Missouri judge rules local governments can stack sales tax on marijuana
A judge in St. Louis ruled Thursday that local municipalities can stack sales taxes on marijuana dispensaries, the first court ruling on a much-debated issue playing out around the state.
The lawsuit was filed by Robust Missouri 3 LLC. The company saw its Florissant dispensary’s tax rate on cannabis products rise to 14.988% after both the city and St. Louis County approved 3% sales taxes on adult-use marijuana in April 2023.
The constitutional amendment that legalized recreational cannabis sales included a 6% statewide excise tax — but it also authorized “any local government” to charge a sales tax of up to 3%.
At the heart of Robust’s lawsuit is whether the law intended for local governments to be able to impose a maximum of 3% sales combined, or if they can each impose a 3% sales tax.
St. Louis County Circuit Judge Brian May ruled that both governments’ taxes are valid.
In his Thursday order, May stated there is no court precedent on this issue, so he interpreted the intent of the law “as a whole and not in isolated parts.”
While the law allows for recreational marijuana to be legal, he stated it also intended for local governments to be able to “protect public health.”
“If [Robust’s] interpretation were accepted, then a municipality or city would essentially be given carte blanche to ignore any county ordinance or regulation, including those related to public health and safety wholly unrelated to the taxing issue,” May wrote in the ruling.
May pointed to the provision that allows the city to approve placing a dispensary within less than 1,000 feet of any then-existing school.
“…and the county, and other cities in the Ferguson-Florissant School District, would have no say in that decision,” May wrote. “This absurd outcome would directly contradict the stated purpose of the [amendment].”
The ruling is a win for the Missouri Association of Counties, said Steve Hobbs, the association’s executive director. The association has strongly advocated that counties have the ability to do this, he said.
“The bulk of the counties around the state had gone to the voters and asked them to implement this tax,” Hobbs told The Independent on Friday. “And I think every one of them approved of it. I think [the ruling] removes some uncertainty from those counties.”
On the other side, leaders of the marijuana industry have called the effort to collect both taxes an “unconstitutional money grab” that violates the terms of the amendment.
“We know from other states that when legal marijuana is taxed unnecessarily high, it only helps the illicit market,” said Andrew Mullins, executive director Missouri Cannabis Trade Association, in a statement to The Independent Friday, “which deprives Missouri veterans and substance abuse programs of needed revenue.”
Robust Missouri has submitted an appeal on the circuit court’s decision. Another similar case is pending in Buchanan County.
St. Joseph dispensary Vertical Enterprises sued Buchanan County Collector Peggy Campbell, arguing that it, too, would be “irreparably harmed” if both taxes were imposed.
A hearing is scheduled in that case for May 16 in the Circuit Court of Buchanan County.
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