Oregon missed $18M in cannabis tax revenue, new rules announced
Oregon was missing about $18.7 million in retail tax revenue from cannabis retailers last budget year, according to the Department of Revenue.
Officials hope the announcement of some new requirements will get that green flowing into the state coffers.
Cannabis retailers will now have to prove they've paid their taxes in order to get or renew their business licenses, Gov. Tina Kotek's office announced.
Dispensaries will have to obtain a certificate of compliance from the Oregon Department of Revenue and provide that certificate to the Oregon Liquor and Cannabis Commission (OLCC) as part of the license application and renewal process.
Who is not complying?
In a joint news conference with the Department of Revenue and OLCC, neither agency detailed which retailers have not been paying taxes and they said noncompliance is a relatively small problem.
"Most of the folks in this industry are paying their taxes," OLCC executive director Craig Prins said. "We don't want to lose sight of that."
Still, cannabis retailers are less compliant than other tax programs, according to data from the Department of Revenue. Dispensaries have a 9% delinquency rate, compared to 3% for other businesses.
Roughly 11% of dispensaries in tax debt are on a Department of Revenue-approved payment plan.
Why the new rules?
The announcement comes on the heels of an investigation by Willamette Week that found owners of one of the state's largest chains, La Mota, owed the state $1.6 million in tax liens. The same parent company was at the center of a controversy that led to Oregon Secretary of State Shemia Fagan's resignation.
Tax revenue from cannabis is already down in Oregon as retailers struggle to sell product. And it is "vital to the state's budget," Prins said in a statement.
"That's why it's critically important for us to get this group of licensees into compliance and paying their fair share," he said.
Tax compliance is already a requirement for some other licenses, including contract labor and Oregon Lottery contractors.
The OLCC begin a rulemaking process this year and will enact temporary rules in the meantime, the agency said.
“I’m grateful to the current leadership at the OLCC and the Department of Revenue for working collaboratively to resolve this long-standing need for equivalent tax compliance across cannabis and liquor sectors,” Kotek said in a statement. “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.”
This article originally appeared on Salem Statesman Journal: Cannabis vendors must prove tax compliance in Oregon
