Oregon Cannabis PSA: A Little Grace on Retailer Tax Compliance Requirements

It’s been a minute since we wrote about the new OLCC tax compliance rules for retailers. These temporary rules require all retailers to certify tax compliance via the Oregon Department of Revenue (DOR) in order to renew or transfer ownership of a marijuana retailer license. OLCC has a pretty good FAQ sheet here, as part of its general overview page on the subject here.

The temporary rule has been in effect for transfers in ownership since June 16, 2023. (Transfers in ownership are defined as ownership changes of 51% or more.) We’ve dealt with a few tax compliance issues in these situations already, including people scrambling to clean up their dashboards ahead of sale. For retail license renewals, the temporary rule has been in effect only since September 15, 2023. We had one retailer client trip on this new requirement already, which is kind of amazing since the rule literally took effect on Friday.

From this week’s experience, I have some good news to share. OLCC appears willing, as a matter of course, to allow any retailer who has applied for but not yet received a certificate of tax compliance (“DOR Certificate”) to continue to operate under temporary authority, at least through the 30-day late renewal window. I’d like to emphasize the “has applied for” bit in that last sentence. Also, it’s worth mentioning that retailers (and their applicant owners) should not wait until the eleventh hour to submit DOR Certificate applications. We are learning that the process isn’t always quick or easy– particularly if an individual or entity is in arrears and angling for a payment plan with DOR.

Another item of note is that these conditional letters are automatically generated. They are sent within 24 hours of renewal payment and submission to the email address associated with a licensee’s account. For this reason, I believe the conditional letters do not mention tax compliance or lack thereof, as of this writing. (I haven’t actually seen one lately.)

So what should last-minute shoppers keep in mind? Well, anyone approaching a license renewal deadline should: 1) ensure all DOR Certificate applications are submitted well before the license expiration deadline (including requisite applications of any “applicant” owners); and 2) reach out to their OLCC investigator (i) with evidence of any and all required DOR submissions, and (ii) to confirm everything that I am saying is true. I’m not your lawyer. (Probably. And if I am, you should still reach out.)

So that’s my PSA on a few finer points in this latest program provision. In the bigger picture, my colleague Jesse Mondry asked back in May: “How Many Retailers Will Close Due to Governor Kotek’s New Tax Compliance Missive?” At that point, DOR reported that 9% of licensed cannabis retailers, or around 75 licensees, hadn’t fully paid their taxes. I’m guessing those numbers will drop a bit with OLCC now beginning to enforce this new rule— even with a bit of wiggle room being afforded to certain licensees.

Finally, please note that this remains a dynamic area. As I recently explained, the tax compliance rules are temporary in nature: OLCC will adopt permanent rules this fall. The permanent rules could evolve in any number of ways, including by requiring non-retail licensees to show tax compliance. Watch this space.