution.

D. Fee Collection and Revenue Reconciliation Controls

The Massachusetts CCC audit’s finding that over $550,000 in prorated fees went uncollected for two years without detection reflects a failure of basic revenue reconciliation controls. Every cannabis regulatory agency should maintain a comprehensive fee registry tracking all licenses, applicable fee amounts, collected amounts, and authorized waivers—with reconciliation against licensee records performed at minimum on a quarterly basis. Waivers should require documented authorization at the supervisory level and should be reported to commissioners or equivalent governing bodies.

E. Recommendations

1. Mandatory Procurement Documentation. State cannabis regulatory agencies should maintain a publicly accessible contract registry listing all active contracts, contract values, vendor names, performance metrics, and audit rights. Procurements above a defined threshold (e.g., $1 million) should require independent review by the state auditor prior to execution.
2. Seed-to-Sale Market Competition Policy. States should adopt multi-vendor cannabis tracking frameworks where feasible, or at minimum require competitive solicitation at every contract renewal rather than sole-source renewals. Contract terms should require vendors to provide state agencies with direct access to all regulatory data independent of the vendor’s platform—eliminating data-hostage dynamics that increase vendor leverage at renewal. Contract terms should specifically require vendors to actively flag irregularities indicative of diversion, with enforceable performance standards and third-party audit rights, in light of both the Estes whistleblower litigation and the December 2025 California court ruling finding Metrc’s current implementation noncompliant with state diversion-flagging requirements.
3. Whistleblower Response Protocols. State cannabis regulatory agencies that receive whistleblower complaints regarding vendor performance of compliance tracking obligations should be required to investigate within a defined timeframe and to report findings to the legislature.
4. Public-Private Fund Governance. Any public fund managed by a private equity partner using state authorization should be subject to full financial disclosure requirements, including all interest rates, fee structures, return allocation mechanisms, and performance targets. Legislative committees should receive annual independent reports on fund performance. No major structural changes to fund operations should be permitted without prior legislative notice.
5. Technology Budget Protection. Cannabis regulatory agencies should establish dedicated technology reserve funds within their budget structures to ensure that IT upgrades and replacements can proceed on a scheduled basis without dependence on unpredictable annual appropriations. The Massachusetts CCC’s inability to upgrade its portals due to unmet budget requests—despite regulating an industry generating $1.65 billion in annual adult-use sales and having reached $8 billion in cumulative sales—represents a structural vulnerability that periodic emergency appropriations cannot adequately address.

ENDNOTES

¹ Mass. State Auditor’s Office, Audit of the Cannabis Control Commission (Audit No. 2025-1477-3S, Aug. 14, 2025), https://www.mass.gov/doc/audit-report-cannabis-control-commission/download.

² Rosalind Adams, How Private Equity Trumped Social Equity in State Cannabis Deal, THE CITY (Apr. 24, 2024), https://www.thecity.nyc/2024/04/24/cannabis-fund-social-equity-dispensary/.

³ Wash. State Auditor’s Office, Evaluating Oversight of the Cannabis Industry: Follow-Up Issues (Oct. 2024), https://sao.wa.gov/reports-data/audit-reports/evaluating-oversight-cannabis-industry-follow-issues; JLARC, Cannabis Market Study Preliminary Report (May 2025), https://leg.wa.gov/JLARC/reports/2025/CannabisMarket/p_a/print.pdf.

⁴ ‘Partnership’ or Consolidation? Cannabis Software Deal Leaves Industry Guessing, MJBizDaily (Aug. 7, 2025), https://mjbizdaily.com/news/consolidation-or-partnership-cannabis-software-deal-leaves-industry-guessing/406235/.

⁵ California Cannabis Regulation News, Orange County Judge Rules DCC Track-and-Trace System Non-Compliant (Jan. 2026), https://cannabis.lacity.gov/articles/january-2026-news-bulletin.

