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Missouri's marijuana landscape is witnessing a heated legal battle, and it's all about the taxes. In the Show-Me State, where recreational marijuana has gained popularity and legalization has opened new horizons, lawsuits have emerged, challenging the imposition of multiple local taxes on marijuana sales.
In this in-depth blog post, we'll delve into the heart of this issue, exploring the lawsuits, the legal arguments, and why these tax disputes underscore the importance of the state's medical marijuana program.
The Taxing Tug-of-War
On October 1, marijuana prices across many parts of Missouri experienced an upswing due to the implementation of new local taxes. These taxes are causing quite a stir, with lawsuits recently filed in Buchanan and St. Louis counties contesting their legality. At the core of this controversy is a fundamental question: can local taxes be "stacked," meaning that both a county and a city-imposed tax must be collected by a dispensary within the boundaries of an incorporated city? Or should only the city tax apply?
The Missouri Constitution, which authorized recreational cannabis sales, mandated a 6% statewide excise tax and granted local governments the power to levy a sales tax of up to 3%. The central issue before the courts now revolves around the legality of imposing and "stacking" both these local taxes on marijuana sales.
The Legal Battle Unveiled
In an October 10 news release that announced the St. Louis lawsuit, the Missouri Cannabis Trade Association labeled the attempt to collect both taxes as an "unconstitutional money grab." This approach is perceived to infringe on the terms of the amendment that was passed in November, legalizing recreational marijuana.
The Executive Director of the Missouri Cannabis Trade Association, Andrew Mullins, emphasized that this lawsuit seeks to put an end to Missouri's adult-use marijuana customers paying stacked local taxes, as it goes against the Missouri Constitution and the will of the voters.
Missourians currently spend around $100 million monthly on recreational marijuana, and approximately three dozen counties have introduced a local tax. The Department of Revenue, responsible for collecting these taxes for local entities, has alerted dispensaries within areas where both city and county taxes are in effect that they must charge both levies.
The total amount collected equates to roughly $3 million a month, which, according to Jack Cardetti, a spokesperson for the trade association, contradicts the constitutional mandate. In light of this situation, the counties assert that they have the constitutional authority to impose this tax.
The Intent of the Amendment
To better understand the "stacking" issue, let's examine the language of the constitutional amendment that legalized marijuana in Missouri. The drafters of this amendment wanted to prevent "stacking," so they used the broad term "local government" for the entity authorized to impose a tax. This term's definition was designed to encompass both cities and counties. For incorporated areas, it was defined as "a village, town, or city," while it applied only to counties for unincorporated places.
It's crucial to note that all dispensaries, whether catering to medical or recreational marijuana users, pay regular sales taxes. The standard rate combines the 4.225% state tax with any local taxes, meaning that retailers charge both county and city sales taxes within municipal boundaries.
For medical marijuana users, there's an additional 4% state tax with no provision for an extra local tax. Recreational users, on the other hand, pay the standard sales tax, a 6% state tax, and, where authorized by voters, an additional 3% for local government programs.
Lawsuits in the Spotlight
Two lawsuits in particular have emerged as prominent legal battlegrounds in the "stacking" tax dispute. Robust Missouri 3 LLC, the operator of a dispensary in Florissant, filed a lawsuit after being notified by the Department of Revenue that the sales tax rate for recreational marijuana sales would be 14.988%. This rate includes the regular tax rate of 8.988% in Florissant, as well as the city and county marijuana sales tax.
Robust has taken legal action against the Department of Revenue and St. Louis County, seeking a court order to block the collection of the county tax. The Department of Revenue has refrained from commenting on the ongoing litigation.
The lawsuit argues that if an injunction is not issued, Robust will suffer irreparable harm by collecting sales tax from customers above what Article XIV of the Missouri Constitution authorizes, which could permanently damage customer relationships.
In Buchanan County, Vertical Enterprises, the operator of a St. Joseph dispensary, filed a lawsuit against Buchanan County Collector Peggy Campbell. The lawsuit claims that imposing both taxes would cause irreparable harm.
Both lawsuits are in their early stages, with a hearing in the Buchanan County case scheduled for early December.
Conflicting Guidance on Stacking
The dispute deepens as conflicting guidance has been provided to local governments on the issue of "stacking." Robust filed exhibits in the St. Louis case that show the Department of Revenue offering inconsistent advice to local governments. In one notice from the Taxation Division issued in February, it was stated that the constitution prohibits stacking local marijuana taxes.
This notice clarifies that both cities and counties can ask voters to authorize the tax but emphasizes that the tax collected from a customer is limited to the percentage passed, depending on whether the facility is within an incorporated or unincorporated area.
The department reversed its stance later that month. In a new notice from the Taxation Division, it was mentioned that the section of the constitution authorizing the tax stated that any successful tax vote applies to the "political subdivision" where it was enacted.
The term "political subdivision" was not defined in the amendment, and the new notice did not differentiate between local government and political subdivision. This change in guidance came after discussions with the Missouri Association of Counties, which asserted that the counties had the right to impose the tax based on the ballot language and wording of the constitution.
Ambiguity Persists
The lawsuits underscore the ambiguity in interpreting the constitution and raise significant questions about the interpretation of Article XIV. It remains uncertain how money will be refunded to customers if the courts rule in favor of the dispensaries.
As this legal tug-of-war unfolds in Missouri, it's crucial to reflect on the relevance of the state's medical marijuana program.
Medical Marijuana
In the midst of these tax disputes and uncertainties surrounding recreational marijuana, Missouri's medical marijuana program stands as a beacon of stability. The medical program continues to offer patients with qualifying health conditions a reliable avenue to access marijuana treatments that are tailored to their unique needs.
Schedule a medical marijuana evaluation to access a range of treatment options tailored to your needs. The ongoing tax disputes emphasize the importance of securing a medical marijuana card, ensuring that your health needs are met effectively and consistently.
Summary
The lawsuits challenging "stacking" taxes on recreational marijuana sales have ignited a legal battle with far-reaching consequences. Amidst this legal turbulence, the medical marijuana program remains the foundation of reliable healthcare for individuals seeking condition-specific relief.
Schedule your medical marijuana evaluation today to secure access to effective treatments and personalized care, providing peace of mind in an uncertain landscape. As Missouri navigates the complexities of marijuana taxation, one thing is clear, the medical marijuana program offers a stable and compassionate approach to healthcare, reminding us that even in the ever-evolving world of marijuana legislation, patients' needs are at the forefront.
Get Your Medical Marijuana Card in Missouri Today!
Although marijuana is now legal recreationally in Missouri, you should still get your medical card. If you have any questions, just give us a call!
There are so many benefits to having your medical marijuana card in a recreational state, including being responsible for less in taxes, saving at dispensaries, and higher possession laws.
If you don’t already have your medical marijuana card, we can help! Our doctors are standing by to take you through a quick and easy evaluation to see if you qualify. During your evaluation, they will be happy to answer all your questions about how cannabis may be able to help with your anxiety or any other medical conditions.
Schedule an appointment with a marijuana professional online or by giving us a call at
(877) 303-3117 to talk to a patient support representative.
Doctors Who Care.
Relief You Can Trust.
At Missouri Marijuana Card, our mission is to help everyone achieve wellness safely and conveniently through increased access to medical marijuana. Our focus on education, inclusion, and acceptance will reduce the stigma for our patients by providing equal access to timely information and compassionate care.
Call us at (877) 303-3117, or simply book a medical marijuana evaluation to start getting the relief you can trust today!
Check out Missouri Marijuana Card’s Blog to keep up to date on the latest medical marijuana news, tips, and information.
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