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When a Kansas Citian goes to their local dispensary to buy marijuana, they’re paying nearly 22% in sales taxes on top of their purchase.
The 22% — 21.975%, to be specific — is the result of “tax stacking,” or multiple taxes being applied to the same purchase, and it happens on a wide variety of products.
For marijuana, the taxes include general sales taxes — including 4.225% for the state, 3.25% for Kansas City, 1.375% for Jackson County, 1% for the Main Street streetcar transportation district and 0.125% for the zoo. They also include marijuana-specific taxes: 6% for the state, 3% for the city and 3% for the county.
The marijuana-specific part of that calculation is being challenged before the Missouri Supreme Court. The case was brought by Robust Missouri Dispensary 3, whose Florissant customers pay 20.988% in sales taxes.
The dispensary, backed by the Missouri Cannabis Trade Association, argues that under the Missouri Constitution, only one local government — either a city or a county, but not both — is allowed to levy a 3% sales tax on marijuana. The dispensary’s lawyer, Eric Walter, presented that case to the state’s highest court May 13.
“For the purposes of this additional 3% local tax, that is a power afforded to the local government,” Walter told the judges. “That definition is very clear. It’s unambiguous: ‘In the case of an incorporated area, a village, town or city, and, in the case of an unincorporated area, a county.’”
“It can’t mean anything other than a binary solution,” he added. “There’s only one ‘local government’ for any given dispensary.”
When Missourians voted in 2022 to legalize recreational marijuana, they also opened up the possibility of local governments taxing sales of cannabis products at a maximum of 3%.
Since then, voters have approved the collection of sales taxes on recreational marijuana in most counties and many cities and towns.
In early 2023, the Missouri Department of Revenue sent out a letter to the state’s political subdivisions clarifying that “after further review … a city and a county cannot ‘stack’ the additional up-to-3% local tax on recreational marijuana sales.”
But later, the department sent out another letter rescinding that decision “after engaging in public and private stakeholder feedback.”
In the second letter, the department’s taxation division wrote that it “will not advise municipalities or counties regarding the possibility of stacking,” because the state constitution’s language on the subject is “ambiguous.”
Speaking before the Missouri Supreme Court last week, Walter said that, “having worked with state agencies before, I know (DOR’s first ruling) was not just a casual, happenstance thing.”
“A lot of deliberation and intent and study and analysis would have gone into that before DOR issued a statewide communication letting the world know how it interprets this constitutional provision,” he said.
“But after hearing from unidentified stakeholders, DOR had a change of heart and said: ‘Oh, just forget about that letter; it’s all very confusing. I guess you guys will have to figure it out.’ So you, unfortunately, are going to be stuck with figuring it out,” Walter told the court.
Arguing against the Florissant dispensary were lawyers representing St. Louis County — which the dispensary initially sued — and St. Charles County, which joined the lawsuit later.
The counties point to another section of the constitution’s cannabis provision allowing “any local government” to impose sales taxes on marijuana as proof that more than one government is able to impose the tax in areas where their jurisdictions overlap.
According to St. Louis County’s attorney Laura Robb, the dispensary’s interpretation of the provision creates an “absurd result” in which “dispensaries are essentially not governed by any of the applicable public health ordinances.”
Robb also argued that under the “purpose” provision of the cannabis section, it “states that one of the purposes is to tax the businesses involved while protecting public health.”
“The drafters of this provision consider the economic impact of the act and the potential revenue generation in conjunction with the public health responsibilities,” Robb told the Missouri Supreme Court. “It’s only logical that portions of the revenue should be captured by the entities fulfilling the public health duties.”
Florissant doesn’t have its own public health department and relies on St. Louis County for those services.
A St. Louis County circuit judge sided with the counties in May 2024, writing that “If (Robust’s) interpretation were accepted, then 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.”
That decision was overturned by the Missouri Court of Appeals Eastern District in November 2024. In that decision, Judge John Torbitzky wrote: “The plain language of (the provision) is unambiguous. Only one local government is authorized to impose an additional three percent sales tax.”
As to whether their ruling nullified the public health authority of counties to regulate dispensaries, Torbitzky wrote: “Those issues are not before this court. Each such ordinance would need to be evaluated on its own merits.”
Asked by Missouri Supreme Court Chief Justice Mary Russell to respond to the counties’ public health argument, Walter replied similarly to Torbitzky: “This is not a county health code case.”
He later told the court that he doesn’t believe changing a tax rule would make cities’ dispensaries immune to county health codes.
“That seems illogical to me. I think there’s a natural reading of the constitution that wouldn’t end with that result,” he said. “But if that is the end result of some future case looking at that issue, it’s an easy fix for municipalities, assuming they want health codes imposed on dispensaries — and I would guess that they would.”
Higher taxes have resulted in sticker shock for many cannabis customers.
“Customers come in and they get their receipt and see their total, and everyone’s always like, ‘Wow, tax, tax, tax, tax, tax, tax,’” said David Craig, vice president of marketing at Illicit Gardens, a Missouri-based cannabis brand.
Levying more taxes on marijuana can have adverse impacts on community well-being and crime, Walter told the court.
