RN Collins has written a series of 20 new articles for cannabis law report on 2026 Psychedelics & Legal Issues.

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Designing Inspector-General Functions for Emerging Drug Agencies

Cannabis Law Report Policy Reform / Governance / Oversight Series — Article 6

Abstract

The emergence of state-licensed psilocybin programs and the rapid expansion of regulated cannabis markets have created a new class of state drug regulatory agencies operating without the mature oversight infrastructure that governs established federal and state bureaucracies. The Inspector General model, codified at the federal level by the Inspector General Act of 1978, provides a proven structural template for independent oversight of agency programs — combining audit authority, investigative power, whistleblower protection, and mandatory reporting to legislative and executive principals. This article examines the functional components of an effective Inspector General (IG) design, surveys the oversight failures that have already materialized in early-stage cannabis regulatory agencies, and develops structural design recommendations for embedding IG functions into emerging psychedelic and drug regulatory bodies. Drawing on the Massachusetts Cannabis Control Commission audit of 2025, California’s Department of Cannabis Control performance audit, and the federal IG framework, the article argues that proactive IG infrastructure is more protective of public trust than reactive audits conducted after dysfunction is entrenched.

I. Introduction

The Inspector General Act of 1978 represents Congress’s foundational determination that federal agencies require independent, internal oversight mechanisms capable of operating without interference from the agency heads they monitor.¹ In the intervening decades, the federal IG model has been expanded, reformed, and institutionalized — there are currently 72 statutory inspectors general at the federal level, organized through the Council of the Inspectors General on Integrity and Efficiency (CIGIE).² In fiscal year 2024 alone, federal IGs identified $71.1 billion in savings from federal programs and operations — $52.7 billion from audit recommendations and $18.4 billion from investigative recoveries — representing approximately $18 returned for every $1 invested in IG budgets.³ The model has proven effective at surfacing fraud, waste, and mismanagement across diverse regulatory domains.

Yet as states create entirely new drug regulatory agencies to administer emerging psilocybin service programs and cannabis markets, many have launched without dedicated IG functions, relying instead on periodic audits by state auditors’ offices, legislative oversight, or internal compliance staff lacking structural independence. The documented costs of dysfunction at the Massachusetts Cannabis Control Commission — $535,914 in uncollected fees, an Inspector General investigation, and a unanimous legislative vote to overhaul the agency’s governance structure — illustrate the institutional damage that accumulates when problems are identified only after they become entrenched. An embedded compliance officer with IG reporting lines can be funded at a fraction of those reactive costs. The consequences of this omission are already visible: Massachusetts’s Cannabis Control Commission — which oversees an $8 billion market — was found in an August 2025 state audit to have engaged in widespread mismanagement, procedural inequities, potential financial fraud, and regulatory failures attributable in part to the absence of adequate internal oversight.⁴ California’s Department of Cannabis Control was similarly found in a June 2025 California Department of Finance performance audit to have conducted predominantly reactive compliance inspections without an adequate proactive inspection program, and to have administered a $100 million grant program with only two part-time staff.⁵

These experiences from established cannabis markets are directly instructive for states designing psilocybin regulatory bodies. Oregon’s Psilocybin Services section within the Oregon Health Authority and Colorado’s Natural Medicine Division within the Department of Revenue are young, under-resourced agencies operating without dedicated IG functions. As these programs grow and public scrutiny intensifies, the absence of structural oversight capacity will likely produce the same accountability failures documented in cannabis regulation.

This article proposes structural design recommendations for embedding IG-style oversight into emerging drug regulatory agencies, calibrated to the particular risk profile of psychedelic regulation.

II. The Federal Inspector General Model: Core Components

A. Statutory Architecture and Independence

The Inspector General Act of 1978, codified at 5 U.S.C. §§ 401–424, establishes three foundational requirements for an effective IG function: independence, dual reporting, and comprehensive access.⁶

Independence is secured by prohibiting agency heads from directing, preventing, or limiting IG audits and investigations.⁷ The core provision states that the head of the establishment “shall not prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation.”⁸ At the federal level, establishment IGs are appointed by the President subject to Senate confirmation, and can be removed only by the President with mandatory written notification to Congress — a structural protection that insulates IGs from retaliation by the agencies they oversee.⁹

Dual reporting requires IGs to report simultaneously to the agency head and to Congress, typically through semiannual reports transmitted to “the head of the establishment not later than April 30 and October 31 of each year” and then transmitted to Congress within 30 days.¹⁰ This dual-accountability structure is the mechanism through which IGs can surface agency-level problems to external oversight bodies without routing disclosures through the agency being investigated.

