Missouri Court Upholds Local Cannabis Sales Taxes

LOS ANGELES- A recent ruling by St. Louis County Circuit Judge Brian May has affirmed the authority of Missouri cities and counties to impose their own sales taxes on cannabis dispensaries, in addition to the state’s existing excise tax. This decision came in response to a legal challenge from Robust Missouri 3 LLC, which operates a dispensary in Florissant where the tax rate surged to nearly 15% following the implementation of 3% sales taxes by both the city and St. Louis County in April 2023. These local taxes are in addition to Missouri’s 6% state excise tax.

The lawsuit by Robust Missouri centered on whether the constitutional amendment that legalized recreational cannabis sales capped local sales taxes at a combined 3% or permitted each locality to levy a separate 3% tax. Judge May’s ruling supported the latter interpretation, emphasizing that the law was designed to enable local governments to protect public health.

Steve Hobbs, executive director of the Missouri Association of Counties, welcomed the decision, highlighting that the voter-approved taxes eliminate uncertainties for county administrations. However, industry representatives like Andrew Mullins, executive director of the Missouri Cannabis Trade Association, argued that high tax rates could inadvertently bolster the illegal cannabis market, thus reducing potential revenues for state programs benefiting veterans and substance abuse initiatives.

In the wake of this ruling, Robust Missouri has filed an appeal. The issue of local cannabis taxation continues to stir debate as Missouri’s cannabis market, which exceeded $1.3 billion in sales in its inaugural year, shows rapid growth. Other legal challenges are also unfolding, including a lawsuit by Vertical Enterprise in Buchanan County over similar taxation issues, with a court hearing scheduled for May 16. This ongoing legal discourse highlights the complex interplay between local autonomy and state regulations in the burgeoning cannabis industry.