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The Oregon Court of Appeals has upheld the Oregon Liquor and Cannabis Commission’s rules that require dispensary licensees to provide a certificate of compliance from the state showing they’re current on their state taxes, or working to pay them.
A cannabis company operating dispensaries on the Oregon Coast appealed the state rule in May 2024. A panel of three judges for the Oregon Court of Appeals earlier this month ruled that the OLCC’s tax compliance rules were valid.
“Those rules fit within [the OLCC’s] authority to adopt or amend rules that it considers necessary to protect the public health and safety,” wrote Judges Megan Jacquot, Gregory Tookey and Jacqueline Kamins in a July 9 ruling. “In addition, the OLCC is authorized to refuse to issue a license if an applicant is unable to demonstrate ‘financial responsibility sufficient to adequately meet the requirements of the premises proposed to be licensed.’ A certificate of tax compliance is pertinent or relevant to that determination.”
The agency implemented the new rules in 2023 at the behest of Gov. Tina Kotek following the fallout from the resignation of Secretary of State Shemia Fagan and a consulting contract she signed with the troubled cannabis outfit La Mota. La Mota had accrued millions of dollars’ worth of state and federal tax liens stretching back to 2015, and reporting by WW showed that, despite the failure of the company to pay its taxes, its principals, Aaron Mitchell and Rosa Cazares, were allowed to retain all their cannabis licenses and even obtain new ones from the OLCC.
The rule requires that dispensary owners must obtain upon license renewal each year a certificate of compliance from the Oregon Department of Revenue showing they’re current on all state taxes, or on a payment plan to become current. At the time of the rule change, the state said it was out $18.9 million due to unpaid cannabis taxes.
An applicant must also show compliance with the Department of Revenue before obtaining a new dispensary license from the OLCC.
Two companies controlled by the same couple, James and Rosalina Deatherage, challenged the OLCC’s rules in May 2024. Together, business records show, they own five dispensaries, in Coos Bay, Charleston, Bandon, Reedsport and North Bend.
Kevin Jacoby, the attorney representing the Deatherages, says he is still considering whether to advise his clients to appeal the July 9 ruling to the Oregon Supreme Court.
