Cocoa bean hull mulch is widely used for agriculture and gardening as a mulch. The cocoa bean itself is a rich source of the alkaloid methylxanthines, theobromine and caffeine. If animals ingest whole beans, or cocoa powder, signs of "chocolate toxicity" could develop.
If animals contact cocoa bean hulls in garden mulch, or if used as bedding, the hull surface may contain residues of pesticides such as organochlorines (OCl) and organophosphates(OP), and other pesticides perhaps not licensed in the US or Canada, because of their origin primarily in Central and South America. Before using it as an organic gardening mulch, it has been recently proposed that this mulch be composted or tested to contain less than 10 parts per billion of the OCl and OP pesticides.
One study that dealt with cocoa shell meal as a possible food source for broiler chickens measured theobromine concentrations at 1.3% in the hulls, so considering the sensitivity of dogs to theobromine, it would be prudent not to allow them to ingest cocoa bean shells from gardens.
Cats can be assumed to have the same risk of contact pesticide exposure, but they are less likely to eat the mulch than dogs.