By Rudi Keller, Missouri Independent
New local taxes took effect on October 1, and marijuana prices increased in many areas of Missouri. In Buchanan County and St. Louis County, lawsuits have been filed arguing that certain taxes are illegal.
The constitutional amendment which legalized recreational cannabis included a statewide excise and sales tax of 6 percent. Local governments were also authorized to charge up to a 3 percent sales tax. Now the question is before the courts whether local taxes can be stacked, meaning that a dispensary located within the limits of an incorporated municipality must collect both the county tax and the tax authorized by the municipality.
In a news release issued on October 10, announcing St. Louis’ lawsuit, Missouri Cannabis Trade Association called both efforts to collect money an “unconstitutional cash grab” which violated the terms of November’s amendment.
The lawsuit filed today should end the practice of Missouri adult-use cannabis customers paying stacked local taxes that violate Missouri Constitution as well as the will and wishes of voters, said Andrew Mullins.
Jack Cardetti, the spokesman of the trade association, stated that Missourians spend about $100 million per month on recreational marijuana. Around three dozen counties passed local taxes. The state Department of Revenue collects tax on behalf of local entities and has informed dispensaries in areas where both a city tax and a county tax are applicable that they must charge the two levies.
Cardetti stated that “it equates to about $3 million per month that Missouri cannabis consumers are forced to pay, when this is not what their constitution says.”
Steve Hobbs is the executive director of Missouri Association of Counties. He believes that counties have the constitutional authority to impose this tax.
Hobbs stated that “it is a very small amount, and the law makes it very clear to me that counties are able to do this.”
The drafters of the marijuana legalization amendment wanted to avoid stacking. So they used “local government” as a broad term for the entity that was authorized to impose the tax. The term “local government” was used to apply to both counties and cities.
All dispensaries that sell marijuana, whether for recreational or medical use, are required to pay sales tax. The combined rate of 4.225 percent and any local tax is the full rate. Retailers charge both county and municipal sales taxes within municipal boundaries.
Medical marijuana users pay a 4 percent additional tax that is used for state-related purposes. There is no local tax authority. Recreational marijuana users pay the standard tax plus the state tax of 6 percent and, if authorized by voters for local government programs, an additional 3 percent.
Robust Missouri 3 LLC is the operator of a dispensary located in Florissant. has sued for suing it after being notified by Department of Revenue of its 14.988 percent sales tax rate on recreational marijuana. This is the regular Florissant tax rate of 8,988 percent plus the city and County marijuana sales tax.
Robust has filed a lawsuit against the Department of Revenue, St. Louis County and the County of St. Louis to block the collection of county taxes.
The Department of Revenue has declined to comment about the litigation.
The lawsuit claims that if an injunction was not issued, Robust would suffer irreparable damage by having to collect more sales tax than what is allowed by Article XIV Missouri Constitution. This will permanently harm the customer relationship.
St. Joseph dispensary Vertical Enterprises in Buchanan County sued Buchanan County collector Peggy Campbell, arguing it would also be “irreparably damaged” if the two taxes were imposed.
Both lawsuits have just begun. Early December is the date set for a hearing to determine a trial date in the Buchanan County lawsuit.
Robust filed exhibits in the St. Louis case that show the Revenue Department has contradictory guidance to local governments regarding stacking. In a notice issued by the Taxation Division in February, it stated that the constitution prohibited stacking of local marijuana taxes.
The notice says that both cities and counties may ask voters for their approval of the tax.
The notice says: “However the tax collected by a customer depends on the location and if the facility is located in an unincorporated or incorporated area, and the amount of tax is determined by the percentage that is passed.”
The department reversed this guidance later in the month. The Taxation Division’s new notice stated that section of the Constitution authorizing the tax stipulates that any successful tax votes are applicable to the “political division” where they were enacted.
The new notice states that the amendment does not define “political division”.
The notice said that the distinction between local government (local government) and political subdivisions is important because voters from the entire county, not only those in unincorporated areas, will approve the additional tax. “Practically, counties don’t limit their sales tax application based on geographic location.”
Hobbs stated that the Missouri Association of Counties lobbied hard for revised guidance.
He said: “We discussed with them why we thought the ballot language and the way that it was written allowed counties to impose this tax.”
Cardetti stated that counties should benefit from the new revenues generated by dispensaries outside of municipalities, as well as the standard sales taxes generated by dispensaries in a given county.
He said that they get a share of the sales since they pay the same tax as other products.
Cardetti stated that members of the association will collect marijuana taxes in both the city and county until the courts decide on stacking.
He said it was unclear how much money would be reimbursed if the court sided with the dispensaries.
He said, “It’s too early to say.” “I’m expecting the court order to be very specific.”
The original publication of this story was by Missouri Independent.
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The post Missouri Marijuana Business Sues Over ‘Stacked Taxes’ Local and County Taxes first appeared on Marijuana Moment.
