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

Cannabis farm. [Photo courtesy of Mendocino Grasslands, credit: Nathan Frank]

Cannabis farm. [Photo courtesy of Mendocino Grasslands, credit: Nathan Frank]

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 Mendocino 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.

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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Truth Be Told
Member
Truth Be Told
1 year ago

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

Bingo! And the Cannabis Dept., Executive Office and County Counsel.

Just when you think Mendo couldn’t be more of a cluster…along comes a $3 million reporting error (but no one bothered to tell the Board); a $662,000 budget overrun in the Cannabis Dept. (knocking the Sheriff out of the top spot for the first time in memory); a surprise $75-80,000 bill from County Counsel (whose only advice has been not to release grant funds to the farmers it was intended for); and a proposal to divert grant funds to pay for all the screwups! They should all resign in disgrace!

Ricky Bennis
Guest
Ricky Bennis
1 year ago
Reply to  Truth Be Told

Everyone likes to slight a pot grower, but sure enough they can’t get away with running a business like this! Imagine the criteria to qualify for one of these grants the County is not disbursing, I bet they get held up in petty vindictive processes; I’m sure the County expects better performance than they themselves can muster.
Beyond pot regulation, a politician would do well to sponsor a bill that regulates regulation better. Anything that requires payment must receive performance on par. Agencies shouldn’t be allowed to charge as a hurdle to operation. Charges must match the work performed: anyone who’s dealt with the BCC, aka CalCannabis, or whatever it is they call themselves this week, know. They charge thousands for a website you use once a year, with a ridiculous password security, non functioning, barely modified Go-Daddy shopping website, with surly prisoners on the help line…people in charge of pot regulation would never be able to actually pull off an application in their systems. Think about: the total number of pot applications in the whole State, is fewer than the number of people who are processed through one regional DMV!

Last edited 1 year ago
Ed Voice
Guest
Ed Voice
1 year ago
Reply to  Ricky Bennis

The first analogy I can think of is like stepping on a rake and then let all the finger point begin…

https://kymkemp.com/2021/03/10/local-and-long-time-cannabis-professional-kristin-nevedal-hired-as-mendocino-countys-cannabis-program-manager/

Trashman
Guest
Trashman
1 year ago
Reply to  Truth Be Told

No weed, no sawmills, now what? The storms took a lot of the romance out of the off grid lifestyle.

Kicking Bull
Guest
Kicking Bull
1 year ago

There are no mistakes.

Patriot in WillitsD
Member
Patriot in Willits
1 year ago
Reply to  Kicking Bull

No, there definitely are mistakes. This is the Mendocino county government. When did they suddenly become competent?

Kicking Bull
Guest
Kicking Bull
1 year ago

Situation Normal All Farced Up

Mendocino Mamma
Guest
Mendocino Mamma
1 year ago

They should all be ashamed of their selves. Absolutely ridiculous Nevedal should follow all her predecessors right out the back door. Sorry, not sorry to say that. No accountability in accounting. With as much attention as they pay to the cannabis program HOW THE F? It DOMINATES EVERY BOS MEETING. It is insanity. The cannabis cowboys and girls at the county signed up for summer camp fun. Now they are getting bucked off at the big boy RODEO. Carry on, time for some more closed door sessions. thats the issue. No transparency = no accountability in closed door bumble fests. Smile and wave boys, cats outta the bag, now ya gotta problem, yet they never have any functionl solutions.

izzy
Guest
izzy
1 year ago

Isn’t the County Counsel on a salary? Does the $75-80,000 bill represent more costly outside advice?
Rhetorical questions at this point; government activities at many levels don’t make a lot of sense anymore.

Truth Be Told
Member
Truth Be Told
1 year ago
Reply to  izzy

County Counsel is on a salary but you make a good point because he frequently hires outside counsel to do his job.

jimimmel
Guest
jimimmel
1 year ago
Reply to  izzy

In trinity at least, The county counsel gets a base salary. Then if there are issues they charge for any additional time etc. So if they give bad advice and a lawsuit ensues, they get paid extra for representing their bad advice. Great plan.

Bozoandtheclowns
Guest
Bozoandtheclowns
1 year ago
Reply to  jimimmel

The county destroyed part of the economy by trying to force growers to jump through some expensive unnecessary hoops. Vote them out of office, fire the CEO and lets get some people in there who can run things.

sparky
Guest
sparky
1 year ago

Nevedal should be fired. BOS is failing. Vote them out!!

