The Missouri Supreme Court heard arguments Tuesday regarding whether or not cities and counties can stack marijuana sales taxes, in a legal battle that began in 2023.
The court’s answer will impact more than 70 areas statewide, where both city and county governments have been imposing a 3% tax at dispensaries, according to Missouri Department of Revenue data.
Columbia cannabis customers were paying a 3% county tax on top of a 3% city tax until an state appellate court ruled against the practice in November.
Those taxes were added to the 6% state tax approved by voters when recreational marijuana was legalized in November 2022, and all of the taxes were in addition to the state and local retail taxes that apply to all goods.
The ruling affected at least seven dispensaries in Columbia where customers paid the stacked taxes. The only dispensary in an unincorporated area is just outside city limits.
The lawsuit before the Missouri Supreme Court focuses on a Florissant-based dispensary Robust Missouri 3 where customers are paying a total sales tax of 20.988%, which includes a 3% sales tax from both the city of Florissant and St. Louis County.
Robust has argued that it’s unconstitutional to have two local governments taxing customers.
“There’s only supposed to be one local government, one boss, one master dictating outcomes and imposing the 3% tax,” said Eric Walter, Robust’s attorney, at the Tuesday hearing.
St. Louis County and St. Charles County have the authority to pass a 3% tax on unincorporated areas, he said, but not on their entire geographic footprint.
The panel of Missouri appellate judges agreed with Robust in November, ruling that the constitution’s “plain, unambiguous” language means cities and counties cannot stack marijuana sales taxes.
“Only one local government is authorized to impose an additional three percent sales tax,” Judge John Torbitzky of the Missouri Court of Appeals Eastern District wrote in the unanimous opinion.
That decision reversed a lower court’s ruling last year that allowed both Florissant and St. Louis County to both impose a 3% sales tax on marijuana products.
St. Louis County Circuit Judge Brian May wrote that if Robust’s interpretation of the law were accepted, it would lead to “absurd outcomes,” because “a municipality or city would essentially be given carte blanche to ignore any county ordinance or regulation, including those related to public health and safety wholly unrelated to the taxing issue.”
May was largely talking about public health regulations — particularly those that apply to marijuana dispensaries — because public health in Florissant is regulated by St. Louis County.
On Tuesday, Supreme Court Chief Justice Mary Russell asked Walter to respond to May’s ruling that Robust’s interpretation “effectively nullifies” other county ordinances regarding health and welfare.
“This is not a county health code case,” Walter said, an argument the appellate court agreed with.
However, St. Louis County’s attorney, Laura Robb said, Tuesday that public health is “in the purpose” of the constitutional amendment voters approved in 2022 legalizing recreational marijuana. Florissant relies on St. Louis County to impose public health ordinances on all its businesses, she said, because it doesn’t have its own department of public health.
“So it’s only logical that portions of the revenue should be captured by the institution with the public health duties,” Robb told judges Tuesday.
Robb agreed with May that it would have an “absurd result to have dispensaries that are essentially not governed by any of the applicable public health ordinances that apply to every other building that’s in Florissant.”
The constitutional amendment states that “local government” means, “in the case of an incorporated area, a village, town, or city; and, in the case of an unincorporated area, a county.”
At a hearing last year, attorneys for St. Louis and St. Charles counties argued the word “and” is key in the definition.
Supreme Court Judge Kelly Broniec asked Robb to review the section of the constitutional amendment titled “local control.” There, it outlines how residents can vote to ban dispensaries in their towns and cities.
Broniec read the question the law states should be submitted to voters: “Shall (insert name of local government) ban all non-medical microbusiness dispensary facilities and comprehensive marijuana dispensary facilities from being located within (insert name of local government and, where applicable, its ’unincorporated areas’) and forgo any additional related local tax revenue?”
Broniec asked if this provision supports the counties’ definition of local government or Robust’s?
“If one of the local governments disallowed it and one allowed it – if it was on the same ballot, let’s say – whose would control, if both the city and the county are a local government,” Broniec asked.
“I don’t know the answer to that question,” Robb said.
Walter later told Broniec that he loved her question.
“It was very insightful because when you talk about the constitutional authority allowing the local government to outright ban dispensaries, there’s a particular procedure,” Walter said, “and …even dictates what the language needs to be when presented to the voters on the question.”
Walter pointed out that the constitution requires that each one of Missouri’s eight congressional districts have no less than 24 dispensaries. The 2nd Congressional District is comprised almost entirely of St. Louis County, and if the county were able to impose a ban, there’d be a few parts of St. Charles and Jefferson counties remaining to “cram 24 dispensaries into.”
“That would invade the prerogative of all the 90 maybe unique municipalities within the county of St Louis,” Walter said. “And they should be allowed to decide whether or not they want these businesses for their citizens.”
