Earlier this week, the Missouri Court of Appeals, Eastern District, ruled that the stacking of cannabis sales taxes was unconstitutional.
The state legalized adult-use sales in 2022 when 53.1% of voters in the state approved Amendment 3, a ballot initiative that sought to legalize adult-use marijuana. The initiative also legalized the possession, purchase, consumption, manufacture, delivery and sale of cannabis for individuals aged 21 and above.
This is in addition to allowing persons with specific offenses related to cannabis to petition for release from prison or probation and parole and have their records expunged. This approval saw the state issue licenses to recreational dispensaries in February 2023, officially launching recreational cannabis sales.
Soon after this, local governments started implementing sales taxes on cannabis sales in a bid to capitalize on the new market. While imposing the 3% sales tax had been made clear, the regulation hadn’t touched on whether counties could levy an additional 3% tax stacked on the tax already imposed by a local town or city.
This loophole allowed counties like Cass and Jackson in the Kansas City area to approve a county-wide cannabis sales tax. In the St. Louis area, the St. Charles and St. Louis counties also approved county-wide cannabis sales tax.
Soon after this, Robust Missouri Dispensary 3 filed a suit disputing the additional taxes in October 2023. In the initial proceedings, the circuit court ruled that the county was allowed to impose a county-wide tax on top of any tax already imposed by a local city, town or village.
The dispensary appealed this decision in the appeals court, which issued its ruling this week. In the ruling, the 3-judge panel at the appeals court explained that only one local government was allowed to levy an additional 3% sales tax. This ruling prevents multiple governments from collecting any more retail sales taxes.
The decision was celebrated by the Missouri Cannabis Trade Association, led by Andrew Mullins, its executive director. Mullins explained that the industry could now continue contributing millions upon millions annually in sales tax revenue to local communities as well as the state.
Latest figures show that the recreational marijuana market in Missouri has reached a valuation of $1.4 billion, less than two years after its launch.
The industry group estimates that the new decision will save $3 million monthly for consumers. The Missouri Cannabis Trade Association advocates for the implementation of a safe, successful, and compliant recreational and medical use marijuana program in Missouri.
This ruling is likely to be welcomed by the wider cannabis industry, including firms like Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF), since some jurisdictions have been imposing excessive taxes that end up making licensed operators non-competitive when compared to black market marijuana products.
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