Adam Jackson
Oregon is now mandating marijuana retailers to establish good standing with state tax collectors before renewing their business licenses — or risk losing the permit altogether.
The rule is a temporary measure set to last until December 12, but will be revisited later this year for permanent rulemaking, the Oregon Liquor and Cannabis Commission’s Recreational Marijuana Program said in a June 16 statement. The industry has been marked as the least tax-compliant business sector in the state, with Oregon losing out on an estimated $18.7 million in sales tax revenue.
Beginning September 15, cannabis businesses must prove tax compliance to renew their licenses, and with immediate effect, the same requirement is applicable to any business filing for a change of ownership. According to Mark Pettinger, spokesperson with the OLCC, businesses are struggling with compliance due to slim profit margins and restricted access to banking.
“The first effort is to try to get those businesses complying, so that they’re making at least some payments, if not making payments in full,” Pettinger told KLCC public radio. The new regulations were initiated following a scandal involving the former Secretary of State, Shemia Fagan, and a tax delinquency revelation involving one of the state’s largest cannabis chains, La Mota.
The cannabis industry is grappling with declining prices, falling sales and high federal taxes, as they’re unable to take standard business tax deductions. Some, such as Curaleaf Holdings, have exited Oregon altogether, looking for potential buyers for their retail outlets.
Oregon Gov. Tina Kotek, in May, ordered the OLCC to mandate proof of state tax compliance as a prerequisite for renewing a retail license. The idea is to discourage entities from leveraging a de facto loan by avoiding tax payments, Portland Business Journal reported, thus enabling them to expand operations and undercut competitors’ prices at taxpayers’ expense.
Oregon cannabis retailers can now obtain tax compliance certificates from the Department of Revenue, which has partnered with the OLCC to launch a website providing further details on the paperwork and eligibility criteria. The commission will work with local cannabis advocates to revise the rules later this year.
