Wednesday, July 24, 2024

Mendo’s Cannabis Department Faces Declining Revenue, Budget Overages, and a Multi-Million Dollar Reporting Error

(Left to Right) 4th District Supervisor Dan Gjerde, 1st District Supervisor Glenn McGourty, Cannabis Department Director Kristen Nevedal, 5th District Supervisor Ted Williams, 2nd District Supervisor Mo Mulheren, 3rd District Supervisor John Haschak

During the mid-year budget review at the March 14 Mendocino County Board of Supervisors meeting, the Board learned about a multi-million dollar reporting error by the Mendocino Cannabis Department that may have been based in part on a misunderstanding by state officials.

Five county departments are projected to come in at more than $200,000 over budget. The mid-year report notes that the Cannabis Department is in the lead by far, with projections of being over budget by $662,000, due to shortfalls in revenues from cannabis fees

The Sheriff’s Office is the second-highest over-budget department, with a projected overage of a little more than half a million dollars. Animal care, facilities, and the Executive Office are also over budget. 

The most recent sales tax report, for July-September of 2022, shows that the county’s sales were down 5.2%. The only two sectors that have brought in an increase in sales tax are hotels and motels, at just a little over 6%, and gas stations by just over 7%, probably due to higher gas prices. Long-time cannabis attorney Hannah Nelson commented on the 42.1% decrease in garden and agricultural supplies, which the report says is “Due in part to the decline in the Cannabis industry.” Nelson called it a “House on fire indicator…Here we have a preview of things to come that are going to trickle down further and further at an alarming rate.”

Nelson then remarked on the reporting error that Cannabis Program Director Kristin Nevedal had made regarding the Local Jurisdiction Assistance Grant Program (LJAGP) funds. Nevedal recently told the Mendocino County General Government Committee that she wants to use the majority of the over-$17 million grant she secured from the state to cover Cannabis Department expenses, including $75,000-80,000 in county counsel fees.

Nelson reported that on Monday, Nevedal testified during the California Senate Business, Professions and Economic Development Committee hearing on cannabis issues that she had made a $3.2 million reporting error in her state report on the grant. Nelson asked if the Board and the CEO’s office were aware of what had transpired.

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CEO Darcie Antle replied that she had learned about the matter at 1:30 on the day of the Board of Supervisors meeting, which would have been about an hour before Nelson addressed the Board. “I didn’t know that statement had occurred,” Antle said, adding that two of her deputy CEOs have been working with the Cannabis Department on its budget regularly for several weeks. “One of our questions was about that grant, and how that money was being spent,” she concluded, inviting Nevedal to offer further clarification.

Nevedal assured the Board that none of the money from the Local Jurisdiction Assistance Grant Program has been spent. The error, she said, was a failure on her part to zero out a table in a form she filed to request a budget amendment. “I did not zero out the last table, which is the indirect and other expenses for the 2021-2022 year, because we had applied for a budget amendment,” she explained. “I wasn’t aware until I read the Senate Oversight Hearing background that they had assumed that we had spent down $3.1 million and a little bit of change. So I corrected that with the State yesterday.”

Supervisor John Haschak was more perturbed about the projected $662,000 overage in the Cannabis Department’s budget. That money is now a general fund obligation, though Acting Deputy CEO Tim Hallman said he was meeting with the department later in the afternoon to figure out how much of its expenses can be covered by the Local Jurisdiction Assistance Grant Program grant. He is also working on a time study to quantify how much time staff from the Executive Office and Code Enforcement are spending on cannabis department issues. Haschak persisted. “The Cannabis Department is under the purview of the Board,” he acknowledged. “This didn’t come to light until the Executive Office found the issue. This is a budget of $1.2 million. To be now over 50% off…It’s concerning to me. And it’s concerning that we didn’t know about this issue of the $3.2 million in the LJAGP grant. You know, that’s a $17.5 million dollar budget. I’m just very concerned about the capacity of the department to handle that budget.” 

