Of course Grigori cities have religions..... Cassiel doesn't support them, but doesn't persecute them either. However, a theocracy is much like an ecclesia.... the Church would make the rules.... in the case of the Grigori, which Church?
God-King is a naming problem.... I think of the civic as more of a centrally-controlled form of government early on, if it doesn't fit the leader. I figure, your first city will be the seat of your government to start. Eventually, a 2nd city will be founded, relying heavily on the favors of the citizens of the 1st city in many cases. Therefore, the 1st city (probably your capital) demands something in return.... in this case, gold and raw materials. Once several cities in addition to your cap are in existence, the concept starts to fall apart if a heavy-hand isn't used. So eventually, it makes economic sense to switch to a more sprawl-oriented civic (City States or Aristocracy).
So while Cassiel would never permit worship of him, city leaders may still expect tribute from other nearby establishments, at least early on.