Millions in pot tax revenue going 'up in smoke' in Oregon

Daniel O'Conner, the manager of Vessel, a marijuana dispensary in Northwest Portland, fills out tax forms every month. (KATU Photo)

Cannabis businesses owe millions in overdue taxes to the Oregon Department of Revenue.

The latest numbers show 176 businesses owe a total of $15.7 million.

Daniel O'Conner runs Vessel, a dispensary in Northwest Portland. He says filling out the cannabis tax forms eat up his profits and his time, but it's something he must do.

"Definitely paying our taxes on time will definitely help normalize it because there's just going to be less stigma," O'Conner said.

Part of the problem can be attributed to the oversupply of cannabis, which has led to a dramatic drop in prices since legal sales began in October 2015.

"Not being able to sell it out of state; we just have to sell it cheaper here and reduce our profits," O'Conner said.

Those slim profit margins have led some businesses to be late on paying their taxes.

The Oregon Department of Revenue says the top 10 businesses with outstanding balances owe more than $600,000 each.

The problem is getting worse. Since July the total owed to the state has gone up by $3 million.

The Oregon Liquor Control Commission says it does not have the ability to immediately pull licenses like its counterparts in Washington and Colorado. That's because the tax money is collected by the Department of Revenue and not the OLCC.

The Department of Revenue says it's working with the OLCC to encourage businesses to pay back the tax money they owe.

"People taking advantage of not paying their taxes is definitely not a way of running your business," O'Conner said on the issue of pulling OLCC licenses for pot business that are overdue on their taxes.

The OLCC says the problem doesn't have a simple solution since if the licenses are pulled, the business won't have the income to repay what it owes.

KATU News reached out to Washington state to determine how big of a problem it has with overdue taxes. Sales in Washington are nearing $1 billion, but according to the state's Liquor and Cannabis Board, just around $3 million is owed.

The Oregon Department of Revenue says it cannot disclose the pot businesses that owe money because of a state law. That's not the case in Washington, where revenue and tax payments are made public for every cannabis business in the state.

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