Office of Community and Civic Life 2021 Audit Status Report

Recreational Cannabis Tax: Greater transparency and accountability needed

Report published May 2, 2016 | Follow-up report | Contact Jenny Scott

The Office of Community and Civic Life improved accountability and transparency of the recreational cannabis tax since our 2019 audit. The office worked with Council to change the decision-making process, increase transparency of the tax allocation, and improve the grants process. Public reporting of tax allocations still needs to be finalized. Our 2019 audit found that most of the recreational cannabis taxes had been used for police and transportation programs even though the tax has been promoted to produce funds that would benefit and support individuals and cannabis businesses owners who were adversely affected when cannabis was illegal. While those uses are allowed, community members, cannabis businesses, or others affected by past cannabis policies had not been involved in the overall budget decisions, and the City did not report on how it used the tax revenues. We recommended the City improve the transparency of tax allocation decisions and results.

On this audit there was one recommendation implemented and one in process.

We recommend that the Office of Community & Civic Life develop a grant process, which includes clarifications for how the grants will be awarded and managed, what outcomes will be achieved, and how outcomes will be reported to City Council. For the cannabis tax funds allocated to Civic Life, the bureau improved the grant process by developing goals and a timeline for the process. A community panel is in place and has reviewed proposals for grant funding. Grantees who will receive funding this fiscal year have been selected. We will follow-up in May 2021 to determine whether grants were allocated timely, what outcomes were achieved, and how Civic Life reported outcomes to Council. (Recreational Cannabis Tax: Greater transparency and accountability needed)

We recommended that Civic Life use the Cannabis Program's vision and goals to develop and communicate a strategy for the program, including coordination with other City bureaus to streamline the licensing and enforcement process and focus work of the program. In May 2020, Civic Life hired a new Cannabis Program supervisor, and the program developed a strategic framework for Fiscal Year 2020-21. Civic Life reported that it shared the program's framework with City bureaus and other stakeholders, such as the Oregon Liquor Control Commission and Oregon Cannabis Commission. The Cannabis Policy Oversight Team issued a report in 2020 outlining goals and policy recommendations, including prioritizing data collection and analysis of legalization impacts, and developing a cannabis equity framework. Civic Life started incorporating these recommendations into the program. Civic Life still needs to develop a bureau-wide strategic plan, which will align and inform the Cannabis Program's strategy. (Cannabis Program: Management fundamentals needed to improve regulation)

We recommended that Civic Life implement a data management system to consistently and accurately track data on Cannabis Program licensing, complaints, and enforcement. This data should be used to manage program resources, adjust licensing fees, and report program performance. Civic Life reported it has researched various technological solutions and obtained approval for purchasing a new system. The program is working with the Office of Management and Finance's Procurement Services and the City Attorney's Office to finalize the purchase of a new system to manage the program's data and activities. (Cannabis Program: Management fundamentals needed to improve regulation)

We recommended that Civic Life inform Council and the public about cannabis regulation through a monitoring report or other communication tools that include information on program performance and the cannabis industry. This information should be used to revise and update program strategy as needed. The Cannabis Program worked with Civic Life's Strategic Communications Officer to develop a communication strategy. Civic Life said it was creating reports highlighting various areas of the program, including Licensing & Compliance, the Cannabis Policy Oversight Team, and Social Equity & Education Development Initiatives. (Cannabis Program: Management fundamentals needed to improve regulation)

Implemented Recommendation Details

We recommended that the Office of Community & Civic Life work with Council to develop a Cannabis tax allocation framework that includes: tax allocation and oversight committee input on how tax revenue should be allocated. City Council decides and authorizes the allocation of cannabis tax as part of the annual budget process. The Office of Community and Civic Life worked with Council over the last year to change the allocation process by making it transparent and including the public in the allocation decisions. Civic Life convened and worked with the Cannabis Policy Oversight Team, which provides recommendations on public policy. Civic Life adopted the team's recommendations and provided input to Council. Council held budget work sessions in May 2019 and March 2020 to discuss the tax allocation and hear from City bureaus that requested funding from the cannabis tax. After significant public input in June 2020, Council decided against an allocation to the Portland Police Bureau Traffic Division and increased funding for community grants awarded through Civic Life. Civic Life reported cannabis tax allocations to the oversight committee but it still needs to ensure the total annual Recreational Cannabis Tax allocations are reported to the public in an accessible format. (Recreational Cannabis Tax: Greater transparency and accountability needed)

Data Notes