Comprehensive access means that the IG may access all records, reports, audits, reviews, documents, papers, and data available to the agency and may issue administrative subpoenas for non-federal records.¹¹ The Congressional Research Service primer on statutory IGs notes that the structure and placement of IGs in government agencies “allows OIG personnel to develop the expertise necessary to conduct in-depth assessments of agency programs.”¹²

B. Functional Mandate

Under 5 U.S.C. § 402, the core statutory duties of an IG are to: (1) conduct and supervise audits and investigations; (2) provide leadership and coordinate activities to promote economy, efficiency, and effectiveness; and (3) prevent and detect fraud and abuse in programs and operations.¹³ The IG’s authority encompasses reviews of existing and proposed legislation and regulations, coordination with other government entities, and receipt and investigation of employee complaints regarding violations of law, mismanagement, waste, or abuse.¹⁴

The federal model also provides for employee complaint mechanisms protected from retaliation, an important structural feature for agencies in politically sensitive regulatory domains where staff may be reluctant to report misconduct through internal channels.

C. The IG Reform Act of 2008 and CIGIE

The Inspector General Reform Act of 2008 created the Council of the Inspectors General on Integrity and Efficiency (CIGIE), an umbrella body that coordinates the work of federal IGs, establishes professional standards, and operates an Integrity Committee to receive complaints about IGs themselves.¹⁵ The CIGIE model illustrates that the IG function benefits from external professional governance: without oversight of the overseers, the IG function itself becomes vulnerable to institutional capture.

The political vulnerability of the IG function was dramatically illustrated on January 24, 2025, when President Trump dismissed at least 17 federal inspectors general in a single overnight action without the 30-day advance notice and written rationale required by the Securing Inspector General Independence Act of 2022.¹⁶ Eight of the dismissed IGs filed suit on February 12, 2025 seeking reinstatement, arguing the dismissals violated federal statute. On September 24, 2025, a federal court ruled the dismissals were unlawful but declined to reinstate the IGs. The episode underscores that structural protections for IG independence must be legally specific and enforceable, not merely aspirational.

D. Existing IG Analogues in State Cannabis Regulation

The IG model is not purely theoretical for drug regulatory agencies. Partial analogues already exist in cannabis regulation, and their design choices — and gaps — directly inform the recommendations in Section IV.C.

Nevada Cannabis Compliance Board. Nevada’s CCB, established by Assembly Bill 533 during the 2019 legislative session, operates with a statutory Inspection/Audit Division and a separate Investigations Division that together perform IG-equivalent functions. Under NRS 678A.480, the CCB’s Inspection/Audit Division is required to conduct a routine audit of each licensed cannabis establishment at least once per audit cycle, covering seed-to-sale reporting data and monthly inventory submissions. The Investigations Division conducts proactive financial and operational audits of licensees, including in-person interviews, background checks, and financial analysis — functions that parallel an IG’s investigative mandate.¹⁷ The CCB’s 2025 Biennial Report confirmed that audit and inspection teams completed all fieldwork and that 100% of licensees were visited during the reporting period.¹⁸ This documented, mandatory inspection-to-licensee coverage rate is the benchmark that Oregon’s OPS program lacks.

Massachusetts Cannabis Control Commission. Massachusetts does not have a cannabis-specific IG. However, the Massachusetts Office of the Inspector General — a general-purpose state IG with jurisdiction over all state agencies — exercised oversight over the CCC under its broad statutory authority, conducting the March 2025 investigation that identified approximately $550,000 in uncollected prorated license fees and up to $1.2 million in potential provisional licensing fees, calling the lapse “an egregious operational breakdown.”¹⁹ This illustrates the “shared IG jurisdiction” model: an existing state IG exercising ad hoc oversight of a drug regulatory agency. The model is reactive rather than proactive — the Massachusetts IG acted after problems were reported through a hotline complaint, not through systematic audit.

The California lesson. No state has created a dedicated Inspector General for a cannabis regulatory agency, notwithstanding the scale of California’s market. California’s DCC relies on the California State Auditor for periodic external performance audits and on its own internal compliance and law enforcement divisions for ongoing oversight. The 2025 California State Auditor performance audit — which found predominantly reactive inspections and a $100 million grant program administered by two part-time staff — is the direct product of that absence. The lesson is not that a cannabis IG was tried and failed; it is that none was ever created, and the resulting accountability gaps are now documented.

