August 2, 2022 — In the wake of a Mendocino County Grand Jury report that found layers of delay in distributing a grant, a policy manual has been updated, an affidavit is being drafted, and legal review will start up again next week.
In 2020, the County received $2.2 million from the state, to administer individual grants to applicants who are eligible to run a cannabis business in the unincorporated areas of Mendocino County; and who can demonstrate that they have been harmed by the war on drugs. But most of that money is held up in legal review. Out of 52 applications, five grants have been awarded. The other 47 approved grant applications are waiting for County Counsel to determine that they won’t run afoul of the state’s policy about misuse of funds.
The Local Equity Entrepreneur Program, or LEEP, is supposed to allocate direct assistance awards to individuals, which puts the county in the position of vouching for the recipients. If the county were to award a grant that doesn’t meet the state’s strict requirements, the county would have to collect the misused funds as it would any other debt, possibly becoming ineligible to receive further grants.
But if the money is not awarded by the end of August, the state could take it back.
Michael Katz, the Executive Director of the Mendocino Cannabis Alliance, an industry advocacy group, noted that the Grand Jury report aligns closely with complaints and policy proposals that the MCA has been making for a while.
The report’s first finding is that “There was no process developed for the distribution of grant funds to individuals prior to applications being received. This has resulted in extended delays at every step from eligibility to application to communication to contract negotiation,” which prevents the timely distribution of funds.
“The results of that, unfortunately, have been that some operators have been in this application process since February of last year, counting on these funds to help them move forward in this incredibly challenging business at this incredibly challenging time,” Katz said last week.
Kristin Nevedal, the Mendocino County Cannabis Program Manager, uses similar language for what she’s faced in her role. Asked about the same finding at July’s LEEP meeting, she said, “I think that’s absolutely correct. I think the program has been incredibly challenged by changes and lack of leadership, frankly, in the cannabis program as a whole.”
Shortly after the county received the first round of funding in February 2021, Megan Dukett, the cannabis program manager at the time, left her position. The county had hired a company called Elevate Impact to administer the grant for no more than 10% of the award, but Nevedal said, “It is completely unfair to expect a contract administrator to develop a program for any local jurisdiction solely on their own.”
Nevedal said she learned about the program’s complexities at the end of 2021, when she had one part time helper and had been on the job herself for just a little over a year.
“So I had no clue how underdeveloped the program was until we started getting into the review of applications and then how we would essentially issue checks,” she acknowledged. “Most local jurisdictions do not include capital improvements in what’s allowed as far as expenses that can be paid for using direct grant funds. And I think from the county’s perspective, you don’t know what you don’t know. So I don’t believe the county really knew ahead of time the complex nature of the applications we’d be receiving to have the foresight to understand that we also needed planner time to also conduct these reviews.”
The Grand Jury also found that “the county did not ask the state for requirements on record keeping until May 2022,” and that this should have been done much earlier in the process.
That finding dovetails with the fear of misusing the funds, which Katz thinks has led to unnecessary restrictions.
“There are still barriers that are being put in place on certain requests by the department that are not demanded by the state. So for example, there are many folks who are working to create solar usage opportunities on their cultivation sites in various ways. And solar is something that’s desirable, obviously. We’re trying to phase out generators. We’re trying to phase out fossil fuel use…but the cannabis department has been objecting to specific types of solar, being concerned with how much power the solar would provide, and really just putting what seem like unnecessary restrictions that are not demanded by the state on the uses that would benefit the operator. So if they actually revised the manual to allow anything that is not explicitly disallowed, there wouldn’t be the need to dig into every item and go back and forth on the minutiae that we’ve seen happening for applicants.”
On Friday, the cannabis program issued V5, the latest edition of the Local Equity Program Manual. In an email, Nevedal wrote that, “The program is still working on a form/affidavit for awardees to sign stating that they’ve read and understand the grant agreement,” as well as the much-edited manual. Nevedal added that “County Counsel plans to resume the review of approved grant applications next week.” However, the changes to the manual consist of several sets and subsets of requirements for documentation, and do not address what the money can and cannot be used for.
County Counsel did not immediately return a call requesting more information, but Katz said yesterday that he thinks that’s what County Counsel needs in order to complete its review.
“We hope it turns into money in people’s hands soon,” he said. He expects the next round of edits will include language expanding the allowable uses of the grant funds.
He hopes to see version V6 of the manual sometime next week.
