Missouri Appeals Court Considers Local Governments’ Authority to Stack Sales Taxes on Marijuana

October 9, 2024

Missouri Appeals Court Hears Case on Local Marijuana Sales Tax

On Tuesday, a Missouri Court of Appeals hearing turned into a debate reminiscent of a grammar class, focusing on how marijuana products are taxed statewide. The constitutional amendment approved by voters in 2022 allows local governments to impose additional sales taxes on recreational marijuana, but the key question for the judges was: What did voters mean by “local government”?

Attorneys for St. Louis and St. Charles counties emphasized that the word “and” is crucial in defining “local government,” which includes both incorporated areas (like cities) and unincorporated areas (like counties). They sought to uphold a previous ruling that allows both counties and municipalities to impose a 3% sales tax at dispensaries.

Conversely, Robust Missouri 3 LLC, a dispensary based in Florissant, argued that the placement of commas changes the meaning. They contended that the amendment’s structure delineates distinct clauses for incorporated and unincorporated areas, implying that only one local government can impose taxes—leading to a lower overall tax rate.

The stakes are high: Florissant currently has a total sales tax rate of 14.988%, while neighboring Hazelwood and St. Ann have the highest at 17.988%.

Appellate judges raised concerns about “absurd outcomes” should Robust’s interpretation be accepted, questioning whether it could allow municipalities to bypass county regulations related to public health and safety. Robust’s attorney asserted that compliance with local regulations is still required under state law.

The Missouri Association of Counties has advocated for counties to levy their own taxes, while marijuana industry leaders have criticized the dual-tax approach as an “unconstitutional money grab.” Jack Cardetti from the Missouri Cannabis Trade Association expressed hope that the judges would provide relief for consumers who have been overpaying in taxes.

A similar case is also pending in Buchanan County, where a dispensary argues against the imposition of both county and municipal taxes. A hearing date for this case has not yet been scheduled.