Marijuana sales tax vote could lead to legal battle
As April elections approach recreational marijuana sales taxes will be a featured ballot item on hundreds of ballots throughout the state.
While medical marijuana sales are taxed at a flat rate of 4%, adult use sales are taxed by the state at 6% with localities able to add an additional tax of up to 3%.
Originally, Missouri Department of Revenue had stated that those taxes would not be able to be added for both cities or municipalities and the counties they are located in.
In February, the Department reversed that previous position, allowing for multiple local entities to enact additional sales tax simultaneously.
According to the authors of Amendment 3, the intent was clear. Counties would be able to add a tax of 3% with tax revenue benefiting the local government responsible for the care, maintenance, and safety of the roads and areas where dispensaries are located; while sales inside city limits would be subject to taxes at a city level.
With DOR taking the position that these taxes are stackable consumers will face a tax of up to 12% on adult use marijuana products in cities and towns across the state.
The applicable language of Article XIV
“Pursuant to Article III, Section 49 of this Constitution, the governing body of any local government is authorized to impose, by ordinance or order, an additional sales tax in an amount not to exceed three percent on all tangible personal property retail sales of adult use marijuana sold in such political subdivision. The tax authorized by this paragraph shall be in addition to any and all other tangible personal property retail sales taxes allowed by law, except that no ordinance or order imposing a tangible personal property retail sales tax under the provisions of this paragraph shall be effective unless the governing body of the political subdivision submits to the voters of the political subdivision, at a municipal, county or state general, primary or special election, a proposal to authorize the governing body of the political subdivision to impose a tax. Any additional local retail sales tax shall be collected pursuant to general laws for the collection of local sales taxes.
“Except as authorized in this Article, no additional taxes shall be imposed on the sale of marijuana.
“The fees and taxes provided for in this section shall be fully enforceable notwithstanding any other provision in this Constitution purportedly prohibiting or restricting the taxes and fees provided for herein.”
The constitutional definition of “local government,” in the context of Article XIV, means, “in the case of an incorporated area, a village, town, or city and, in the case of an unincorporated area, a county.” Despite the definition of the term being outlined within the Missouri Constitution, it appears that once approved by voters what lies ahead is a potential legal battle to rectify the Counties’ interpretation with the intent of the authors of Amendment 3.
“Article XIV is extremely clear and unambiguous about the definition of a ‘local government,’ and by extension, which political subdivision is authorized to impose a 3% tax on retail sales of adult use marijuana in a given instance,” The Missouri Cannabis Trade Association said in a statement. “In other words, for purposes of Article XIV, the “local government” vested with certain rights and authorities is either: (1) a village, town, or city incorporated under Missouri law, if a marijuana facility licensee is situated within that village, town, or city; or (2) the county, if a marijuana facility licensee is situated in an unincorporated portion of a county. This interpretation reflects the plain and logical reading of the definition. Any other interpretation could
not withstand even modest scrutiny.”