Nevedal said there were several good reasons for the department’s failure to generate revenue, including a much smaller number of Phase III applicants than was originally expected. “We also reduced our revenue projections because we had no idea when we planned this budget that we’d be doing fallowing,” which significantly reduces fees from appeals. “We scrapped that out of the budget,” for transparency reasons, she said. She also did not expect the large bills from County Counsel. The department’s move from the campus in Ukiah to the Justice Center in Willits was also not in the budget. “So there’s a number of things that we could not have planned for in this budget because we don’t have a crystal ball and we didn’t know it would be the will of this Board to ask us to take on additional tasks that would push back revenue-generating tasks,” she concluded.

“Well, it seems like it’s the Board’s fault, then,” Haschak replied.

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  1. SUPRISE!!! Politicians screw up every single thing they touch. They over regulate and grossly mis manage every single thing they take control of greedily gobbling down tax payer money and spending wildly on “administrative costs” the constipate every process with idiotic rules and guidelines that make no sense and cost the participants or citizens way more than necessary to produce whatever it is. Pot, timber food. You name it. I say. F&$;K. Government oversite they are greedy corrupt leeches. That need to figure out how to make an honest living and leave the industrious ppl alone

  2. Are we surprised? How is that possible? A new dispensary opens everyday! Our county should be the Napa of weed! We should all be financially stable and there should be pot growing in ag lands with grapes. Pot farmers should have ag insurance for bad crop years or missed deals, like the grape farmers do! We should be selling prime weed at safeway next to the bottles of patron. Why not?!

  3. The Cannabis dept is over budget because they have been working with county counsel to figure out how to get people out if the program, not to get licenses. They implemented a vegetation modification program that did not include due process.
    They wrongly deprioritized farms for no state licensing that actually had state licenses. And now they want to use LJAGP grant funds designed to help people, to pay county counsels time to screw people?

  4. “I’m just very concerned about the capacity of the department to handle that budget.”

    Handle it????????????????? They nicked the 3 mil. They’re thieves.

  5. Just a other example of corupt government here in mendo. I just wonder what circumstances made this million. Dollar “mistake” come to light suddenly the other day? It just seems like everyone thinks it’s normaL around here and for most part puts up with a certain level of corruption..

  6. How has the Board not terminated MCD’s “Director” yet? This person has no qualification for this job, never had when she was hired. I have received personal communication from her arguing about cultivation methods and making absolutely baseless claims how I made “false” statements on my permit application about how I cultivate cannabis. All without offering any evidence that would have come up at an inspection. All without having sufficient knowledge about cannabis cultivation. All without offering any guidance on how to get through this process. I could come up with 3.1 Million more reasons why this person needs to go. Incompetence has never been more obvious.

