Oregon Governor Tina Kotek announced this week that cannabis retailers must pay state taxes or regulators won’t issue or renew their licenses.
The directive, which will be carried out by the Oregon Liquor and Cannabis Commission and the Oregon Department of Revenue, will affect more than 820 licensees annually that will need to meet tax compliance, according to a news release issued Tuesday.
“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, a Democrat, said in a statement.
According to data from the revenue department, cannabis retailers have a higher noncompliance rate in Oregon for payment of taxes (9%) than other tax programs administered by the department (3%).
Oregon law allows regulators to take action against companies that fail to pay their taxes when it comes to the issuance of some licenses, the execution of contracts, or appointments to a board or commission.
The OLCC, according to the news release, will add a tax-compliance tool to its application and renewal process for cannabis retailers by requiring licensees or applicants to provide a tax compliance certificate from the revenue department.
Reigning in unpaid taxes has been a challenge for cannabis regulators elsewhere.
In California, the Department of Tax and Fee Administration last year started ramping up enforcement against unlicensed and licensed cannabis companies, which at the time owed the state nearly $200 million in unpaid taxes.
Efforts to collect unpaid taxes in the world’s largest cannabis market have included launching raids and auctioning off seized properties.
High taxes, according to industry executives and analysts, have crushed licensed cannabis businesses in California while providing a huge advantage to underground operators who skirt taxes and other regulatory requirements.