⁶ Mass. Cannabis Control Commission, Massachusetts Adult-Use Cannabis Sales Generated $1.65 Billion Total in 2025 (Jan. 9, 2026), https://masscannabiscontrol.com/2026/01/massachusetts-adult-use-cannabis-sales-generated-1-65-billion-in-2025/; Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1 (agency response noting hiring freeze effective May 2025), https://www.mass.gov/info-details/cannabis-control-commission-finding-1.

⁷ N.Y. OCM, 2025 Annual Report (Dec. 31, 2025), https://cannabis.ny.gov/system/files/documents/2025/12/cannabis-control-board-and-office-of-cannabis-management-release-2025-annual-report.pdf; News10, Governor Says Cannabis Dispensaries Will Not Face Closures (Aug. 2025), https://www.news10.com/news/ny-news/ocm-enforcement-change-threatens-cannabis-dispensaries/amp/.

⁸ Executive Order, Increasing Medical Marijuana and Cannabidiol Research (Dec. 18, 2025), summarized at Goodwin LLP, Bye-Bye 280E (Dec. 23, 2025), https://www.goodwinlaw.com/en/insights/publications/2025/12/alerts-practices-can-bye-bye-280e.

⁹ Mass. State Auditor’s Office, Overview of Audited Entity, https://www.mass.gov/info-details/audit-of-the-cannabis-control-commission-overview-of-audited-entity-0.

¹⁰ Clark Hill PLC, The Growing Cybersecurity Risks in the Cannabis Industry (2025), https://www.clarkhill.com/news-events/news/the-growing-cybersecurity-risks-in-the-cannabis-industry/.

¹¹ AAFCPAs, Executive Order to Reschedule Cannabis: What It Means for IRC 280E (Dec. 19, 2025), https://www.aafcpa.com/2025/12/19/executive-order-to-reschedule-cannabis-what-it-means-for-irc-280e/.

¹² Wash. State Auditor’s Office, State’s Cannabis Tracking System Falls Short of Long-Sought Goals, Audit Finds (Oct. 22, 2024), https://sao.wa.gov/the-audit-connection-blog/states-cannabis-tracking-system-falls-short-long-sought-goals-audit-finds.

¹³ Wash. State Auditor’s Office, Evaluating Oversight of the Cannabis Industry: Follow-Up Issues, supra note 3.

¹⁴ JLARC I-900 Subcommittee, Public Hearing on Oversight of the Cannabis Industry (Nov. 6, 2024), Cannabis Observer summary, https://cannabis.observer/observations/92200-jlarc-i-900-subcommittee-public-hearing-november-6-2024-oversight-of-the-cannabis-industry/.

¹⁵ Washington’s Marijuana Tracking System Is Unreliable, Auditors Report Says, Marijuana Moment (Oct. 26, 2024), https://www.marijuanamoment.net/washingtons-marijuana-tracking-system-is-unreliable-auditors-report-says/.

¹⁶ Wash. Office of the Chief Information Officer (OCIO), Leaf Data Systems Lessons Learned Report (2020), cited in Wash. State Auditor’s Office, supra note 3.

¹⁷ Id.

¹⁸ Id.

¹⁹ Wash. State Auditor’s Office, Evaluating Oversight, supra note 3.

²⁰ Id.

²¹ Washington’s Marijuana Tracking System Is Unreliable, supra note 15.

²² Id.

²³ Wash. State Auditor’s Office, State’s Cannabis Tracking System Falls Short, supra note 12.

²⁴ Wash. State Liquor and Cannabis Board, CCRS FAQ, https://lcb.wa.gov/ccrs/faq.

²⁵ Wash. State Auditor’s Office, State’s Cannabis Tracking System Falls Short, supra note 12.

²⁶ Wash. LCB, CCRS FAQ, supra note 24 (“There is no Application Programming Interface (API) for CCRS.”).

²⁷ Wash. State Auditor’s Office, Evaluating Oversight, supra note 3.

²⁸ JLARC, Cannabis Market Study Preliminary Report (May 2025), supra note 3, at 3–4.

