Counties can’t stack marijuana taxes, Missouri Supreme Court rules

The Missouri Supreme Court ruled Tuesday that counties cannot stack marijuana sales taxes on dispensaries located in cities that already impose their own 3 percent tax.

The state’s highest court determined in a 6-1 decision that 2022’s Amendment 3 — which allowed for recreational marijuana use in the state — does not permit counties to collect an additional sales tax on facilities in incorporated areas that already have their own tax.

The case centered around Robust Missouri Dispensary 3 LLC v. St. Louis County, et al., a Florissant dispensary that filed against St. Louis County after both county voters and Florissant voters approved a separate 3 percent sales tax on recreational marijuana purchases. The dispensary sued on the grounds that the Department of Revenue had initially concluded that cities and counties couldn’t “stack” taxes in incorporated areas. However, that was later deemed “ambiguous.” Robust sued both St. Louis County and St. Charles County, which had also imposed its own 3 percent sales tax on facilities in unincorporated areas.

Oral arguments were heard by the state Supreme Court May 13. Eric M. Walter of Armstrong Teasdale in St. Louis represented Robust during oral arguments. St. Louis County was represented by Laura Robb of the St. Louis County counselor’s office, and St. Charles County was represented by Bryan E. Wise of the St. Charles County Counselor’s office.

In its opinion, the court found the language in Amendment 3 to be unambiguous, siding with Robust’s argument that only one “local government” can impose the additional 3 percent sales tax: a city in an incorporated area or a county in an unincorporated area, but not both.

“The plain language of article XIV, section 2 limits the definition of ‘local government’ to allow only one local government to impose a 3 percent tax — a village, town, or city in an incorporated area, and a county in an unincorporated area,” the majority opinion stated.

The court rejected arguments from St. Louis and St. Charles counties that Amendment 3 allowed counties to tax marijuana sales in incorporated areas as well, pointing to the definition of “local government” outlined in the amendment.

“The drafters of article XIV, section 2 specified a ‘local government’ is based on the area in which the dispensary is located,” stated the opinion. “If a marijuana dispensary is located in an incorporated area, that village, town, or city is the only local government that may institute the 3 percent tax.”

The opinion also addressed concerns raised by the counties in prior arguments that their ability to enforce health regulations would be diminished if they could not collect taxes from dispensaries in incorporated areas. The court said article XIV only limits county authority over marijuana-related ordinances, not general health and safety codes.

“Nothing in article XIV, section 2 bars an incorporated area from adopting health regulations mirroring those of the county,” the opinion stated.

In his dissent, Judge Zel Fischer argued the amendment’s plain text does allow counties to tax marijuana sales in incorporated areas, pointing to the use of the word “and” in the definition of local government.

“Through the use of the conjunction ‘and’ … the plain language of this subsection allows a county to impose an additional sales tax in both incorporated and unincorporated areas,” Fischer wrote.

Fischer said the majority’s opinion could lead to “absurd results,” including undermining a county’s authority to regulate marijuana dispensaries and creating voter confusion.

“If, as the principal opinion holds, a county is only a ‘local government’ in its unincorporated areas, then the phrase ‘and, where applicable, its unincorporated areas’ (in the voter-approved ballot language) is superfluous and would misinform voters at the ballot box,” Fischer stated.

The case is Robust Missouri Dispensary 3 LLC v. St. Louis County, et al., Case No. SC100898.