These analogues confirm that the IG function described in this article is not without precedent in drug regulation. They also confirm the gap: no state has embedded the full federal IG model — independence, dual reporting, comprehensive access, and proactive audit authority — into a drug regulatory agency.

III. Oversight Failures in Early-Stage Drug Regulatory Agencies: Case Studies

A. Massachusetts Cannabis Control Commission (2022–2024)

The Massachusetts Cannabis Control Commission (CCC) was created to oversee a cannabis market that has grown to approximately $8 billion in annual sales. A performance audit conducted by the Massachusetts Office of the State Auditor covering the period July 1, 2022 through June 30, 2024 found the following:

Financial mismanagement: The CCC failed to consistently administer prorated license extension fees, resulting in at least $535,914.49 in uncollected revenue across 161 administrative extensions granted without collecting the required fees.²⁰ The Massachusetts Inspector General separately flagged approximately $550,000 in uncollected prorated extension fees and up to $1.2 million in potential provisional licensing fees — calling the lapse “an egregious operational breakdown.”²¹

Regulatory inequity: The audit found “the appearance of potential favoritism and/or impropriety” in fee collection, with some businesses required to pay fees “while others inexplicably did not need to do so.” The absence of documented procedures for licensing staff created what the audit termed “a lack of supervision and minimal accountability” over licensing decisions.²²

Financial control failures: The CCC failed to identify duplicate license fee payments, misclassified revenue, and did not maintain records of fee waivers, resulting in “financial misstatements and reporting inaccuracies” and creating the potential for “financial loss or fraud.”²³

Structural breakdown: The audit concluded that “a breakdown of management structure and role consolidation” contributed to operational and compliance risks.²⁴ The agency experienced rapid senior leadership turnover, reliance on outside legal counsel to address employment problems, and assignment of multiple high-level responsibilities to individual staff without adequate support.

Inadequate internal controls: The CCC lacked a fully compliant internal control plan, leaving the agency unprepared to address emerging risk from organizational instability.²⁵ The commission’s technology systems required replacement but budget requests for IT upgrades were denied in both FY2025 and FY2026.²⁶

The Massachusetts audit directly preceded the state House of Representatives voting unanimously to overhaul the CCC’s governance structure — a legislative response enabled by the audit’s findings but representing a reactive rather than proactive accountability mechanism.²⁷

B. California Department of Cannabis Control

The California Department of Cannabis Control (DCC) — created in 2021 to consolidate three predecessor cannabis licensing authorities — was the subject of a June 2025 performance audit and a 2024 State Auditor investigation of its Local Jurisdiction Assistance Grant Program.

The performance audit found that the majority of DCC’s compliance inspections and investigations were “reactive, as they are initiated by complaints,” rather than proactively scheduled.²⁸ The audit recommended that DCC “consider whether a more proactive approach, such as an increased number of unannounced routine inspections, would be more effective.”²⁹

The 2024 grant program audit revealed that DCC had administered a $100 million program with only two part-time staff, resulting in approved grant spending plans for grantees “who were not prepared to receive” funds, inadequate scrutiny of grantee expenditures, and failure to monitor progress toward defined goals.³⁰ California law requires the state auditor to track agency compliance at 60 days, six months, and one year — an external audit cycle that identifies problems after they have already caused harm.³¹

IV. Applying the IG Model to State Psilocybin Agencies

A. The Oversight Gap in Current Psychedelic Regulatory Frameworks

Oregon’s Psilocybin Services (OPS) section within the Oregon Health Authority has no dedicated IG function. Oversight of the OPS program is currently provided through: (1) the Oregon Health Authority’s internal compliance and audit processes; (2) the Oregon Psilocybin Advisory Board (OPAB), a stakeholder body restructured by House Bill 2387 in 2025 to include greater industry representation; (3) the Oregon Secretary of State’s audit division, which conducts performance audits of state agencies on a periodic and often reactive basis; and (4) legislative oversight through the Behavioral Health and Health Care Committee.³²

As of 2025, the Oregon program had 31 licensed service centers and 356 licensed facilitators, with approximately 8,000 clients having participated in psilocybin sessions.³³ The OPS Data Dashboard publishes licensing, compliance, product sales, and client demographic data under Senate Bill 303, enacted in 2023.³⁴ While commendable for transparency, this data infrastructure is an output system, not an oversight mechanism capable of detecting fraud, mismanagement, or systematic violations by agency staff or licensees. The program has required taxpayer subsidy since its inception: Oregon lawmakers appropriated $3.1 million from the general fund for the first biennium, and OHA acknowledged in legislative documents that fee revenue would not cover operating costs during the program’s early years. For the 2025–27 biennium, no general fund appropriation for OPS was enacted, leaving the agency dependent on licensing fee revenue that has proven insufficient in prior years.³⁵