Truth Be Told
Member
Truth Be Told
1 year ago
Reply to  sparky

When Nevedal was hired the Board put her on the same level as the CEO and County Counsel by directing she report directly to them, instead of the CEO like every other employee. The whole sad show has operated in the shadows ever since without transparency or accountability.

Angry farmer
Guest
Angry farmer
1 year ago

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?

Joe'sGarage
Guest
Joe'sGarage
1 year ago

“she had made a $3.2 million reporting error” Oh please fess up, you and your bureaucrat cronies stole the money, and you know it.

Bigfoot
Guest
Bigfoot
1 year ago

This is a perfect example of how the Northen California Cannabis market is a house of cards. For the last few years both Humboldt and Mendocino county have doubled down on a dying cannabis market. A 3.2 million dollar “mistake” doesn’t just happen. Our leaders have constantly been selling us pipe dreams by constantly pointing to the next silver bullet of legislation and pocketing the cash while we are distracted. As someone who deeply appreciates the cannabis industry, I ask all residents to no longer be duped by this pipe dream. The sooner we diversify our economy, the sooner we will be closer to a stable local economy.

Farmer
Guest
Farmer
1 year ago

Humboldt County Did the exact same thing. They absorbed a lot of the Grant Funding into the General Fund and gave themselves raises. Its so funny how people thing farmers are the criminals when massive wealth accumulation through illegal activity happens right in front of their eyes. You should see the tax breaks on property or forgiveness of taxes that county employees get vs the general public. Why do you think they got rid of our previous Auditor Controller. She didn’t play their games as was going to expose the massive inequity and embezzlement of funds

Farce
Guest
Farce
1 year ago
Reply to  Farmer

County employees get property tax breaks?! Tell me more…because that is a huge bonus.The rest of us have to pay usury rates-20% interest- if we run into trouble and are late.

Truth Be Told
Member
Truth Be Told
1 year ago
Reply to  Farmer

It’s way illegal to give themselves and their friends tax breaks but nothing surprises me anymore. This Board of Supervisors, Administration and County Counsel are corrupt to the core. There’s no transparency and no accountability with all the real decisions being made behind closed doors, But yes, as ‘Farce’ says, tell us more!

PenguinnD
Member
1 year ago

Incompetent, much?

But I do find it extremely interesting that “fees from appeals” are apparently considered a
significant” part of their expected revenue. It would seem there is no incentive to be fair in their decisions. Is there?

John Sakowicz
Member
1 year ago

To the Mendocino County Grand Jury:

File under “FUBAR (F–ked/Fouled Up Beyond All Repair/Recognition) at the MCD (Mendocino Cannabis Department)”.

Huge accounting error ($3.2 million) and budget overage (more than $662,000).

Adding insult to injury, the accounting error was not voluntarily disclosed to the County CEO. Local cannabis attorney Hannah Nelson only heard about it in testimony given in Sacramento.

These accounting errors and budget overages are in addition to the gross mismanagement of the permit process (county approval rate of 1.4 % compared to 49% statewide).

Listen to the story at KZYX (6 min. 28 sec.)

KZYX – Homepage

Nothing except excuses by MCD Director, Kristin Nevedal. The Mendocino County Board of Supervisors needs to terminate Ms. Nevedal. And the Mendocino County Grand Jury needs to investigate the MCD.

John Sakowicz
Ukiah

Mendocino Mamma
Guest
Mendocino Mamma
1 year ago
Reply to  John Sakowicz

Agreed John… there’s been far too many issues for far too long yet no one in the upper California government beyond local level ever chooses to do s*** about it. Meanwhile, they keep shoveling the money to all this mess. Dysfunctional cannabis dept, dysfunctional da office, dysfunctional building and planning dept, dysfunctional road department, dysfunctional emergency department. La la la la la la la la la la.

Last edited 1 year ago
Farce
Guest
Farce
1 year ago

I thought Kristin Nevedal was supposed to be cool and get this crap worked out? She was as cool as Flo-Kana or something like that!

Mendo gramma
Guest
Mendo gramma
1 year ago

On Tuesday Ted Williams said, if you want services you are already paying for you will have to pay more. They want us to give them more money, when they just keep wasting it. He is tone deaf .

