St. Louis County cities hope to reap sales tax from legalized marijuana
Scores of officials in St. Louis County cities are hoping that residents approve a 3% tax on recreational marijuana sales this spring.
While the money generated from the tax may not be enormous, local leaders expect the funds to be helpful as rising costs continue to take a bite out of city budgets.
Missouri residents who are 21 and older can now purchase marijuana at dispensaries around the state. The ballot item that legalized the sale of marijuana also allowed cities and counties to collect a 3% sales tax on the product.
Thirty-five St. Louis County governments voted to place a 3% tax on the April 4 ballot. The City of St. Louis is also asking voters to approve the tax. And St. Louis County residents will decide whether to impose the tax on dispensaries.
Not all cities asking voters to approve the tax have a dispensary. But Webster Groves Mayor Laura Arnold said she wants residents to back the tax in case her city gets one in the future.
“I don't know that we all expect demand to go through the roof so that there are dispensaries on every corner. And clearly there cannot be because there are limitations about where you can put them,” Arnold said. “But I think all of us also recognize that we should be ready if a dispensary wants to locate in our town. And that's what we're doing here.”
While it’s not known how much money each city will collect from a marijuana tax, local leaders estimate that sales from one dispensary will provide more than $100,000 for cities.
And while Arnold said that money wouldn’t be game changing for larger cities, she added that having any extra money is beneficial.
“And fundamentally, municipal costs are rising, and we're not immune from inflation,” Arnold said. “We're not immune from labor market pressures. And we have limited ways to increase our revenue, and this certainly fits in with the other kind of ‘sin taxes.’”
Mayors of cities with dispensaries, such as Ferguson and Sunset Hills, said they like how there’s few restrictions on how they can use proceeds from the tax. By contrast, the 6% state tax on marijuana goes to specific purposes including the public defender system and the costs of administering the marijuana program.
Ferguson Mayor Ella Jones said her city plans to use the money to help improve roads. She added that she hasn’t heard any complaints from voters about potentially adopting the tax.
“It's not coming out of their pocket per se, unless they [purchase] marijuana,” Jones said.
Sunset Hills Mayor Patricia Fribis said putting the tax on the ballot when her city already has a dispensary is an easy call.
“It would go in general revenue at this time unless the board decides to earmark it for something else,” Fribis said.
Pat Kelly of the Municipal League of Metro St. Louis said he expects other cities in the region to place a marijuana tax on the ballot, especially as it becomes more clear how much money that cities with dispensaries are generating.
“There are costs associated with having those types of facilities,” Kelly said. “And that's something that we've learned from other states that have passed this. It's still primarily a cash business. And so there's added security from a policing standpoint. And if a store did open up and the city didn't have the tax, I'm sure that that's something they would probably consider taking to the voters.”