Switching From Medical Marijuana Dispensary to OLCC Retail?

Tax Rate Changes, New Tax Filing Process Are Coming

The Department of Revenue wants to help the marijuana industry understand the changes in the tax collection process if they convert from operating as an Oregon Health Authority medical marijuana dispensary to a marijuana retailer in the Oregon Liquor Control Commission (OLCC) regulatory environment.

Different Tax Rates for OHA Dispensaries & OLCC Retailers

Once an OLCC license becomes effective, the taxes you collect on your customers’ purchases of marijuana and marijuana products will change. The "Early Start" rate now in place for medical marijuana dispensaries is 25 percent, but the retailer rate is 17 percent. You should charge your customers the lower 17 percent rate when your OLCC license takes effect.

Filing Tax Returns – Transitioning from Dispensary to Retail

Whether you remain a Medical Marijuana Dispensary or become a Marijuana Retailer you’re still responsible for filing tax returns with the Department of Revenue.

What and how you must file depends on when you transition. If your OLCC retailer license takes effect on October 1, 2016, you should electronically file your first retail tax return for the 4th quarter of 2016 on Revenue Online. You should also file your final return as a dispensary for the 3rd quarter of 2016 using Form OR-581.

If you’re transitioning at the end of 2016 and your final day of sales as a medical marijuana dispensary is December 31, 2016, and your OLCC retail license takes effect on January 1, 2017, you should electronically file your first retail tax return for first quarter 2017 using Revenue Online, and for the dispensary’s operation for the 4th quarter of 2016 file a Form OR-581.

For any other transition scenario, you’ll be required to file two returns for the 4th quarter: one on paper for the 25-percent tax rate and one electronically on Revenue Online for the 17 percent rate.

You will want to keep detailed sales records to track when your tax rate changed, so that you can accurately file reports for the two tax rates.

Please contact the Department of Revenue at marijuanatax.DOR@oregon.gov with any questions.