No matter how much California Gov. Gavin Newsom gallivants around Europe, fluffs his supposed presidential creds, and tries to pretend he isn't the person who drove California into a ditch, the stench of the state's fraud and corruption clings to him like cheap cologne. Now the CalDOGE team, led by Republican gubernatorial candidate Steve Hilton, is hard at work to ensure Newsom will never be able to separate himself from the corruption he furthered both before and during his eight-year, accidental governorship.
CalDOGE's first report out of the gate exposes the California Cannabis Tax Fund shell game. A game that was engineered by Hair Gel himself.
When Newsom was lieutenant governor, he was the face and the staunch advocate for marijuana legalization with his Proposition 64, the "California Cannabis Tax Fund (CCTF)" Act. In legalizing cannabis distribution and use throughout the state, the proceeds were supposed to be used for substance abuse prevention. After its passage in 2016, Newsom took a victory lap and made this proclamation to one of his favored press outlets:
In a profile in Billboard magazine a few months later, he acknowledged that his legacy and that of Proposition 64, the legalization measure, were now tied together:
“Put it this way: Everything that goes wrong, you’re looking at the poster child.”
Behold your poster child. This latest information drop from CalDOGE puts Newsom squarely in the thick of this California corruption.
Gavin Newsom’s California Explodes in Fraud as he Galavants in Germany.
— California Globe (@CaliforniaGlobe) February 13, 2026
Newsom makes Tim Walz look like a piker as Steve Hilton’s CalDOGE Uncovers $370M in CA Fraud.@CaliforniaGlobe link 👇👇👇 pic.twitter.com/KGSDhMiWJ9
Six years and $370.25 million later, Rhetor's AI-powered forensic audit — conducted in partnership with CAL DOGE — reveals where that money actually went: into a sprawling network of 517 grants funding political organizing, voter registration drives and "social justice youth development," all administered by a single nonprofit intermediary most Californians have never heard of.
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The cannabis tax proceeds are supposed to be distributed through the California Department of Health Care Services (DHCS). However, DHCS has disconnected itself from this process, instead contracting with The Center at Sierra Health Foundation, a 501(c)3 organization, which acts as the "de facto bank for the state's equity, prevention and youth funding."
After The Center at Sierra Health Foundation takes as much as 20 percent off the top for "administrative fees," it uses an application process to sub-grant the remaining funds to community-based organizations.
The state does not pick who gets the grants. The intermediary does, bypassing the rigorous procurement processes mandated for direct government contracts under the Department of General Services and State Controller oversight.
RedState has reported extensively on the quagmire of California's "behested payments" system, which is simply a legal form of money laundering. Lo and behold, this method of fraud factors heavily in the distribution of the cannabis tax money.
The pipeline starts with the governor's office, and the relationship between The Center at Sierra Health Foundation and the governor extends well beyond a standard contract. According to the California Fair Political Practices Commission's Behested Payment Transparency Report (pg.19-20), in 2020 alone, Sierra Health Foundation was the third-largest payor of behested payments statewide at $14,747,724 and the single largest payee of behested payments statewide at $30,869,901 — payments Newsom solicited from private companies.
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Newsom himself was the top behesting official in the state that year at $226.8 million total (pg. 20), and Sierra Health Foundation ranked among his top three financial partners in the system.
Behested payments are legal in California with no dollar limits, but the California Fair Political Practices Commission itself flagged the scale as concerning enough to implement new transparency regulations.
Essentially, voters were manipulated by toxic empathy, and deceived with social-justice speak, to fund Democrat get-out-the-vote efforts disguised as compassionate drug prevention.
Voters approved cannabis tax revenue for substance abuse prevention. DHCS redefined "prevention" to include political organizing — then buried it inside the grant criteria of a nonprofit intermediary most Californians have never heard of.
[...]
The pipeline flows from the governor's office to The Center at Sierra Health Foundation, the fiscal intermediary, who determines grant recipients. Rather than awarding grants to recipients that qualify for Proposition 64's original purpose — fighting substance abuse — The Center uses Prop. 64's taxpayer dollars to fund leftwing activist organizations.
The grant recipients that received approval from The Center at Sierra Health Foundation are also telling. Two of the biggest recipients:
- Elevate Youth - which does social justice youth development and civic engagement; and,
- United Way of Santa Cruz County - focused on activism for BILPOC and LGBTQ+ youth families.
Both are leftwing activist organizations which have little to nothing to do with substance abuse prevention. These organizations did the work of creating sub-sub-grants for smaller advocacy organizations in order to further disguise where the money was going.
The $370.25 million was not distributed through a handful of large, auditable contracts. It was dispersed across 517 individual grants, averaging $716,150 each.
Grant Fragmentation
517 grants · avg $716,150
No single grant large enough to trigger intensive audit scrutiny.
This fragmentation makes traditional auditing nearly impossible. No single grant is large enough to trigger intensive audit scrutiny. The dispersal prevents consolidated oversight of outcomes. And because The Center — not the state — manages the sub-granting process, no single state auditor has a comprehensive view of where the money lands or what it produces.
This is the kind of fraud pattern that manual auditors miss by design. When grants are deliberately fragmented across hundreds of recipients, the mislabeling only becomes visible at scale.
Thanks to CalDOGE's partnership with Rhetor to use their AI technology, they were able to unearth the fraud hidden beneath the supposed legitimate layers.
Rhetor's AI analysis — deployed as part of its CAL DOGE partnership — cross-referenced RFA language, grant award descriptions, cost-per-participant calculations and program outcome reporting across the full portfolio of 517 grants. The pattern detection surfaced what no individual audit could: a systematic reclassification of political organizing as public health spending, replicated across hundreds of awards.
CalDOGE concludes this report with this challenge: (emphasis added)
The receipts are public. The grant guidelines are public. The cost-per-participant math is public. None of this was hidden. It was just fragmented enough that no one was supposed to connect the dots.
Rhetor and CAL DOGE connected them. The question now is whether Californians will act or wait until Sacramento sends the next $370 million into the same pipeline.
Republican candidate Steve Hilton is playing this smartly and garnering attention to the level of corruption that a complicit California media has kept hidden, and Newsom would prefer be ignored. The 2028 Democrat presidential run is Newsom's goal, and all his fraud needs to be wrapped around his neck like an albatross to sink him like a stone. America must be saved from him.
And so does California. If Riverside County Sheriff Chad Bianco steps down from his race, California might have a fighting chance to elect a Republican governor for the first time in 16 years.
EDITOR'S NOTE: RedState Managing Editor Jennifer Van Laar serves on the CalDOGE Advisory Board.
Editor’s Note: The mainstream media isn't interested in the facts; they're only interested in attacking the president. Help us continue to get to the bottom of the massive blue-state fraud epidemic by supporting our truth-seeking journalism today.
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