Colorado’s Natural Medicine Division within the Department of Revenue faces an analogous oversight gap. Colorado’s first healing center license was issued in April 2025 — with Denver issuing its first local healing center license on July 23, 2025 — and the program is still in its formative stage, making this an optimal moment to build IG infrastructure rather than waiting for dysfunction to materialize.³⁶

B. Risk Profile of Psychedelic Regulatory Agencies

Emerging drug regulatory agencies face a distinctive risk profile that makes IG functions especially valuable:

Novelty and underdeveloped SOPs. New agencies lack the institutional knowledge, documented procedures, and precedent-based decision-making that characterize mature regulatory bodies. The absence of established standard operating procedures creates discretionary gaps that invite inconsistent treatment, favoritism, and regulatory capture.

Politically contested regulatory domain. Psilocybin regulation operates in an environment of intense public interest, federal legal tension, and competing advocacy from industry, public health, and law enforcement stakeholders. Agency decisions — on licensing, enforcement priorities, product standards, and data collection — are subject to political pressure that makes independent oversight particularly important.

Small, close-knit industry with capture potential. Early-stage psychedelic markets involve a small number of licensees, trainers, and advocates who interact frequently with agency staff through rulemaking processes, advisory board meetings, and license application review. Oregon’s Rules Advisory Committee process places OPS staff in direct, repeated contact with a small cohort of licensee-advocates. The structural conditions for regulatory capture — repeated interaction, shared mission framing, and limited competing stakeholder perspectives — are present in the OPS context in a way that larger, more anonymous cannabis markets are not. The Massachusetts audit’s finding of “potential favoritism and/or impropriety” in a cannabis licensing context illustrates the concrete consequences of capture in a drug regulatory agency.

Public trust dependence. Psilocybin programs depend for their continued political viability on public confidence in program safety and integrity. A single high-profile mismanagement finding — especially one involving financial irregularities, discriminatory enforcement, or client safety failures — could trigger legislative repeal or defunding. Oregon’s broader drug policy environment offers a cautionary precedent: the legislature’s rollback of Measure 110’s decriminalization provisions through HB 4002 in 2024 demonstrates that voter-approved drug policies are vulnerable to legislative revision when implementation fails to meet public expectations.

Intersection with sensitive personal data. Senate Bill 303 requires Oregon service centers to collect demographic data including income, gender identity, sexual orientation, and adverse reactions.³⁷ This data is held by a public agency administering a program involving a Schedule I controlled substance under federal law, creating meaningful risk of federal law enforcement access through legal process. An IG function with authority to audit data security and privacy compliance is essential for maintaining client trust and legal compliance.

Client protection and grievance infrastructure. The client-facing rights protections applicable to psilocybin program participants — including informed consent frameworks, ADA accommodation requirements, anti-discrimination provisions, sexual misconduct prohibitions, and grievance pathways — require their own oversight infrastructure. These are addressed comprehensively in the Policy Reform / Governance / Oversight series. See Civil Rights Safeguards in Psychedelic Service Delivery Models, in this series. The IG function described in this article operates alongside, and is structurally distinct from, that client-facing rights infrastructure.

C. Structural Design for a Psilocybin Program IG

Drawing on the federal model and the lessons of cannabis regulatory failures, the following structural elements are recommended for IG functions within emerging psilocybin regulatory bodies:

1. Appointment independent of program management. The IG should be appointed by an authority external to the program being overseen — either the state’s chief executive, the agency head, or a relevant legislative committee — but not by the program director whose operations the IG will audit. Term-limited appointments of four to six years, with removal only upon written notice to the legislature, provide structural independence while maintaining accountability.

2. Dual reporting to executive and legislative principals. The IG should submit semiannual reports to both the agency head and the relevant legislative oversight committee. These reports should include: findings from completed audits; significant investigative findings; recommendations and agency responses; instances of agency resistance to oversight activities; and metrics on complaint intake and disposition.

3. Comprehensive record access and subpoena authority. The IG should have access to all agency records, including licensing files, compliance records, financial accounts, and personnel records. Administrative subpoena power over non-agency parties — including licensees who fail to respond to voluntary requests — should be available for investigative matters.

