Anyone hoping to run a cannabis dispensary in Oregon will be required to prove they鈥檝e paid their state taxes before receiving a license or having an existing license renewed, under changes announced by Gov. Tina Kotek on Tuesday.
That鈥檚 already a step that some Oregon agencies take before issuing licenses. But the Oregon Liquor and Cannabis Commission doesn鈥檛 currently check to make sure applicants for cannabis retail licenses don鈥檛 have unpaid taxes, despite a higher percentage of nonpayment among cannabis businesses.
The lack of tax accountability has gotten attention in recent months, following by Willamette Week that one large cannabis chain, La Mota, was allowed to expand across Oregon even as it racked up more than $1.5 million in unpaid state taxes.
The owners of that chain, Rosa Cazares and Aaron Mitchell, became embroiled in scandal after news they鈥檇 hired then-Secretary of State Shemia Fagan as a consultant . They鈥檝e also been significant political donors to Kotek and other Democrats.
Kotek鈥檚 announcement Tuesday didn鈥檛 mention the troubled dispensary chain by name. And far more businesses than La Mota could be impacted by the policy change. The state currently has 823 retail licensees, and the Department of Revenue says 9% of cannabis dispensaries owe back taxes to the state.
According to the state鈥檚 Office of Economic Analysis, part of the problem has to do with the oversupply of recreational marijuana in the state, which has cratered prices dispensaries can demand. Cheaper marijuana for consumers means business owners aren鈥檛 making as much.
鈥淎ctual tax collections are considerably below expectations based on actual sales as firms struggle with profitability in the market, leading to rising tax delinquencies,鈥� the office said in a February revenue forecast. 鈥淚t鈥檚 a complicated picture of businesses struggling with market conditions, and being unable to pay all their bills.鈥�
The unpaid taxes pose a problem for state coffers, which rely on cannabis revenues to pay for addiction services and education, among other things.
鈥淥regon鈥檚 cannabis industry is important to the state鈥檚 economy, and the sales tax it generates is vital to the state鈥檚 budget,鈥� Craig Prins, interim director of the OLCC, said in a statement. 鈥淭hat鈥檚 why it鈥檚 critically important for us to get this group of licensees into compliance and paying their fair share.鈥�
It鈥檚 not clear when marijuana licensees might actually need to demonstrate compliance. Kotek said she鈥檚 directing the OLCC to work with the Department of Revenue to create a 鈥渃ertificate of tax compliance鈥� applicants can submit when looking for a new or renewed license to operate a dispensary. Licenses
鈥淭his will help ensure that all businesses are operating under the same rules and not getting any competitive advantage if they haven鈥檛 paid their taxes,鈥� Kotek said in a statement Tuesday.
The OLCC and Department of Revenue planned to hold a joint press conference Tuesday afternoon to discuss the change. According to from the agencies, the OLCC will begin crafting rules licensees must follow this year.
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