The Missouri Supreme Court is considering whether both cities and counties can tax recreational marijuana sales at 3%.
The court on Tuesday heard arguments in a case brought by Robust, which operates dispensaries across Missouri, including in Florissant in north St. Louis County.
In April 2023, voters in both Florissant and St. Louis County approved a 3% sales tax authorized by the state’s marijuana legalization amendment. The state Department of Revenue then sent Robust a letter telling it to collect the additional 6% on its pot sales in Florissant.
Robust sued, arguing that counties like St. Louis can only levy their 3% tax in unincorporated areas, not in municipalities like Florissant. A St. Louis County judge disagreed, and Robust appealed.
Article XIV, the constitutional amendment legalizing recreational marijuana in Missouri, says local governments are, “in the case of an incorporated area, a village, town or city, and, in the case of an unincorporated area, a county.”
The court is required to give all those words their “plain and ordinary and natural meaning,” Robust’s attorney Eric Walter told the court. “There's only supposed to be one local government, one boss, one master, dictating outcomes and imposing the 3% tax.”
Robust is not arguing that the county did not have the right to ask voters to pass the tax, Walter said. The law just does not allow them to levy that tax on dispensaries that are located within municipalities.
Think of it like a high school graduation, he said. No one would find it confusing if an invite read, in case of rain the event will be indoors, and in case of good weather, the event will be on the football field.
“It would always be one or the other, just like with local government,” Walter said.
Attorneys for St. Louis and St. Charles counties disagreed. They said that counties and municipalities co-exist in the same geographical space at the same time, and that the language in the amendment authorizing the tax specifically says the governing body of “any local government.” can vote to levy the additional tax.
“The use of the word 'any' acknowledges that there may be more than one local government authorized to impose the tax in this political subdivision,” said Laura Robb, an attorney with the St. Louis County counselor’s office. “'Any,' in case law, has an expansive meaning.”
The counties also pushed a theory advanced in the Circuit Court ruling upholding the county tax in incorporated areas.
Article XIV includes a section that says the only local ordinances and regulations that a facility must follow are those issued by the local government where the facility is located. If the city is the only local government in incorporated municipalities, Robb said, county health ordinances would not apply.
“The interpretation urged by [Robust] would lead to this absurd result, which I believe is something that the drafters did not intend,” she said.
Judge Kelly Broniec noted a potential problem with the county’s definition of local government.
Cities and counties can both ask voters to ban dispensaries in their borders, she said. If both the city and the county are local governments for the purposes of the tax issue, they must also be local governments when it comes to dispensary bans.
“If one of the local governments disallowed it and one allowed it, if it was on the same ballot, who would control if both the city and the county are a local government?” Broniec asked.
“I don’t know the answer to that question,” Robb replied.
State data show that almost 90 of Missouri’s 114 counties have authorized the additional tax. Jack Cardetti, a spokesman for the state’s cannabis trade association, said customers have paid almost $3 million extra per month.
“What we know from other states is that when you tax the sale of legal marijuana too much, people end up purchasing it from the illicit market, the exact opposite of what marijuana legalization is meant to do,” he said.
The marijuana industry basically invited the counties to approve the tax, said St. Charles County Executive Steve Ehlmann.
“They didn't say, 'Hey, we'd have a better society if marijuana was legal,'" he said. "What they said was, people are smoking marijuana already and if we make it legal, we can tax them just the same way we tax your Budweiser and your bourbon.”
He joked that it was the first tax increase he had argued to support.
St. Charles County has raised more than $2.4 million since voters approved the tax in April 2023. St. Louis County is sitting on more than $6 million. Neither entity has allocated any of the money.
A decision by the Supreme Court will come at a later date. A similar case in Buchanan County is on hold until the ruling comes down.