4. Complaint hotline with whistleblower protection. Licensed facilitators, service center staff, clients, and members of the public should have a confidential mechanism for reporting potential violations, mismanagement, or safety concerns. Whistleblower protection provisions should prohibit retaliation against complainants by both agency staff and licensees.

5. Proactive audit program. The IG function should include a risk-based annual audit plan covering financial controls, licensing equity, enforcement consistency, data security, and procurement integrity — not merely reactive investigations of complaints. The California DCC’s over-reliance on complaint-driven inspections illustrates the vulnerability of reactive-only oversight systems.²⁹

6. Coordination with state auditor and inspector general. Where states have existing offices of the Inspector General or State Auditor with jurisdiction over the psilocybin regulatory agency, the psilocybin program IG should operate within that institutional framework, sharing investigative resources and benefiting from established professional standards. Oregon’s Inspector General holds broad jurisdiction over state agencies under the Oregon Government Accountability Act and could be given explicit statutory authority over the OPS program — as the Massachusetts Inspector General exercised general-jurisdiction oversight over the CCC.

V. Scaling the IG Function to Program Size

A recognized objection to IG infrastructure in new, small programs is resource proportionality: a full-scale IG office may be disproportionately expensive for a program with 31 service centers. This objection has merit but does not counsel against IG functions — it counsels against large IG offices in small programs.

Several scalable models are available:

Embedded compliance officer with IG reporting lines. A dedicated compliance officer within the program, appointed by and reporting to an external IG or state auditor’s office rather than the program director, can fulfill core oversight functions without the overhead of a standalone IG office. This model is used by smaller designated federal entities in the federal system.³⁸

Shared IG jurisdiction. The state office of the Inspector General can be designated as having specific jurisdiction over psilocybin program compliance, with a named liaison responsible for that program. Oregon’s Inspector General holds broad jurisdiction over state agencies and could be given explicit statutory authority over the OPS program — providing a formalized version of the ad hoc oversight the Massachusetts IG exercised over the CCC.

Periodic performance audit mandate. Legislation can require the State Auditor to conduct a performance audit of the psilocybin regulatory program on a fixed schedule — for example, every two years — with public reporting requirements and agency response timelines analogous to the California model. This ensures systematic, external review without requiring a dedicated internal IG.

Advisory board reform. Oregon’s House Bill 2387 restructured the Oregon Psilocybin Advisory Board (OPAB) to require representation from tribal communities, mental health professionals, and licensed service providers.³⁹ While the OPAB is an advisory rather than oversight body, ensuring its independence from agency staff — through confirmed appointments and published conflict-of-interest policies — strengthens the overall accountability ecosystem.

VI. Additional Lessons from the Cannabis Regulatory Experience

The state cannabis experience directly prefigures the challenges ahead for psilocybin regulators, and several design lessons are transferable:

The importance of early infrastructure investment. The Massachusetts CCC audit’s finding of a “breakdown of management structure and role consolidation” reflects the organizational fragility of agencies that expand rapidly without proportionate investment in administrative infrastructure, including oversight capacity. Investing in IG infrastructure at program launch — rather than after dysfunction materializes — is both cheaper and less damaging to public trust.

The risk of multi-role staff. The Massachusetts audit found that the CCC assigned multiple high-level roles without appropriate support or succession planning when senior staff departed. Small agencies facing rapid expansion are particularly vulnerable to this failure mode. IG oversight of staffing and organizational structure — not merely financial controls — is a legitimate oversight function.

Technology as both tool and risk. The Massachusetts CCC’s request for IT upgrades was denied in both FY2025 and FY2026 state budgets, leaving it operating on outdated software.²⁶ Technology infrastructure is a compliance risk in regulated industries that depend on track-and-trace systems and licensing databases. IG audits of technology adequacy and data integrity are a necessary component of emerging drug regulatory oversight.

VII. Legislative Recommendations

To implement the IG model for emerging psilocybin regulatory agencies, the following legislative provisions are recommended:

Designate IG jurisdiction. Legislation should explicitly designate an existing state IG office — or an embedded compliance officer — as having jurisdiction over the psilocybin licensing authority, with the specific scope of authority including financial audits, compliance reviews, investigation of complaints, and data security assessments.

Mandate semiannual reporting. The relevant legislative committee should receive semiannual reports from the IG covering audit findings, complaint dispositions, and recommendations. These reports should be publicly available.