Guess
Guest
Guess
1 year ago

Just Move to round valley and grow for the cartels, they’ll treat you way better then the county, unless you piss them off them you will be part of next years ferto program.

Mendocino Mamma
Guest
Mendocino Mamma
1 year ago
Reply to  Guess

Chatter on the street is cartel hasn’t been paying. People been laying around with no money for over a year after they grew a thousand pounds for them. Just saw a really nice white Ford truck pulled over yesterday coming out of Covelo with a large black cargo trailer. Fish and game and Parks police tearing it apart. The real money in cannabis now is in the legal/justice system arenas. Admin. Law enforcement. Lawyers. Para legals. Investigators. Inspectors. Consultants. 100% all living large and high on the hog.

Ally
Guest
Ally
1 year ago

Pretty bogus how the headline doesn’t mention other departments that are also over budget. Seems like this article could have given more information on the whole issue rather than just the cannabis department’s issues. But that wouldn’t get as many clicks so….

Ricky Bennis
Guest
Ricky Bennis
1 year ago
Reply to  Ally

These kinds of incompetence thrive where you don’t care. Growing pot is supposed to be legal now. Imagine if wine grape growing entailed shoveling so much money into a dysfunctional regulatory black hole. Or therapists, just to name the next biggest economic drivers in Mendo.

Last edited 1 year ago
Mendocino Mamma
Guest
Mendocino Mamma
1 year ago
Reply to  Ally

There are a few mentions in this article and a previous existing one that talk about the department overages. Here’s the thing they tend to watch that stuff like a hawk. Unusual if a budget gets over 50 Grand. To the tune of over 600Gs it shows nobody was watching. BOS wasn’t paying attention to their baby that they were supposed to be burping. Then what was the one they talked about the second was the sheriff’s office which I can understand with the emergency responses surely will add to the overtime hours. Other budgets there’s hundreds of them within the county never get a chance to be one penny out of line.

Kym Kemp
Admin
1 year ago
Reply to  Ally

Not to bore anyone with the problems of title writing but…we’ve got a pretty long title already without adding, Oh, yeah, and 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. We did however put that in the third paragraph in hopes that some of our more erudite readers might actually make it past the title.

THC
Guest
THC
1 year ago
Reply to  Kym Kemp

S*** this whole country is over budget, that’s why we’re 33 trillion dollars in debt. But most people don’t pay any attention..

boudoures
Member
boudoures
1 year ago
Reply to  Kym Kemp

Nobody in the ukiah area media is digging in deep enough. Please keep up the work.

Truth Be Told
Member
Truth Be Told
1 year ago
Reply to  Ally

Other departments are mentioned, as Kym points out. But the real story is the complete mess Mendo has made of its cannabis program. Can’t issue permits, can’t account for the cannabis tax money, can’t get equity and other grant funding to the farmers, instead siphoning off grant money to pay salaries including to County Counsel for bad advice. Oh, then there’s the $3 million “reporting error” – wait until the State tells the County to pay back the $20 or so million in grant money because the County didn’t use it for what it was intended, which was to get farmers permitted.

Last edited 1 year ago
Bozoandtheclowns
Guest
Bozoandtheclowns
1 year ago
Reply to  Truth Be Told

They say it takes 200 hours to process each application. They have over 500 applications to process. That comes out to over 100,000 hours! This is so messed up. Pot needs to be treated just like grapes or alfalfa. The county thought they were going to make all this money and they spent what they didn’t have. Scrap the entire dept.

Timb0D
Member
1 year ago

The old saying is Follow the Money.

Herc
Guest
Herc
1 year ago

I always hate it when I forget to “Zero out” , and misplace large sums of money!

Skeptical
Guest
Skeptical
1 year ago

Funds were stolen and they’re all in on it. 3 million dollar oversight, wake up people.

THC
Guest
THC
1 year ago
Reply to  Skeptical

Sounds like the covid relief money that disappeared in the IRS, I mean it was only what 900 billion of taxpayer dollars. Nothing more than a rounding error to our overbloted bureaucracy..

Ricky Bennis
Guest
Ricky Bennis
1 year ago
Reply to  THC

How much did the sex cult prison gardening program get in Paycheck Protection funds?

