Missouri Supreme Court ends double cannabis tax
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Cities and counties in Missouri can no longer stack sales taxes on recreational cannabis, the state's Supreme Court ruled Tuesday.
The big picture: The decision struck down a practice that forced dispensaries in incorporated areas to collect a 3% local tax for both the city and the county, clarifying a section of the state constitution that governs recreational cannabis sales.
Flashback: The case was brought by Robust Missouri Dispensary 3, which operates in Florissant, an incorporated city in St. Louis County.
- In 2023, voters in both Florissant and the county approved local cannabis taxes. The Missouri Department of Revenue then told Robust it had to collect both.
Catch up quick: In 2022, Missouri voters passed Amendment 3, which legalized recreational cannabis and set the rules for how it's regulated and taxed in the state.
- The amendment created a 6% statewide sales tax and gave local government the authority to add up to an additional 3% tax.
- Under that framework, only one local government can impose the additional tax, the city in incorporated areas or the county in unincorporated areas.
- The Department of Revenue initially told local governments they couldn't both collect the 3% tax, but it later reversed course, saying the amendment's language was unclear.
What they're saying: The court ruled 6-1 that the article added to the state constitution "limits the definition of 'local government' to allow only one local government to impose a 3 percent tax, a village, town, or city in an incorporated area, and a county in an unincorporated area."
- "This levels the playing field for dispensaries in incorporated areas that were being forced to compete with nearby dispensaries in unincorporated areas who had a built-in 3% pricing advantage," said Eric Walter, partner at Armstrong Teasdale, who argued the case.
- The judge who dissented argued that counties should still be allowed to impose the tax in incorporated areas and that the majority had misinterpreted the constitution.
Zoom in: Under this ruling, Kansas City, as an incorporated city, can impose the 3% local cannabis sales tax within its city limits.
- Counties like Jackson, Clay, Platte and Cass can still impose the tax in unincorporated areas outside KC's borders.
- "We estimate that the statewide financial impact will be consumer savings of approximately $35 million annually," Walter said.