Establish complaint infrastructure. The psilocybin program statute should establish a confidential complaint mechanism for licensees, staff, and the public, with statutory whistleblower protections for complainants.

Set proactive audit standards. Legislation should require that a specified proportion of compliance inspections be proactively scheduled (unannounced or risk-based) rather than complaint-driven, consistent with the recommendation of the California DCC performance audit.

Fund oversight proportionately. Licensing fees paid into the cannabis or natural medicine regulatory fund should include a designated allocation for oversight activities, preventing the scenario in which oversight infrastructure is chronically underfunded relative to program operations. Nevada’s Cannabis Compliance Board provides a working model: NRS 678A.360 requires that one CCB board member possess expertise in corporate finance and auditing, and the CCB’s Inspection/Audit Division is funded through the Cannabis Compliance Fund established under NRS 678A.530.⁴⁰

VIII. Conclusion

The Inspector General model represents a decades-tested institutional design for independent oversight of government programs. Its core elements — independence, dual reporting, comprehensive access, and proactive audit authority — are directly applicable to emerging state drug regulatory agencies overseeing psilocybin and cannabis programs. The recent audit findings at the Massachusetts Cannabis Control Commission and the California Department of Cannabis Control demonstrate that the absence of this infrastructure enables the financial mismanagement, regulatory inequity, and accountability failures that undermine both program integrity and public trust.

Oregon and Colorado have built admirable regulatory frameworks for their psilocybin programs but have not yet embedded dedicated oversight mechanisms capable of detecting internal dysfunction before it becomes entrenched. As these programs grow in licensed facilities, licensed practitioners, client volume, and program complexity, the case for proactive IG infrastructure becomes more compelling with each quarter of operation. The time to build oversight capacity is before it is urgently needed.

Endnotes

¹ Inspector General Act of 1978, Pub. L. No. 95-452, 92 Stat. 1101 (1978), codified at 5 U.S.C. §§ 401–424; Congress.gov, H.R.8588, Inspector General Act of 1978, 95th Cong. (1977–1978), https://www.congress.gov/bill/95th-congress/house-bill/8588.

² Council of the Inspectors General on Integrity and Efficiency (CIGIE), Oversight.gov, Inspectors General, https://www.oversight.gov/about/inspectors-general (approximately 72 federal statutory IGs; approximately half appointed by the President subject to Senate confirmation, approximately half appointed by agency heads).

³ CIGIE, Annual Report to the President and Congress: Fiscal Year 2024 (Mar. 2025), https://www.oversight.gov/reports/cigie-annual-report/cigie-annual-report-president-and-congress-fy-2024 ($71.1 billion in total savings: $52.7 billion from audit recommendations, $18.4 billion from investigative recoveries; approximately $18 returned per $1 invested in IG budgets).

⁴ Massachusetts Office of the State Auditor, Audit of the Cannabis Control Commission (July 1, 2022 – June 30, 2024), released Aug. 14, 2025, https://www.mass.gov/audit/audit-of-the-cannabis-control-commission-august-14-2025; Mass.gov, Audit Identifies Mismanagement, Violation of State Regulations and Procedural Inequities at Cannabis Control Commission, Aug. 14, 2025, https://www.mass.gov/news/audit-identifies-mismanagement-violation-of-state-regulations-and-procedural-inequities-at-cannabis-control-commission.

⁵ California Department of Finance, California Department of Cannabis Control Performance Audit (June 2025), https://oreports.dof.ca.gov/reportPdf/2278/California%20Department%20of%20Cannabis%20Control%20June%202025 (finding that the majority of DCC’s compliance inspections and investigations are reactive, initiated by complaints, and recommending consideration of a more proactive approach including increased unannounced routine inspections).

⁶ 5 U.S.C. §§ 401–424; U.S. House of Representatives Office of the Law Revision Counsel, 5 USC Ch. 4: Inspectors General, https://uscode.house.gov/view.xhtml?path=/prelim@title5/part1/chapter4&edition=prelim.

⁷ 5 U.S.C. § 403(a); Federal Reserve System Office of Inspector General, Inspector General Act of 1978, https://oig.federalreserve.gov/inspector-general-act.htm.

⁸ 5 U.S.C. § 403(a).

⁹ 5 U.S.C. § 403(b) (appointment without regard to political affiliation, solely on the basis of integrity and demonstrated ability); see also Securing Inspector General Independence Act of 2022, Pub. L. No. 117-263, div. E, title LII, § 5201, 136 Stat. 3222 (Dec. 23, 2022) (requiring 30-day advance written notice with substantive, case-specific rationale before removal); Congressional Research Service, Statutory Inspectors General in the Federal Government: A Primer 2–4, https://oig.eeoc.gov/sites/default/files/page_attachments/R45450.pdf.

