New Top California Cannabis Regulator Appointed By Newsom Must Fix The Program’s Failures (Op-Ed)

*“Kellum’s tenure will succeed only if he recognizes that the agency he now
leads cannot rebuild trust without acknowledging, clearly and without
qualification, the depth of the failures that preceded him and his
commitment to charting a new course.”*

*By Hirsh Jain, Ananda Strategy*

Late on the Wednesday evening before Thanksgiving, California Gov. Gavin
Newsom (D) quietly announced the appointment of Clint Kellum as the next
director of the state Department of Cannabis Control (DCC).

The timing of the announcement, released at a moment when the Newsom
administration could be confident that few Californians would be paying
attention, was not lost on close observers of the cannabis market. It
revealed the administration’s deep discomfort with the conversation this
transition should provoke: a candid examination of DCC’s failures under the
leadership of current director (and longtime Newsom ally) Nicole Elliott,
and the profound damage those failures have inflicted on California’s legal
cannabis market.

It is a conversation that’s long overdue.

Nearly a decade after the passage of Proposition 64, California’s legal
cannabis system bears little resemblance to what voters were promised.
Instead of a well-regulated market that displaced the illicit one, the
state has allowed unlicensed cannabis operators to flourish, unsafe and
untested products to proliferate and enforcement to collapse. The legal
market is now forced to compete with the very illicit activity legalization
was meant to eliminate.

But many of the industry’s deepest wounds were not inevitable consequences
of legalization. They were regulatory failures, and specifically failures
of DCC under its longtime leadership.

Since its inception, DCC has been at the center of a long and unbroken
sequence of scandals and breakdowns.

Most prominent was the pesticide testing scandal, in which the agency
allowed products contaminated with banned pesticides to be sold on the
legal market. This failure undermined the very premise of “legal and
tested” cannabis in California, a premise the state had used to justify
stringent compliance costs and high taxation.

As the regulatory agency tasked with ensuring safety failed at the most
basic level of product oversight, consumer confidence in the legal cannabis
market predictably collapsed.

Equally damaging was DCC’s failure to close loopholes in its “track and
trace” system that allowed so-called “burner distributor” licenses to move
illicit cannabis into the legal supply chain. These loopholes were well
known within the industry, repeatedly discussed in public forums and raised
directly with regulators. Yet DCC declined for years to take meaningful
enforcement action, allowing illicit actors to benefit from a system that
was supposed to regulate them.

This failure not only deprived legal operators of a level playing field, it
further blurred the line between legal and illicit commerce. It produced
the very outcome legalization was intended to prevent.

DCC’s mismanagement also extended to the administration of local grant
programs.

In a formal report, the California state auditor criticized DCC’s
“inadequate oversight” of cities receiving millions of dollars in state
equity grants, describing the “inappropriate expenditures” made using these
taxpayer dollars. Programs intended to remedy decades of disproportionate
enforcement instead became examples of weak accountability and public
corruption, perhaps unsurprising in a state where large sums of taxpayer
funds routinely go missing. The state auditor found that cities received
funding without ensuring that grants reached their intended beneficiaries,
and that DCC did little to intervene.

Tellingly, DCC faced serious allegations from its own employees as well.

A whistleblower lawsuit accused the agency of retaliating against employees
who had raised concerns about DCC’s regulatory failures and uneven,
retaliatory enforcement practices. Such allegations reinforced a broader
perception that the agency was animated by personal grudges, resistant to
criticism, unable to self-correct and particularly intolerant of dissent
within its own ranks.

These substantive failures were compounded by DCC’s unyielding insistence,
often stated boldly and publicly, that the legal cannabis market in
California was “healthy” and “growing.”

In reality, legal cannabis sales in California have fallen by more than 30
percent since 2021—a staggering decline. DCC’s refusal to acknowledge these
declines fostered an Orwellian culture of official unreality. Instead of
confronting the crisis, the agency’s messaging sought to obscure it,
hindering reform and leaving legislators, operators and consumers without
an honest assessment of the system’s condition.

Meanwhile, senior statewide leaders have begun to say openly what DCC has
long refused to admit.

State Treasurer Fiona Ma (D) recently stated that California’s cannabis
legalization framework was a “failure” and suggested that the state may
need to start over entirely. Attorney General Rob Bonta (D) acknowledged
that California’s cannabis taxes are punitively high and are responsible
for pushing consumers back into the dangerous illicit market.

These comments represent clear and unambiguous admissions, from the highest
levels of state government, that the system is not working.

The cumulative effect of these failures has been devastating. Hundreds of
municipalities in California still prohibit legal cannabis businesses,
understandably citing the visible failure of the legal market across much
of the rest of the state as justification. Licensed dispensaries continue
to compete with unlicensed storefronts that operate in the open, in part
because state and local authorities lack a coherent enforcement strategy.

Consumers face high prices, limited access, questionable testing integrity
and a regulatory environment that provides little confidence that legal
products are meaningfully safer or more reliable than illicit alternatives.

California’s failures have also rippled nationwide.

