The Massachusetts Cannabis Control Commission failed to collect upwards of $1.7 million in licensing fees, according to a state Inspector General’s office investigation.

Inspector General Jeffrey Shapiro called the lapse “an egregious operational breakdown” that underscores the need for statutory reform of the troubled agency.

According to the report, commission staff extended the expiration dates of more than 150 marijuana business licenses, and then didn’t collect about $550,000 worth of fees over a period of two years.

In the same timeframe, investigators said, the commission granted more than 120 new “provisional” licenses without collecting as much as $1.2 million in license fees.

“The idea that an agency for two years cannot be held accountable and responsible for a significant business operation in many ways is beyond belief,” Shapiro said in an interview.

Commission staff told investigators they’ve since collected more than $320,000 worth of missing fees.

Cannabis Control Commission executive director Travis Ahern pushed back against Shapiro’s $1.2 million assessment in a statement Thursday.

Businesses with provisional licenses only need to pay the fees if and when they get a final license, he said.

“Only a very small number of provisionally approved applicants actually continued with their license applications,” Ahern said, adding that all provisional fees “were properly paid, collected, and accounted for.”

The inspector general’s office said the commission must conduct an internal audit to determine how much of the $1.2 million is still missing.

Shapiro previously asked the Legislature to appoint a receiver to oversee the commission, which was plagued with allegations of toxicity, workplace harassment and infighting.

He no longer believes the commission needs a receiver, he said, citing new leadership. But he reiterated his call for statutory reform to clarify the commission’s leadership structure.

“The Legislature is the entity that created this agency, and is the entity that can fix it,” he said.