Council authorizes limited-scope cannabis revenue audits to reduce costs for local operators

Port Hueneme’s City Council authorized a limited-scope revenue audit contract for the city’s licensed cannabis businesses, a change staff and council framed as a cost-reduction step for smaller operators.

Finance Director Lupe Acero (introduced to the council as Lupe Acero) told the council staff put the audit scope on a smaller scale—focusing on core documentation such as point-of-sale records, state tax returns and general ledgers—but excluding bank statements, purchase records and inventory review. Staff said that change reduces auditor time and cost while preserving the ability to validate gross revenue.

“Based on our review for the limited-scope audit, we’re proposing to award this audit to Booth Management Consulting,” Acero said. She reported the estimated limited-scope cost at about $1,880 for typical walk-in businesses and about $1,764 for smaller businesses under $3.5 million in annual sales.

Acero and other staff said they plan to meet with the businesses ahead of audits to make sure records are organized and to provide a list of required documents; staff said they would monitor audits and could return to the council to restore a full-scope audit if the limited approach does not yield sufficient verification.

Council members thanked staff for trying to reduce fees at a time of market pressure for cannabis operators. Councilor Gama praised the staff’s effort to ease burdens on smaller businesses; the city manager said the change would not reduce tax revenue to the city but would lower the out-of-pocket audit fee for businesses. One council member asked that future packets include the consultant’s proposal response; staff agreed to provide that information going forward.

The council unanimously authorized the city manager to award the limited-scope cannabis revenue audit contract to Booth Management Consulting (BMC). The contract anticipates repeated audits (the development agreements call for two audits a year); staff estimated the total number of businesses subject to audits at roughly a baker’s dozen and said the city’s professional-service threshold is $25,000 so aggregate fees may approach that limit depending on the number of audits performed.