Colfax ends private cannabis compliance audits, directs staff to adjust permit fees
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Summary
City council voted to terminate the city's contract with SCI Consulting Group, which had conducted twice-yearly inspections and audits of the town's licensed cannabis retailer; council instructed staff to return with ordinance and fee adjustments and reserved the right to re-engage audits if problems arise.
The Colfax City Council voted to terminate the city—s contract with SCI Consulting Group, which had provided twice-yearly compliance inspections and financial audits for Golden State Patient Care (GSPC), the city—s longtime cannabis retailer. Council also asked staff to return with ordinance language and fee adjustments so businesses will not continue to be charged for a service no longer provided.
GSPC owner Jim Dion told council he has paid for outside audits and compliance work for years and asked the council to remove the requirement. "Please let me get rid of the babysitter," Dion said, adding he has an annual state license and multiple outside compliance providers and that the store has passed state inspections.
Council members and staff discussed trade-offs between local review and relying on state enforcement. City staff recommended reducing SCI inspections to a single annual inspection rather than canceling the contract, but several council members said the twice-yearly requirement was burdensome and that the city could rely on its municipal code and state regulators while retaining the option to order an ad hoc audit if concerns emerge.
The council approved a motion to terminate the SCI contract and directed staff to examine the municipal code and business-license fee schedule to ensure the city does not continue to collect pass-through audit fees from cannabis businesses. Council also directed staff to preserve the authority to order audits or compliance inspections in the future if monitoring or revenue collection concerns arise.
Council members said the termination would reduce a cost passed through to the business and would not remove the city—s enforcement options. Staff said the city will revisit the licensing/fee ordinance and return to council with proposed changes clarifying which costs are recoverable and how ad hoc audits would be procured.
The action was approved in a council vote.
Looking ahead, council members said they expect to rely first on code enforcement and state regulators for escalated compliance work but left the door open to re-establishing a contracted audit if the city sees evidence of underpayment or noncompliance.