Missouri Appeals Court rules against stacking taxes on recreational marijuana sales
The latest development in the ongoing battle over tax stacking on marijuana purchases in Missouri reverses the course of previous decisions.
On Tuesday, the Missouri Eastern District Court of Appeals declared that counties and municipalities cannot both impose a 3% sales tax on marijuana products within the same jurisdiction. This verdict has pivotal implications for marijuana dispensaries and consumers across the state.
The appellate court’s ruling stemmed from a lawsuit by Robust Missouri 3 LLC, a Florissant-based dispensary, which contended against the double taxation by St. Louis County and the city of Florissant. The court affirmed that, under Missouri’s constitution, only one local government—emphasizing that either a city, town, or village in incorporated areas, or a county in unincorporated areas—is entitled to impose the additional tax.
This decision could potentially save Missouri cannabis consumers about $3 million monthly, given the state’s adult-use marijuana sales average approximately $105 million per month.
Judge John Torbitzky, writing for a unanimous panel, underscored the clear constitutional language that strictly defines “local government” and restricts overlapping taxes within the same geographical boundaries.
The issue at the center of the controversy was the interpretation of the term “and” in the constitutional definition of local government. Counties argued this wording allowed them to levy an additional tax even in incorporated areas. However, the appellate court rejected this interpretation, emphasizing that it would make parts of the constitutional language redundant.
The ruling is significant, as 90 of Missouri’s 114 counties have enacted the 3% marijuana sales tax, with 74 of these overlapping with municipalities that have also implemented the tax, resulting in double taxation at dispensaries.
Reacting to the court’s decision, St. Charles County announced plans to appeal to the Missouri Supreme Court. St. Charles County Executive Steve Ehlmann contended that voter approval was based on ambiguous constitutional language drafted by the marijuana industry. According to Ehlmann, this ambiguity led voters to believe counties were also entitled to the tax.
A similar appeals case out of Buchanan County is still pending. St. Joseph dispensary Vertical Enterprises has also challenged Buchanan County’s right to impose the tax, arguing it too would be adversely affected by such double taxation. The Buchanan County case is still awaiting oral arguments, indicating ongoing legal disputes about the extent of county powers within town and city limits.
