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Lawsuit alleges ‘stacking’ taxes on marijuana sales in Missouri ‘unconstitutional’

Recreational Marijuana Missouri
Posted at 5:21 PM, Oct 10, 2023
and last updated 2023-10-10 18:35:02-04

KANSAS CITY, Mo. — A St. Louis County dispensary filed a lawsuit Monday against Missouri claiming it's unconstitutional for municipalities and counties to stack sales taxes on recreational marijuana sales.

Two counties in the Kansas City area — Jackson and Cass — currently stack sales taxes after voters in April passed both county and municipal taxes, which are both 3% across all jurisdictions, on recreational marijuana sales.

The plaintiff, Robust Missouri Dispensary 3, operates in the city of Florissant, Missouri, which is located in northern St. Louis County.

In February 2023, the Missouri Department of Revenue issued a statement that clarified "based on constitutional language, a city and a county cannot 'stack' the additional up to 3% local tax on recreational marijuana sales," according to the lawsuit.

The interpretation of Article XIV in the Missouri Constitution is being questioned in the lawsuit, which reads: "The governing body of any local government is authorized to impose, by ordinance or order, an additional sales tax in an amount not to exceed three percent on all tangible personal property retail sales of adult use marijuana sold in such political subdivision."

In February, state officials reiterated the language in the constitution and said a local government for those in incorporated areas means a village, town or city, and a local government for those in unincorporated areas means a county, according to the lawsuit.

Therefore, St. Louis County dispensaries located within incorporated areas are only subject to a municipality sales tax — Florissant passed a 3% sales tax on recreational marijuana in April — and dispensaries located within unincorporated areas are subject to a 3% county sales tax, which was passed by St. Louis County voters in April.

Later in February, MoDOR issued a statement saying the language of Article XIV is "ambiguous" and that it was rescinding its previous guidance, per the lawsuit. The statement acknowledged there are "two interpretations" of what "any local government" means, and that the DOR would no longer advise municipalities or counties on whether or not they could stack sales taxes on recreational marijuana.

The plaintiff received a "Sales Tax Rate Change Notification" letter — dated October 2023 — from the Director of Revenue for the State of Missouri Wayne Wallingford stating both Florissant and St. Louis County requested to impose 3% local government taxes on sales at Robust Missouri Dispensary 3 starting Oct. 1, 2023, and that the business must comply.

The plaintiff would like to settle in court which interpretation of Article XIV is constitutional, and therefore, whether or not Missouri counties can stack sales taxes on top of municipal sales taxes for businesses operating in incorporated areas. The plaintiff also requests an injunction on St. Louis County sales taxes on recreational marijuana sales at their dispensary in Florissant.

The plaintiff alleges the additional sales taxes would "permanently" damage customer relationships, per the lawsuit.