²⁹ WSLCB Communications, CCRS and the Future of Cannabis Traceability (Medium, Jan. 18, 2024), https://medium.com/wslcb-topics-and-trends/ccrs-and-the-future-of-cannabis-traceability-00b76b03235a (describing phased traceability modernization roadmap); JLARC Cannabis Market Study Preliminary Report, supra note 3 (recommending LCB submit data resource plan by December 31, 2025).

³⁰ Cannabis Observer, WA Legislature (February 2, 2026) Update, https://cannabis.observer/organizations/1134-washington-state-liquor-and-cannabis-board/ (noting Governor’s budget omission may prompt CCRS API development).

³¹ Wash. State Auditor’s Office, Evaluating Oversight, supra note 3.

³² ‘Partnership’ or Consolidation?, supra note 4.

³³ Metrc & BioTrack, Strategic Partnership Press Release (Aug. 5, 2025), https://www.metrc.com/news/metrc-and-biotrack-announce-strategic-partnership/.

³⁴ ‘Partnership’ or Consolidation?, supra note 4.

³⁵ Metrc & BioTrack, Strategic Partnership Press Release, supra note 33.

³⁶ Id.

³⁷ ‘Partnership’ or Consolidation?, supra note 4.

³⁸ New York Delays Marijuana Track-and-Trace Until 2026 After Surprise Deal, MJBizDaily (Sept. 10, 2025), https://mjbizdaily.com/following-surprise-deal-new-york-delays-cannabis-track-and-track-until-2026.

³⁹ Id.

⁴⁰ Ill. Cannabis Regulation Oversight Office, Procurements, https://cannabis.illinois.gov/legal-and-enforcement/procurements.html.

⁴¹ Id.

⁴² Id.

⁴³ Estes v. Metrc, Inc., No. 3:25-cv-00556 (D. Or., filed Apr. 4, 2025).

⁴⁴ Metrc Allowing Rampant Illegal Marijuana Activity, Lawsuit Claims, MJBizDaily (Apr. 11, 2025), https://mjbizdaily.com/metrc-allowing-rampant-illegal-marijuana-activity-former-exec-claims-in-lawsuit/.

⁴⁵ Id.

⁴⁶ Id.

⁴⁷ Whistleblower Lawsuit Against Cannabis Firm Metrc Dismissed, MJBizDaily (June 10, 2025), https://mjbizdaily.com/whistleblower-lawsuit-against-cannabis-firm-metrc-dismissed/.

⁴⁸ California Cannabis Regulation News, January 2026 News Bulletin (cannabis.lacity.gov), supra note 5.

⁴⁹ Id.

⁵⁰ Cannabis Seed-to-Sale Is Becoming a Duopoly, CRB Monitor News, https://news.crbmonitor.com/2023/05/cannabis-seed-to-sale-is-becoming-a-duopoly/.

⁵¹ New York Delays Marijuana Track-and-Trace Until 2026, supra note 38.

⁵² Id.

⁵³ N.Y. OCM, Press Release: BioTrack Seed-to-Sale Tracking (Nov. 18, 2024), https://cannabis.ny.gov/system/files/documents/2024/11/bio-track-seed-to-sale-press-release.pdf.

⁵⁴ Rockland County Business Journal, Hudson Valley Cannabis News (Jan. 2, 2026), https://rcbizjournal.com/2026/02/21/hudson-valley-cannabis-news/ (describing December 2025 lawsuit against OCM Metrc implementation).

⁵⁵ Mass. State Auditor’s Office, Audit of the Cannabis Control Commission, supra note 1.

⁵⁶ Mass. CCC, Massachusetts Adult-Use Cannabis Sales Generated $1.65 Billion Total in 2025, supra note 6.

⁵⁷ Mass. State Auditor’s Office, Overview of Audited Entity, supra note 9.

⁵⁸ In Wake of Critical Audit, Cannabis Commission Shares Progress, WBUR (Aug. 19, 2025), https://www.wbur.org/news/2025/08/19/cannabis-commission-critical-audit.