Because California is by far the largest potential cannabis market in the
United States, its chronic underperformance has suppressed the growth of
the cannabis industry nationwide. If California’s legal cannabis market
reached per-capita performance levels comparable to other states like
Michigan or Montana, its annual legal sales would be more than three times
higher—thirteen billion dollars, rather than the merely four billion
dollars recorded today.

The national implications are staggering. If the California market were
functioning properly, the United States legal cannabis industry would now
exceed forty billion dollars annually, rather than the roughly thirty-two
billion dollars it currently generates, and would support one hundred
thousand additional jobs in the cannabis industry.

Instead of propelling the national industry forward, California has become
a drag on national growth, an anchor weighing down an industry that should
be expanding far more rapidly.

These failures have also weakened the political case for cannabis
legalization across the country. In red and purple states, policymakers
regularly point to California’s regulatory chaos as evidence that
legalization produces disorder, fuels illicit activity and overwhelms
enforcement systems.

California, once expected to be the national model for cannabis regulation,
has become a cautionary example that opponents of reform invoke to slow
progress elsewhere.

DCC’s refusal to acknowledge these failures is not merely a bureaucratic
flaw. It is a political one.

For more than a decade, then-candidate and now-Governor Newsom has
presented himself as a champion of cannabis reform and promised that
California would build the most effective and equitable cannabis system in
the world.

By any honest assessment, these promises were never fulfilled. Under
Newsom’s watch, legalization faltered, the illicit market expanded, local
bans entrenched themselves and regulatory incoherence became the norm.

The administration has consistently avoided acknowledging these failures,
treating any admission of systemic breakdown as a political liability for
Newsom’s future ambitions, rather than a logical prerequisite for urgently
needed reform of California’s system.

DCC’s insistence that the California market is “healthy” and “growing”
reflects the governor’s unwillingness to admit that his cannabis legacy has
been defined by unfulfilled promises and steadily worsening conditions.

But Newsom is now a lame-duck governor, whose focus has clearly left
California and drifted toward national politics. This creates an opening
for Clint Kellum—that is, if he is willing to exercise independence in his
new role—not too much to ask in a position that pays a $230,000 base salary
($300,000 in “total compensation” once the lavish benefits for California
state executives are included). Unbeknownst to most taxpayers footing the
bill, it turns out that “public service” in California pays quite well.

Clint Kellum appointed new DCC Director by Governor Newsom@CAcannabisdept
pic.twitter.com/OkdVwOuqFz

— Hirsh Jain (@anandastrategy) November 27, 2025

A new DCC director cannot, on his own, revise tax structures, mandate local
participation or rewrite Proposition 64.

But Kellum can do something that has been conspicuously absent from the
agency in recent years. He can speak honestly.

Kellum can acknowledge the failures that occurred under his predecessor,
describe the structural weaknesses the agency now faces, reject the
“political spin” that suggests the California market is healthy and growing
and commit to forthright, data-driven leadership going forward. He can echo
what Ma and Bonta have already said: that California’s cannabis system has
been a failure, that it has harmed market participants and consumers alike
and that it requires immediate and comprehensive reform.

Honesty, however, is not a responsibility that falls on regulators alone.

For years, many California cannabis stakeholders—including operators,
attorneys, consultants and even trade associations—declined to criticize
DCC publicly, out of fear of retaliation or a desire to preserve
professional relationships. Some spoke critically of DCC behind closed
doors, while offering praise in public settings.

That omission was not a neutral decision. It was an act of complicity. It
insulated the agency from accountability, allowed dysfunction to deepen and
contributed to the erosion of the legal market. A sustainable regulatory
system cannot exist unless those subject to regulation are willing to
criticize the regulator, even at the cost of maintaining personal
relationships with powerful officials, which many “white collar”
professionals are often loath to do.

California’s cannabis industry now faces a choice. It can continue to treat
regulators with a dishonest deference in public and frustration in private,
a pattern that has helped produce the system that exists today. Or it can
insist on transparency, accountability and integrity from an agency whose
decisions affect billions of dollars and tens of thousands of livelihoods.

DCC does not need perfection. It needs competence, candor and a willingness
to confront the truth—lacking to date. Kellum’s tenure will succeed only if
he recognizes that the agency he now leads cannot rebuild trust without
acknowledging, clearly and without qualification, the depth of the failures
that preceded him and his commitment to charting a new course.

Moreover, whether the coming years become a period of recovery for the
California cannabis market or simply a continuance of a “lost decade” of
cannabis regulation will depend not only on Kellum’s choices, but also on
the willingness of all industry stakeholders to be unafraid to publicly
insist that California’s cannabis regulator finally rise to the level of
the important task before it.

However it unfolds in California, the entire country will be watching.

*Hirsh Jain is the CEO of Ananda Strategy, a cannabis-focused business
advisory firm that works with many of California’s leading cannabis brands
and retailers on matters ranging from competitive licensing, legislative
strategy, regulatory intelligence, market expansion, and other corporate
initiatives.*

The post New Top California Cannabis Regulator Appointed By Newsom Must Fix
The Program’s Failures (Op-Ed) appeared first on Marijuana Moment.