City of Sacramento
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915 I Street Sacramento, CA 95814
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File ID: 2026-00482 2/24/2026
City Auditor’s Fiscal Year (FY) 2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund
File ID: 2026-00482
Location: Citywide
Recommendation: Pass a Motion approving the City Auditor’s FY2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund.
Contact: Farishta Ahrary, City Auditor, (916) 808-7266, [email protected]; Joe Fleming, Senior Fiscal Policy Analyst, (916) 808-7285, [email protected]; Office of the City Auditor
Presenter: Farishta Ahrary, City Auditor, (916) 808-7266, [email protected]; Joe Fleming, Senior Fiscal Policy Analyst, (916) 808-7285, [email protected]; Office of the City Auditor
Attachments:
1-Description/Analysis
2-City Auditor’s Fiscal Year 2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund
3-Presentation
Description/Analysis
Issue Detail: This project was approved as part of the City Auditor’s FY2025/26 Work Plan.
According to the City Council Rules of Procedures, the Budget and Audit Committee shall receive, review, and forward to the Council as appropriate, reports, recommendations, and updates from the City Auditor. This report documents the City Auditor’s FY2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund.
Policy Considerations: The Sacramento Children and Youth Health and Safety Act, also known as Measure L, was passed by voters in November 2022. Measure L amended the Sacramento City Charter, adding Section 120 - Sacramento Children’s Fund. The section outlines the establishment and operations of the "Sacramento Children’s Fund" in the City of Sacramento.
File ID: 2026-00482 2/24/2026
In subsection (c) and paragraph (2) of the Sacramento Children’s Fund, the City Auditor is directed to publish an audited amount of Cannabis Business Operations Tax (CBOT) for the prior fiscal year by January 15 of each year. This report documents the City Auditor’s FY2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund.
Economic Impacts: None.
Environmental Considerations: None.
Sustainability: None.
Commission/Committee Action: On February 3, 2026, the Budget and Audit Committee passed a motion to accept the City Auditor’s FY2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund and to forward to the City Council for approval.
Rationale for Recommendation: This staff report provides the City Council with information that may be used to meet its responsibility to provide oversight and supervision of the City Auditor and other City departments.
Financial Considerations: The City contracted with Macias Gini & O’Connell LLP to audit the FY2024/2025 Cannabis Business Operations Tax Amount at a cost of $19,050. The cost of the City Auditor’s FY2024/2025 Audited Cannabis Business Operations Tax Amount for the Sacramento Children’s Fund was funded as allowable administrative costs from the Sacramento Children’s Fund.
Local Business Enterprise (LBE): None.
CITY OF SACRAMENTO
CANNABIS BUSINESS OPERATIONS TAX REVENUE
Independent Auditor's Report and
Schedule of Cannabis Business
Operations Tax Revenue
Year Ended June 30, 2025
Report No. 2025/26-07
January 2026
·mGO.
Certified
Public
Accountants
City Auditor’s Fiscal Year 2024/2025
Audited Cannabis Business
Operations Tax Amount for the
Sacramento Children’s Fund
Office of the City Auditor | Research and Analysis Division Farishta Ahrary, City Auditor
Measure L
● Also known as the Sacramento Children and Youth Health and Safety Act ● Passed by voters in 2022
● Established City Charter Section 120 – Sacramento Children’s Fund ● Requires the City Auditor to publish an audited amount of CBOT each fiscal year ● The General Fund equivalent of 40% of the audited amount of CBOT is allocated to the Children’s Fund
2 Objective, Scope, and Methodology
● The objective of this project was to fulfill the requirement outlined in §120 Sacramento Children’s Fund, section (c)(2) of the Sacramento City Charter by publishing an audited amount of CBOT for the prior fiscal year. ● We determined that contracting with the City’s external auditors would be the most efficient use of resources to complete this audit. As such, the external auditors completed the audit in accordance with Generally Accepted Auditing Standards and Government Auditing Standards.
3 FY 2024/2025
Audited
Amount of
CBOT
Revenue
4 $22,609,932
Budget vs Actuals
5 ● The City makes an estimate of CBOT revenues
each year during the budget process and
budgets an amount equivalent to 40% of the
CBOT revenue budget to be transferred from
the General Fund to the Children’s Fund.
● During the fiscal year end process, the Finance
Department ‘trues-up’ the contribution to the
Children’s Fund to match 40% of the actual
CBOT revenue.
FY 2024/25 (millions, rounded)
CBOT Approved Budget: $23.3
Children’s Fund Budget: $9.3
Actual CBOT: $22.6
CBOT under Budget: -$0.7
Transfer to Children’s Fund
(‘true up’): -$0.3
Total to Children’s Fund: $9.04
Thank you
Farishta Ahrary
City Auditor
916-808-7266
[email protected]
Joe Fleming
Senior Fiscal Policy Analyst
916-808-7285
[email protected]
6