Sandy Beaches
Guest
Sandy Beaches
1 year ago

Why worry and make difficulty between between the players who really have little stake in the issues. Just blame it on The Rolling Stones.

Truth Be Told
Member
Truth Be Told
1 year ago

“Turn out the lights, the party’s over.”

Seriously, it’s time for the Mendo Supervisors to admit they can’t get State permits for anyone, layoff the staff, shut down their failed program and give whatever grant money’s left back to the State.

Shishkabobby
Guest
Shishkabobby
1 year ago

This article should be filed in the crime section! Forgetting to “zero out” is the best excuse she could think of ? I wonder if that quarter million dollar satellite spying program can give us insight on what else she was up to that day?

Shishkabobby
Guest
Shishkabobby
1 year ago
Reply to  Shishkabobby

Also how do you move your office and not budget for that ? Or not expect the loss of revenue through fallowing when the industry tanked? Or just not expect to go over budget in a department that is always over budget? Sound like she should move to the other “justice center” in Ukiah the one with bars on the windows!!

Bozoandtheclowns
Guest
Bozoandtheclowns
1 year ago
Reply to  Shishkabobby

That happens when the CEO is not qualified.

Mendocino Mamma
Guest
Mendocino Mamma
1 year ago
Reply to  Shishkabobby

The Justice Center moving that was a total inside space swap by the county. Here’s the issue the Justice Center building in Willits has been for sale for years. It has a flat roof, it leaks horribly, lots of mold and abatement issues within. No one would buy it everybody was shocked when they looked at space the necessary repairs not reflected in the price tag. Willits police have the sweetest deal of all $1 a year for the lease of their portion of the building. They’re pretty pissed off the Cannabis Department came up there. They didn’t want to have to share with all the “dopeheads.” The reason they moved up to Willits in the first place was building and planning didn’t like sharing with them at the Low Gap Road complex. It is worth questioning why in the hell doesn’t WPD have their own little building somewhere.? They don’t detain people for any period of time. all aresstees are transported to Mendocino County Jail asap. Truly, all they need is admin office and a dispatch space. How much have they saved by leasing a building for $1 a year for at least the last 20 years. Moving to the cannabis complex to Willits was not a planned effort. Was rather a knee jerk we gotta do something space issue. People bitching wanting their own offices. Typically any movement or orders take months if not years churning through admin and fiscal to occur. Must have been BOS approved, fast tracked in a closed session. That’s why it wasn’t in the budget. Something more to explain. Not expecting it ever will be.

Last edited 1 year ago
Mike Morgan
Member
1 year ago

Never let your accounting team smoke pot.

thebrothers-300x300.png
shortjohnson
Guest
shortjohnson
1 year ago
Reply to  Mike Morgan

we were reflecting on this old saying in October as we burned 50+lbs of last years crop. All golden yellow from oxidation and dropping in value by the day. Was a nice bonfire that night. A few tears were shed. New plans and goals for the future were expressed.

boudoures
Member
boudoures
1 year ago
Reply to  shortjohnson

Good Luck this season

Laytonvillain
Guest
Laytonvillain
1 year ago
Reply to  shortjohnson

We had a similar bonfire in February, it was glorious.

Al L Ivesmatr
Guest
Al L Ivesmatr
1 year ago
Reply to  shortjohnson

That was a short 2 minute bonfire I am guessing. Oh well, think positive, plentiful water this year for all sorts of vegetables, fruits, herbs, and nuts. Anadromous salmonids as well.

Ricky Bennis
Guest
Ricky Bennis
1 year ago
Reply to  Mike Morgan

IDK, you should see the hoops growers have to jump through. Is Mendocino County smoking pot, or assuming they can just do whatever because they’re dealing with “pot smokers”.

sparky
Guest
sparky
1 year ago

“Forgot to zero out $3Million+….”
Sounds like a lot of embezzlement is going on at MCD.

Country Bumpkin
Guest
Country Bumpkin
1 year ago

Hey Ho Kristin’s got to GO! Hey Ho Kristin’s got to GO!

Honestly the county should shut their local program down and hand the whole thing over to the state. The state regulators are more reasonable, knowledgeable, polite, professional, realistic, positive, and supportive of small farms from my experience.

The Mendocino County Cannabis Program employees show up and pretend they are raiding you with every visit. It’s awful. I pray for all the farms that they are only inspected by DCC instead of the county.