A high-stakes legal battle over double taxation on marijuana sales in Missouri is heading to the state’s highest court. Dispensaries and local governments are at odds over whether counties can impose a 3% sales tax on cannabis in cities that already levy the same tax. The outcome could have widespread financial implications for both businesses and consumers.
The Legal Fight Over Double Taxation
Missouri voters approved adult-use marijuana in 2022, and sales took off in early 2023. But almost immediately, tax disputes emerged. The conflict centers on whether counties can collect a 3% cannabis tax on top of the one already imposed by individual cities.
Robust Missouri Dispensary 3 and Vertical Enterprise, two major marijuana retailers, are leading the legal fight. They argue that voters never intended for both county and municipal governments to levy the tax simultaneously in the same location. Instead, they claim county taxes should apply only in unincorporated areas where no city tax exists.
Lower courts have already ruled in favor of the dispensaries. Now, Missouri’s Supreme Court will weigh in, determining whether the extra taxation violates the original legalization measure.
Potential Impact on Missouri’s Cannabis Industry
If the court sides with dispensaries, counties may be forced to refund millions of dollars in improperly collected taxes. That would be a major win for marijuana retailers and consumers, who have been paying some of the lowest cannabis taxes in the country—until now.
- State tax: 6%
- Municipal tax: Up to 3%
- County tax (disputed): An additional 3%
The additional county tax can significantly raise the cost of legal marijuana. For example, in some areas, customers may be paying a combined 12% in taxes, nearly doubling the original state tax rate.
The industry has been booming, but higher prices due to tax stacking could slow down sales. Many businesses fear that if the ruling doesn’t go their way, Missouri’s low-tax advantage could fade, pushing more consumers toward illicit markets.
How Local Governments Are Defending the Tax
Counties argue that the voter-approved amendment never explicitly banned them from imposing their own 3% tax—even in cities that already collect it. They claim that cutting off their ability to tax cannabis would strip them of much-needed revenue for local services.
Supporters of the tax point out that Missouri’s marijuana market has exceeded expectations. In 2023, the state saw more than $1.3 billion in cannabis sales. Local governments argue that the success of the industry means businesses and consumers can afford to contribute more to public services.
One key question for the Supreme Court is whether the language of the 2022 amendment allows double taxation or limits county-level taxation only to unincorporated areas. The answer could set a precedent not just for marijuana but for other future tax disputes.
What Happens Next?
The Missouri Supreme Court has not yet set a final ruling date, but its decision will likely have a ripple effect across the state’s cannabis market.
- If the court rules in favor of dispensaries, counties may have to refund millions in taxes.
- If counties win, marijuana consumers will continue paying the additional tax, potentially making Missouri cannabis less competitive.
While businesses and consumers wait for clarity, local governments are preparing for potential revenue losses. Meanwhile, dispensaries argue that keeping taxes low is essential to sustaining the legal market.
The case could reshape how cannabis is taxed in Missouri, affecting everything from pricing to government budgets. All eyes are now on the state’s highest court as it decides who gets to collect—and who gets to keep—Missouri’s marijuana tax revenue.