¹⁰ 5 U.S.C. § 405(b) (semiannual reports due April 30 and October 31, transmitted to Congress within 30 days).

¹¹ 5 U.S.C. § 406(a)(1)–(2) (authority to access records and issue administrative subpoenas); U.S. Dep’t of the Treasury, Office of Inspector General, IG Act Overview, https://oig.treasury.gov/Inspectors-General-Act-of-1978.

¹² Congressional Research Service, supra note 9, at 5.

¹³ 5 U.S.C. § 402 (statement of purpose).

¹⁴ Id.

¹⁵ Inspector General Reform Act of 2008, Pub. L. No. 110-409, 122 Stat. 4302 (2008); see Congressional Research Service, supra note 9 (describing creation of CIGIE and its Integrity Committee functions).

¹⁶ Securing Inspector General Independence Act of 2022, supra note 9; see Wikipedia, 2025 Dismissals of U.S. Inspectors General, https://en.wikipedia.org/wiki/2025_dismissals_of_U.S._inspectors_general (January 24, 2025 mass firing of at least 17 federal IGs; eight filed suit February 12, 2025; federal court ruled dismissals unlawful September 24, 2025 but declined to reinstate).

¹⁷ Nevada Cannabis Compliance Board, Annual Report Pursuant to NRS 678A.480 (2024), https://www.leg.state.nv.us/Division/Research/Documents/RTTL_NRS678A.480_2024.pdf (CCB Inspection/Audit Division required by NRS 678A.480 to perform routine audit of each licensed establishment at least once per cycle; Investigations Division conducts financial and operational audits including in-person interviews, background checks, and financial analysis).

¹⁸ Nevada Cannabis Compliance Board, Biennial Report 2025, https://ccb.nv.gov/wp-content/uploads/2025/02/CCB-Biennial-Report-2025-FINAL.pdf (“Audit and Inspection: Teams completed all fieldwork and 100% of licensees were visited”).

¹⁹ Mass.gov, OIG Finds Poor Management at CCC Resulted in Failure to Collect Fees for Two Years (Mar. 27, 2025), https://www.mass.gov/news/oig-finds-poor-management-at-ccc-resulted-in-failure-to-collect-fees-for-two-years (Inspector General Jeffrey S. Shapiro exercising general-jurisdiction oversight over the CCC; investigation initiated after hotline complaint; characterized lapse as “an egregious operational breakdown”; flagged approximately $550,000 in uncollected prorated extension fees and up to $1.2 million in potential provisional licensing fees).

²⁰ Mass.gov, Cannabis Control Commission – Finding 1, https://www.mass.gov/info-details/cannabis-control-commission-finding-1 (161 administrative extensions granted without collection of prorated fees; CCC’s own recalculated total was $535,914.49, revised from an initial estimate of $555,671 after correcting a calculation error).

²¹ Mass.gov, OIG Finds Poor Management at CCC, supra note 19 (Inspector General Jeffrey S. Shapiro flagged approximately $550,000 in uncollected prorated extension fees and up to $1.2 million in potential provisional licensing fees; characterizing the lapse as “an egregious operational breakdown”).

²² Mass.gov, Audit Identifies Mismanagement, supra note 4 (describing “appearance of potential favoritism and/or impropriety” in fee collection and “a lack of supervision and minimal accountability”).

²³ WBUR News, In Wake of Critical Audit, Cannabis Commission Shares Progress (Aug. 19, 2025), https://www.wbur.org/news/2025/08/19/cannabis-commission-critical-audit (reporting audit finding of financial misstatements, reporting inaccuracies, and risk of fraud).

²⁴ Id. (quoting audit conclusion that “breakdown of management structure and role consolidation” caused operational and compliance risks).

²⁵ Mass.gov, Audit Identifies Mismanagement, supra note 4 (finding: “the lack of a fully compliant internal control plan leaves the CCC unprepared to address emerging risk”).

²⁶ WBUR News, supra note 23 (CCC’s budget requests for IT upgrades denied in both FY2025 and FY2026 state budgets).

²⁷ WBUR News, As Cannabis Commission Is Again Mired in Turmoil, Mass. Officials Push for Overhaul (Sept. 4, 2025), https://www.wbur.org/news/2025/09/04/cannabis-massachusetts-turmoil-settlement-dizoglio (House voted unanimously to overhaul CCC governance structure).