“We want to have enough money to pay for the programs. We want to generate revenue for the state. But we don’t want to drive all the consumers to the black market,” he said. “(Commercial) product is already more expensive than the black market, even before the taxes are imposed. So there’s an incentive to not have the tax be too high.”
John Mueller, CEO of Greenlight Dispensary, said that “Every additional tax, whether it’s in the state of Missouri or California or anywhere else, obviously just promotes more black-market products coming in.”
Craig agreed, saying, “Anything that makes black-market cannabis cheaper or more competitive is ultimately not a good thing.”
“A lot of people might not have the means to be able to afford these additional taxes — three percent isn’t a lot, but when you add it on top of all the other taxes, it certainly adds up,” Craig said.
People who can’t afford — or simply don’t want to pay — the extra taxes might instead seek out unregulated marijuana, including from “underground, essentially black-market cannabis stores” that Craig said exist thanks to loopholes in state and federal law.
“That, to us, is the reason why you want legal cannabis,” he said. “People are going to get it no matter what, but what you’re getting (with legal marijuana) is packaging that has been approved by the state so it doesn’t appeal to children. You’re getting lab testing so it doesn’t have heavy metals or mold or bacteria or any other type of contaminants, which is very prevalent in black-market cannabis.”
However, because the local sales taxes were in many places implemented in tandem with the beginning of recreational marijuana sales, there isn’t much data to help gauge whether higher taxes might be driving consumers toward illegal alternatives, Mueller said.
Caleb Clifford, chief of staff for Jackson County Executive Frank White, said that “We have yet to hear from anyone in the industry or anyone outside of it that this has done anything to harm the businesses or pushed people to other, illicit means of obtaining cannabis.”
Clifford also said he had not heard from law enforcement or other governments about a rise in black-market cannabis. However, he did say that the continual rise in legal marijuana purchases suggests most people are willing to pay for regulated, taxed cannabis.
“Every estimate that we received prior to the legalization of cannabis in Missouri paled in comparison to what the actual sales have been,” he said. “The sales have continued to exceed all the estimates and expectations, and they are increasing over time, as well.”
While “tax stacking” and the impact on consumers and businesses have been a focus throughout this debate, Clifford called that argument “misguided.”
“There are different responsibilities and functions at different levels of government, so there are means to provide the resources necessary to provide those services,” he said. “So whether it’s the COMBAT sales tax, whether it’s our general revenue sales tax or the stadium sales tax, for example, they are collected throughout the county, because the entirety of the county receives the benefit of those public services.”
“To carve this one out, not only is it unfortunate because of how much investment in the community would be lost, but it sets a dangerous precedent where we’re going to be providing services in locations where we’re not receiving the funds to cover those services, and I fear where that could go long term,” he added.
Walter also acknowledged during last week’s oral arguments that the case was not primarily about tax stacking. When Missouri Supreme Court Judge Brent Powell asked him if a county could impose a 3% tax on marijuana sales in an incorporated area where the city doesn’t already impose a tax, he said it couldn’t.
“In that situation, it’s an incorporated area — the county is not the local government,” he said.
Twenty-six municipalities within Jackson County’s borders have enacted their own local marijuana sales tax, according to Department of Revenue data. Clifford said those 26 cities and towns are home to all of the county’s recreational marijuana stores, meaning that if the Missouri Supreme Court sides with the dispensary, it would cost the county “everything.”
Since Jackson County began collecting sales taxes on recreational marijuana in November 2023, that “everything” has equaled more than $10 million. None of it has been appropriated yet, according to Clifford.
“Out of an abundance of caution and waiting to see whether or not the county was brought in on litigation, the decision was made to allow the court process to play out, or at least get further down the line, before these decisions were made,” he said. “But at this point, due to the needs of the community and the funds that have been received, I would not be surprised if there’s something in the near future appropriating these funds.”
He said there are “active conversations” happening about how to use those funds.
“Different issues are being looked at, including housing, health disparities, job training, some support for nonprofits that have been impacted by federal cuts, and other projects largely supporting community-based providers in the nonprofit world,” he said.
Mueller and Craig both told The Beacon that they aren’t against paying taxes and don’t find fault with the counties for wanting to collect more revenue, but that they “don’t think the spirit of the law allows for that.”
“I think the constitution is very clear, and the will of the people is very clear, and as long as (the court) reads the letter of the law and no politics are involved, it should be a very simple case to reduce down this double taxation,” Mueller said.
Clifford, on the other hand, believes that Jackson County voters passing the sales tax makes enforcing it — and using its revenue to fund community services — the will of the people, too.
Ultimately, the task before the Missouri Supreme Court is figuring out what voters thought “local government” meant when they passed the amendment legalizing marijuana in 2022.
Clifford acknowledged that the constitutional language is “confusing” and “conflicting with itself in different places and establishing procedures that are not consistent with the other laws related to sales taxes.”
But he said that’s reflective of the environment in which it was created.
“I think, when you take a hard look at how this law came to be … it’s the Missouri General Assembly who dropped the ball here,” he said. “This was an issue where the industry stepped into the void and drafted constitutional language which is now enshrined in the Missouri Constitution, and now we’re all trying to figure out what it actually says.”
Type of Story: News
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
“}]] The court weighs arguments from dispensaries and counties about the legality of both cities and counties taxing marijuana sales. Read More
