Oregon’s New Pot Retailer License Requirement Highlights Taxes

On Tuesday(16 May 2023), Governor Tina Kotek issued an order to the Oregon Liquor and Cannabis Commission saying that licenses would not be issued or renewed to cannabis merchants with outstanding tax debts.

The order mandates that the OLCC stipulate state tax compliance as a condition for issuing or renewing retail cannabis licenses. Anyone seeking a retail cannabis license from the OLCC must show proof of tax compliance.

KOIN News Posted on Twitter and wrote: Kotek told the OLCC today that cannabis retailers who owe taxes cannot receive or renew licenses in Oregon.

Cannabis retailers who owe taxes will no longer be able to receive or renew their licenses in Oregon due to a new directive Kotek gave the OLCC today. https://t.co/ZXvTqeOACk

— KOIN News (@KOINNews) May 17, 2023

“This will help ensure that all businesses are operating under the same rules and not getting any competitive advantage if they haven’t paid their taxes,” Kotek said.

Oregon Secretary of State Shemia Fagan had been working for the proprietors of one of the state’s top cannabis companies, La Mota, and the company owed millions in state and federal taxes, thus, this announcement comes weeks after that revelation broke.

When it comes time for cannabis shops to renew their licenses, the OLCC plans to incorporate a new tax compliance tool. A tax compliance certificate form, available from the Oregon Department of Revenue, must be submitted to the OLCC by all applicants.

“I think the main message from us is, you want to hit it head-on, you want to engage with us directly,” said Department of Revenue Director Betsy Imholt. “We have tools available to us, including going into an agreement or a payment plan with any taxpayer.”

The Internal Revenue Service notes that collecting from such a cash-based sector is challenging. “One of the big tools that collectors use is to garnish bank accounts, and that’s impossible if they don’t have one,” Imholt said.

Kotek’s office has reported that the Oregon Department of Revenue has found a greater rate of non-compliance with tax payments from cannabis retailers in Oregon compared to its other tax programs.

“Most of the folks in this industry are paying their taxes. We don’t want to lose sight of that. But we see that 9% rate and that’s it’s higher than other areas,” said OLCC Director Craig Prins. “We want to address that and get more folks into compliance.”

Kotek’s office stated in a press release that this regulation does not apply just to cannabis shops. The Oregon Department of Revenue currently works with a number of other organizations to verify a taxpayer’s tax status before issuing a license, approving a contract, or appointing them to a board or commission.

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“Oregon’s cannabis industry is important to the state’s economy, and the sales tax it generates is vital to the state’s budget,” said Craig Prins, OLCC interim executive director. “That’s why it’s critically important for us to get this group of licensees into compliance and paying their fair share.”

According to Kotek’s office, The state government will benefit from increased and standardized tax compliance. The Oregon Department of Revenue will examine equitable enforcement strategies and payment arrangement options.

The Oregon Liquor Control Commission and the Oregon Department of Money are optimistic that the new regulations will keep the cannabis sector on the straight and narrow, allowing Oregon to continue to receive its essential tax money.

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