Published: July 5, 2023

Oregon Marijuana Tax Compliance


The state of Oregon generally does not levy sales and use taxes or similar on transactions for goods and services. However, marijuana sales are an exception to this rule. The state requires retailers to charge a retail tax of 17% on sales of recreational marijuana. Additionally, localities have the option of imposing an additional tax on these sales of up to 3%. According to the Oregon Department of Revenue, about 9% of businesses licensed to sell recreational marijuana have unpaid tax on their sales, compared to about 3% for other types of businesses. This has resulted in about $18.7 million in unpaid tax revenue from sales of marijuana.

To attempt to rectify this, Oregon Governor Tina Kotek has issued a directive resulting in the adoption of Temporary Administrative Order OLCC 4-2023. The new rules introduced by the order, in effect from June 16, 2023, through December 12, 2023, require that marijuana retailers demonstrate tax compliance through submission of a certificate before their license may be renewed. This includes both changes of ownership of more than 51% and additions of individuals to the license if they are submitted during the period in which these rules are in effect. The requirements apply to renewals on licenses that expire from September 15, 2023. The development of permanent rules is expected over summer 2023.

The certificate of tax compliance is a document certifying that the applicant is compliant with taxes administered by the Oregon Department of Revenue. All taxes administered by the state will be considered, including income, withholding, etc. Information required to complete the process includes:

– Business name;
– Federal Employer Identification Number;
– Business address;
– Business telephone number;
– Type of business;
– Contact name;
– Contact telephone number;
– Signature of an owner/officer of the company;
– Printed name of the signing owner/officer; and
– Date signed.

These certificates can be obtained from the Department, including via their website. Note that the compliance status of a marijuana business can be affected by the status of other related businesses such as those that are vertically integrated or otherwise under common ownership.

Noncompliance in the marijuana industry is exacerbated by the difficulty of such businesses in obtaining banking and other financial services, including credit and debit card payment networks. As federal law still prohibits general sales of marijuana products, many financial institutions impose higher costs on businesses dealing in these products or refuse to work with them altogether. This results in marijuana businesses handling large amounts of cash, which can be very cumbersome and increases the risk of theft. Employees, suppliers, contractors etc. related to these businesses are also affected, potentially complicating their relationships with financial institutions.

Alex Delong