⁵⁹ Id.

⁶⁰ Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1, supra note 8.

⁶¹ Id.

⁶² Mass. OIG, Letter from IG Shapiro to CCC Executive Director Ahern and Chair Stebbins (Mar. 27, 2025), https://www.mass.gov/doc/ccc-failed-to-collect-prorated-and-provisional-license-fees/download.

⁶³ Mass. OIG, OIG Finds Poor Management at CCC Resulted in Failure to Collect Fees for Two Years, Press Release (Mar. 27, 2025).

⁶⁴ State Inspector General Finds Cannabis Control Commission Failed to Collect Up to $1.75 Million in Licensing Fees, Boston Globe (Mar. 27, 2025).

⁶⁵ Mass. Inspector General Calls on Cannabis Regulators to Conduct an Audit, CommonWealth Beacon (Mar. 28, 2025).

⁶⁶ Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1, supra note 8.

⁶⁷ 7 Key Takeaways from the Mass. Cannabis Control Commission Audit, Boston.com (Aug. 21, 2025).

⁶⁸ Id.

⁶⁹ State Auditor Finds Widespread Mismanagement at Cannabis Control Commission, Boston Globe (Aug. 14, 2025).

⁷⁰ Mass. State Auditor’s Office, Audit Identifies Mismanagement, Press Release (Aug. 14, 2025).

⁷¹ Id.

⁷² Id.

⁷³ Mass. Gen. Laws ch. 94G, § 3.

⁷⁴ Mass. State Auditor’s Office, Audit of the Cannabis Control Commission, supra note 1.

⁷⁵ Id.

⁷⁶ Id.

⁷⁷ Mass. State Auditor’s Office, Overview of Audited Entity, supra note 9.

⁷⁸ Mass. Gen. Laws ch. 94G, § 3; Mass. State Auditor’s Office, Audit of the Cannabis Control Commission, supra note 1.

⁷⁹ State Auditor Finds Widespread Mismanagement at CCC, Boston Globe, supra note 69.

⁸⁰ Mass. Gen. Laws ch. 258; 815 CMR 5.00.

⁸¹ State Auditor Finds Widespread Mismanagement at CCC, Boston Globe, supra note 69.

⁸² Cannabis Commission Cites Progress in Wake of Critical Audit, WBUR, supra note 58; Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1, supra note 8.

⁸³ Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1, supra note 8 (agency response noting hiring freeze effective May 2025 and MassCIP/MMJOS procurement status).

⁸⁴ Mass. CCC, FY 2026 Budget Request Focuses on Critical Industry Issues (Mar. 12, 2025), https://masscannabiscontrol.com/2025/03/massachusetts-cannabis-control-commission-fy-2026-budget-request-focuses-on-critical-industry-issues/.

⁸⁵ Mass. State Auditor’s Office, Cannabis Control Commission—Finding 1, supra note 8 (SOPs created April 2025; SOC 2 audit preparation commenced).

⁸⁶ Mass. CCC, Cannabis Control Commission Unanimously Approves Final Social Consumption Regulations (Dec. 11, 2025), https://masscannabiscontrol.com/2025/12/massachusetts-cannabis-control-commission-unanimously-approves-final-social-consumption-regulations/.

⁸⁷ N.Y., Social Equity Cannabis Investment Fund, DASNY (2022), https://www.dasny.org/index.php/opportunities/rfps-bids/2022/new-york-social-equity-cannabis-investment-fund.

⁸⁸ Rosalind Adams, State Cannabis Officials Repeatedly Raised Alarms, THE CITY (June 11, 2024).

⁸⁹ NYC Launches Social Equity Cannabis Loan Fund as State Pauses Its Program, CRB Monitor News (July 5, 2024).

⁹⁰ Id.

⁹¹ Id.

⁹² Rosalind Adams, How Private Equity Trumped Social Equity in State Cannabis Deal, THE CITY, supra note 2.

⁹³ Adams, State Cannabis Officials Repeatedly Raised Alarms, THE CITY, supra note 88.