²⁸ California Department of Finance, California Department of Cannabis Control Performance Audit (June 2025), https://oreports.dof.ca.gov/reportPdf/2278/California%20Department%20of%20Cannabis%20Control%20June%202025 (finding that “the majority of compliance inspections/investigations are reactive, as they are initiated by complaints”).

²⁹ Id. (recommending DCC consider “a more proactive approach, such as an increased number of unannounced routine inspections”).

³⁰ California State Auditor, Report 2023-048, Cannabis Business Licensing: Inadequate Oversight and Inappropriate Expenditures Weaken the Local Jurisdiction Assistance Grant Program (Aug. 29, 2024), https://www.auditor.ca.gov/reports/2023-048/ (DCC administered $100 million grant program with insufficient staff; approved questionable spending plans; failed to monitor grantee progress).

³¹ California State Auditor, Reports — Cannabis, https://www.auditor.ca.gov/reports/policy-area/cannabis/ (California law requires the State Auditor to issue performance audit recommendations and follow up on agency compliance at 60 days, six months, and one year after each report).

³² Oregon Health Authority, Oregon Psilocybin Services – Administrative Rules, https://www.oregon.gov/oha/ph/preventionwellness/pages/psilocybin-administrative-rules.aspx; The Marijuana Herald, Oregon House Unanimously Approves Bill Expanding Psilocybin Access and Oversight (Apr. 15, 2025), https://themarijuanaherald.com/2025/04/oregon-house-unanimously-approves-bill-expanding-psilocybin-access-and-oversight/ (describing HB 2387 restructuring of OPAB).

³³ OregonPsychedelics.org, Oregon Psychedelics Information Portal, https://oregonpsychedelics.org/ (reporting as of 2025: 31 licensed service centers, 356 licensed facilitators, approximately 8,000 clients).

³⁴ Oregon Health Authority, Oregon Psilocybin Services – Senate Bill 303 and Data Collection Information, https://www.oregon.gov/oha/ph/preventionwellness/pages/psilocybin-sb303-and-data-collection.aspx; Oregon Health Authority, Oregon Psilocybin Services Data Dashboard, https://www.oregon.gov/oha/ph/preventionwellness/pages/psilocybin-data-dashboard.aspx.

³⁵ Willamette Week, Taxpayers May Soon Be Filling the Funding Gaps in Oregon’s Psilocybin System (May 24, 2023), https://www.wweek.com/news/2023/05/24/taxpayers-may-soon-be-filling-the-funding-gaps-in-oregons-psilocybin-system/; Willamette Week, Oregon’s Psychedelic Service Centers Are Closing Amid High Costs and Tough Regulation (June 3, 2025), https://www.wweek.com/news/2025/06/03/oregons-psychedelic-service-centers-are-closing-amid-high-costs-and-tough-regulation/ (“The health authority had to tap the state’s general fund for $3.1 million to operate the program in the current biennium . . . [and] there is no funding that OPS is aware of that is coming from the Legislature to support the program for 2025–27”).

³⁶ Colorado Department of Natural Medicine, About Us, https://dnm.colorado.gov/about-us (Colorado’s Natural Medicine Division is within the Department of Revenue; first state healing center license issued April 2025; license applications accepted December 31, 2024); Snell & Wilmer, Colorado’s Magic Mushroom Industry Has Officially Arrived (Oct. 31, 2025), https://www.swlaw.com/publication/colorados-magic-mushroom-industry-has-officially-arrived/ (Denver issued its first local healing center license on July 23, 2025 under the city’s separate municipal licensing regime; first state-regulated session June 6, 2025).

³⁷ Oregon Health Authority, SB 303 and Data Collection, supra note 34 (data collection requirements including race, gender identity, sexual orientation, income, and adverse reactions).

³⁸ Congressional Research Service, supra note 9, at 6–8 (distinguishing “establishment IGs” from “designated federal entity” IGs, the latter appointed by agency heads and scalable to smaller agencies).

³⁹ The Marijuana Herald, supra note 32 (HB 2387 restructured OPAB to include representation from tribal communities, mental health professionals, service center operators, and licensed facilitators).

⁴⁰ Nev. Rev. Stat. § 678A.360 (one CCB board member must possess expertise in corporate finance and auditing); Nev. Rev. Stat. § 678A.530 (establishing Cannabis Compliance Fund); Nevada Cannabis Compliance Board, Biennial Report 2025, supra note 18.