  7. The cannabis department and BOS has been doing everything it can it seems to get rid of cannabis in Mendocino County. Either that or they are so inept that it would appear that way. They have switched departments so many times, hired directors that continually don’t give out licenses, ask for the same paperwork over and over because they lose paperwork regularly, spend tons of time evaluating documents that the State already requires and evaluates while claiming they don’t have enough time to go over all our documents. BOS kept us all at 10,000 sq feet for years to keep us covered for CEQA, to find out a year before the state deadline that the state would not accept that plan, and requiring all over 800 of us to hire off a short list of approved businesses to assess each property separately at great cost. That was almost two years ago and they still don’t have the time to review any of those expensive evaluations, and the state so far has not re extended the deadline, holding almost all the county licenses in jeopardy. They refuse to review those until after they review all the files of those who had to resubmit all their paperwork into their “portal”. Meanwhile, those of us who have everything in order are put on hold. It takes weeks to renew a permit with the county while taking literally 15 minutes for the state. I paid thousands for my appendix G to be completed, but since I am trying to expand production I added things that were set to be changed, which the professional I hired to do my appendix G said that is how it’s done, to be told by the county office I can’t put near future changes in and that I should wait until they review it and it gets approved before I expand. That was two years ago and they still have not reviewed it. And if the county had it together, some of us could have expanded over 10,000 sq feet a long time ago if we could have been allowed to deal with our own CEQA paperwork from the beginning like we ended up having to do anyways and been better prepared to compete with other counties that are supporting their farmers more quickly and efficiently. This county has wasted so much of my money, time and labor than I can shake a stick at. Can’t upgrade, get my permanent state license, get the grant money I need from the excessive taxes we have been charged for the excessive regulatory requirements we am required to meet. So angry my money is funding this circus. How can I help support my community with this mess? I pay for permits and they can’t even send me an official permit on time. Some years they didn’t send me one at all, just took my hard earned money.Local businesses, including agriculture businesses that cannabis businesses have supported all these years should be angry. All the money we have spent on excessive tax and permitting procedures could have been going in your pockets, but instead they keep us so tied up we can’t afford to spend the money with local businesses. If we could expand efficiently, we would be spending more money locally on those expansions, and resulting profits. Instead, they are exterminating us. And nobody will win in this mess. They literally look for ways to gouge us, and leave no Avenue to contest such gouging, waste that gouged money, and leave us hanging. They received 17 MILLION dollars from the state to get our licenses in order and still can’t get our licenses in order. We are paying the cannabis department, the BOS, the CEOs and all their lawyers and outside counsel and only four out of over 800 have gotten through their brilliant process. Meanwhile, stakeholders have been pleading for years with suggestions on how to fix this broken system and they have refused to listen to any of it, even having the gall to complain about having to hear our voices at all and so often at that! While they play ring around the rosy with our livelihoods! Their taxpayers and business owners, imagine they would have to hear our voices? They want to rape us in silence.

    • Your appraisal of the situation is spot on. Neverdal says it takes 200 hours to process each application. If there are 800 applicants, that’s over a million hours!!!
      Remove ALL county fees and regulations, let farmers follow state regulations, and get rid of the county cannabis dept.
      And while you’re cleaning house, fire that inexperienced CEO and hire someone who knows what they’re doing.

        • But others that are more experienced with minstrel permits said that estimate of how much time it would take is grossly over. They said it should take ten hours tops for most of these applicants. But even so, they have finished 11. ELEVEN. And yea they been trying to hire people. Wonder how many applications they have had? Are they really hiring? I heard they won’t hire anyone with stakes in the process. Is it because they would actually want to get this show on the road? Seems to me anyone who has tried to successfully get people their licenses suddenly disappear from that office.

  8. Mendo, Humboldt, Sonoma, El Dorado, Santa Cruz etc etc all county governments annd their corresponding boards of supervisors, planning departments and sheriff departments are corrupt and incompetent. Mendocino county government is no different from any other county government. They all suck. Deal with it. Glad I’m not in the weed business and never have been and found an honest way to make a living from day 1. All the folks who thought they could make money in the weed business well for all these years you took the easy, selfish, environmentally destructive, lazy, hippie, crusty, cartel and gang riddled, violent way to make a living all these years and it was always BS and now you’re being shown what all law abiding citizens have known all along that it is. You had a good run. Now it’s time to do something productive with your lives and leave things better than how you found it and be a productive member of society for once in your life. Good riddance to the weed biz. The silent majority is sick of your violence, the cartels, your pit bulls, all the meth heads all the violence and dangerous jive ass nonsense that has always been on the periphery of your weed culture.
    If you don’t have anything better to do go volunteer somewhere and it might actually turn into an honest job or do some real work for once in your life.

  9. Wait a second am I supposed to feel bad for them for what they’ve done to our community for the last 4 years are you kidding me right now?

  10. What happened to hops?
    Member when olives for oil were gonna be the next thing?
    This is the peril of farming. The crop you plant may fade from the public interest. Smoke and drink hasn’t faded and so it remains an industry in this county. The pot growers need to meet up with the old pear and grape farmers of this area and chat about farming, and maybe grow some actual food for our community while they’re at it.

  11. Why hasn’t the board of supervisors reported on the huge embezzlements game and covered in the payroll department? Where is the transparency to taxpayers with taxpayer dollars?


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Sarah Reith
Sarah Reith
Sarah Reith is a radio and print reporter working in Mendocino and Humboldt counties, focusing on local politics and environmental news.

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