Hilton's CAL DOGE Alleges $370M in Cannabis Tax Funds Diverted to 'Leftwing Political Activism'

Investigation finds funds meant for substance abuse prevention instead used for voter registration, civic engagement, and 'social justice youth development'

Published on Feb. 14, 2026

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A new investigation by CAL DOGE, an initiative launched by California gubernatorial candidate Steve Hilton and state controller candidate Herb Morgan, has uncovered allegations that $370 million in cannabis tax revenue intended for youth substance abuse prevention has instead been funneled to left-wing political organizing efforts. According to the report, the funds were distributed through a nonprofit intermediary, The Center at Sierra Health Foundation, which awarded hundreds of grants to organizations focused on 'civic engagement', 'power building', and other activities unrelated to the original purpose of the tax revenue.

Why it matters

This case highlights concerns about the misuse of taxpayer funds and the potential for political influence over the distribution of public money, especially in the context of California's ongoing challenges with substance abuse and addiction. The allegations raise questions about transparency, oversight, and the need for stronger accountability measures to ensure that public funds are used for their intended purposes.

The details

According to the investigation, The Center at Sierra Health Foundation, which was awarded a master contract by the California Department of Health Care Services to distribute Proposition 64 cannabis tax revenue, has funneled $370 million to 517 different organizations through a grant-making process that prioritizes 'social justice youth development' and 'civic engagement' over substance abuse prevention. The report alleges that some of the grant recipients, such as the Jakara Movement and Asian Refugees United, have no clear connection to substance abuse prevention and are instead focused on voter registration and other political activities.

  • Proposition 64, the state's marijuana legalization law, was approved by voters in 2016.
  • The Center at Sierra Health Foundation has received a master contract from the California Department of Health Care Services to distribute Proposition 64 cannabis tax revenue since 2020.

The players

Steve Hilton

A candidate for governor of California and co-founder of CAL DOGE, an initiative to investigate fraud, waste, and abuse in California state government.

Herb Morgan

A candidate for California state controller and co-founder of CAL DOGE.

The Center at Sierra Health Foundation

A 501(c)(3) nonprofit organization that has been awarded a master contract by the California Department of Health Care Services to distribute Proposition 64 cannabis tax revenue to community-based organizations.

Elevate Youth California

A financial intermediary that has received $370 million from the California Cannabis Tax Fund and distributed the funds to various organizations, according to the CAL DOGE investigation.

Chet Hewitt

The CEO of The Center at Sierra Health Foundation, whose total compensation has increased by 50% since 2018 as the organization's government contract volume has grown.

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What they’re saying

“After collecting $1 billion annually from the Cannabis Tax, that money should be spent on substance abuse prevention as stated in the law, not political organizing to keep Democrats in charge of California's decline.”

— Jenny Rae Le Roux, Director of CAL DOGE (contracostaherald.com)

“In seven days of work, CAL DOGE has already uncovered more fraud than Gavin Newsom and his regime have done in their seven years in power. And we're not even elected yet! This is exactly why I set up CAL DOGE in the first place, to expose fraud and corruption in the system so we can act to stop it on day one.”

— Steve Hilton (contracostaherald.com)

What’s next

The CAL DOGE team plans to continue its investigation and push for formal audits, investigations, and enforcement actions to address the alleged misuse of Proposition 64 cannabis tax revenue.

The takeaway

This case highlights the importance of transparency, oversight, and accountability in the use of public funds, especially when it comes to initiatives intended to address critical social issues like substance abuse. The allegations raise concerns about the potential for political influence over the distribution of taxpayer money and the need for stronger safeguards to ensure that public resources are used for their intended purposes.