⁹⁴ Id.

⁹⁵ Adams, How Private Equity Trumped Social Equity, THE CITY, supra note 2.

⁹⁶ NYC Launches Social Equity Cannabis Loan Fund, supra note 89.

⁹⁷ Id.

⁹⁸ N.Y. Sen. Krueger and Rivera, Statement on Concerns Regarding the NYS Cannabis Social Equity Fund (June 2024), https://www.nysenate.gov/newsroom/press-releases/2024/gustavo-rivera/senators-krueger-and-riveras-statement-concerns.

⁹⁹ Adams, How Private Equity Trumped Social Equity, THE CITY, supra note 2.

¹⁰⁰ 2024 New York Cannabis Equity Wrapped, The Other Magazine (Apr. 2, 2025).

¹⁰¹ NYC Launches Social Equity Cannabis Loan Fund, supra note 89.

¹⁰² DASNY Taps Private Equity Firm Chicago Atlantic as Dispensary Landlord, Commercial Observer (May 24, 2024).

¹⁰³ Id.

¹⁰⁴ NYC Launches Social Equity Cannabis Loan Fund, supra note 89.

¹⁰⁵ Hudson Valley Cannabis News, Rockland County Business Journal (Dec. 28, 2025), https://rcbizjournal.com/2025/12/26/hudson-valley-cannabis-news/.

¹⁰⁶ News10, Governor Says Cannabis Dispensaries Will Not Face Closures, supra note 7.

¹⁰⁷ Id.

¹⁰⁸ Rockland County Business Journal, Hudson Valley Cannabis News (Feb. 21, 2026), https://rcbizjournal.com/2026/02/21/hudson-valley-cannabis-news/.

¹⁰⁹ New York Delays Marijuana Track-and-Trace Until 2026, supra note 38.

¹¹⁰ N.Y. OCM, Press Release: BioTrack Seed-to-Sale Tracking, supra note 53.

¹¹¹ Id.

¹¹² N.Y. OCM, Seed-to-Sale (Metrc), https://cannabis.ny.gov/seed-to-sale.

¹¹³ Id.

¹¹⁴ New York Delays Marijuana Track-and-Trace Until 2026, supra note 38.

¹¹⁵ Cal. State Auditor, Report No. 2025-048: Cannabis Business Licensing (Nov. 2025), https://www.auditor.ca.gov/reports/2025-048/.

¹¹⁶ Id.

¹¹⁷ Id.

¹¹⁸ Cal. State Auditor, Report Responses: 2024-048, https://www.auditor.ca.gov/reports/responses-2024-048-all/.

¹¹⁹ Cal. State Auditor, Report Responses: 2025-048, https://www.auditor.ca.gov/reports/responses-2025-048-all/.

¹²⁰ Cal. State Auditor, Report No. 2025-048, supra note 115.

¹²¹ Id.

¹²² Id.

¹²³ THCFarmer, Metrc Lands $113M Deal to Continue Cannabis Tracking Services in California (July 2024).

¹²⁴ Id.

¹²⁵ California Cannabis Regulation News, January 2026 News Bulletin, supra note 5.

¹²⁶ Id.

¹²⁷ ArentFox Schiff, California’s Cannabis Crackdown: Record Seizures and Budget Reforms Aim to Level the Playing Field (May 20, 2025), https://www.afslaw.com/perspectives/alerts/californias-cannabis-crackdown-record-seizures-and-budget-reforms-aim-level-the; California Dep’t of Finance, Fund Condition Statement: Cannabis Control Fund (3288), Governor’s Budget 2025-26.

¹²⁸ Goodwin LLP, Bye-Bye 280E, supra note 8.

¹²⁹ Wash. State Auditor’s Office, Evaluating Oversight, supra note 3.

¹³⁰ Mass. OIG Letter, supra note 62.

¹³¹ DASNY Taps Chicago Atlantic as Dispensary Landlord, Commercial Observer, supra note 102.

¹³² Id.