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COLUMBIA — Missouri counties, including Boone, may soon need to return marijuana sales tax revenue and end some county-level taxes on marijuana products.
The Eastern Division Missouri Court of Appeals ruled Tuesday that the state constitution’s allows a “‘local government’ to impose a 3% sales tax on marijuana sold at retail after putting the issue to a vote.” The court said a “local government” is defined as a village, town, or city in incorporated areas and a county in the case of an incorporated area.
Therefore, the court’s decision limits both a city and a county from both imposing a 3% sales tax on marijuana products on top of the existing state tax, which is set at 6%.
The ruling comes from a Florissant-based dispensary, Robust Missouri 3 LLC, where customers were paying a total sales tax of 20.988% — a 3% rate on marijuana from the city, 3% from St. Louis County, 6% from the state and a 8.99% general sales tax.
According to the ruling, the state constitution’s “plain language of Article XIV is unambiguous” in stating that only one form of local government is “authorized to impose” an additional tax.
Within Boone County, both the city (Prop 1) and county sales tax passed in the April 2023 election. For the city of Columbia, the tax revenue is deposited in the general fund for public safety, administrative support, health and environment, parks, transportation and capital improvements.
At the county level, $710,758 from tax collected from dispensaries within city jurisdiction was set aside just in case of a future ruling that deemed the county sales tax collection was unconstitutional, according to previous reporting by the Columbia Missourian.
Presiding Boone County Commissioner Kip Kendrick said the county was anticipating a decision like this.
“Boone County made the decision very early on to segregate those funds out.” Kendrick said. “We didn’t want to be caught in a position where we were budgeting those funds on dispensaries within the city of Columbia, certainly within the county of Boone, but within the jurisdiction of the city of Columbia.”
As for the single dispensary within the unincorporated portion of Boone County, Kendrick feels “confident” that those sales tax revenues will remain in the county’s fund. The county is in the process of deciding how to use those funds for the fiscal year 2025.
According to Jack Cardetti, a spokesperson for the the state cannabis trade association MoCannTrade, the ruling will ultimately help consumers save money and stay safer.
“The ruling this week is going to save Missouri cannabis customers about $3 million a month, so it really is significant,” Cardetti said.
As for the revenues for the state, Cardetti said the projected $55 million annual revenues have risen to $230 million annually for state and local governments in Missouri since the marijuana vote in November 2022.
“What we found was time and time again, when states tax cannabis too much, people continue to buy off the illicit market,” Cardetti said. “But having good prices, great customer service, and a not overly burdensome tax rate does bring people out of the shadows of the illicit market and into a regulated market where they can go to a dispensary, they can make sure the products are lab-tested, and that’s really the goal of any legalization program.”
There is currently a similar case in the Western Missouri Court of Appeals, so there is still a chance the Florissant Eastern Court case could be appealed to the Supreme Court.
According to Kendrick, the Department of Revenue has yet to contact Boone County to inform them if the previous revenue will need to be returned or when to stop collecting the tax.
Kendrick is “not sure” of how the revenue, if returned, would be distributed, and said the department is likely waiting on the outcome of the Western Court of Appeals case.
“Whenever they do, we’ll be ready to go to quickly get that distributed back to them,” said Kendrick.
”}]] A ruling in the Missouri Eastern Court of Appeals could require some counties, including Boone, to stop “stacking” both city and county 3% sales taxes on cannabis products. Read More
