Governor Tina Kotek announced she is directing the Oregon Liquor and Cannabis Com-mission (OLCC) to make state tax compliance a requirement for the agency to issue or renew cannabis retail licenses.
At Governor Kotek’s direction, the OLCC and Oregon Department of Revenue (DOR) will implement a new mandate requiring applicants for cannabis retail licenses to provide OLCC proof of tax compliance as part of their application process. OLCC has existing statutory authority to make this change and will engage in administrative rulemaking to add this requirement.
“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,” Governor Kotek said. “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.”
Oregon law permits ensuring tax compliance before the issuance of some licenses, contracts, employment, and appointments can be finalized. OLCC will work to add an additional tax compliance tool to its application and renewal process for cannabis retailers by requiring licensees or applicants to provide OLCC with a tax compliance certificate from DOR.
Data from DOR shows that cannabis retailers have a higher non-compliance rate in Oregon for payment of taxes (9%) than other tax programs administered by the agency (3%). The OLCC has indicated that there are approximately 823 licensees that would need to obtain the tax compliance certificate in any given year.
“We want to help people comply with Oregon’s tax laws,” said Betsy Imholt, Oregon Department of Revenue Director, “This is one more opportunity to connect with taxpayers to ensure their taxes are paid. It is good for both Oregon and for the taxpayer.”
Several agencies already partner with DOR to confirm that a person is in tax compliance before the issuance of a license, execution of a contract, or appointment to a board or commission.
“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.”
This change at OLCC is the first step to expanding and standardizing tax compliance requirements across state government. In addition to evaluating the need for any statutory or administrative changes, DOR will evaluate ways to embed equity into enforcement and compliance, such as the use of payment plans to be brought into compliance, and through automating the certification process to meet the increased demand for compliance certifications.