The Missouri department that oversees sales tax collection across the state has quickly abandoned a previous ruling on marijuana sales taxes, leaving a key question completely in the hands of …
The Missouri department that oversees sales tax collection across the state has quickly abandoned a previous ruling on marijuana sales taxes, leaving a key question completely in the hands of Missouri’s courts.
Early in February, with sales of recreational marijuana beginning across the state and many local governments asking voters to consider special sales taxes on the drug, the Missouri Department of Revenue issued a ruling that rankled county governments statewide. In it, the department declared that city and county governments could not “stack” the special marijuana sales taxes authorized by the 2022 recreational marijuana amendment — only one local tax could apply to any given store.
But now, after pressure and backlash from county governments, who would have been disproportionately shorted by the ruling, the Department of Revenue has rescinded its ruling and says it won’t make any further effort to resolve a significant ambiguity in the tax provisions of the recreational marijuana amendment.
According to a new letter sent by the department to city and county governments, there are two competing interpretations of the amendment’s section that allows a “local government” to levy an extra 3 percent sales tax on recreational marijuana.
Under the first interpretation, only one local government’s tax can apply at any given marijuana store, because the language of the amendment approved by voters indicates that only a single local government has authority over a store, depending on the store’s location. As a consequence, county governments could not levy a marijuana tax inside city boundaries.
But the second interpretation of the tax provision starts with the fact that the recreational marijuana amendment doesn’t directly say that cities and counties can’t stack their marijuana tax. In any other circumstance, county sales taxes apply inside a city boundary, and nothing in the amendment explicitly changes that. Therefore, a county could stack its marijuana tax on top of a city’s marijuana tax.
“At the moment, neither interpretation is absolute,” the Department of Revenue said in its new letter distributed to local governments. The only thing known for certain is that any local marijuana tax has to be approved by local voters; the rest will have to be resolved through court.
“The Department will not supersede the decisions of the people on sales tax for adult marijuana, nor the meaning of constitutional verbiage, when there is not a definitive answer,” according to the letter. “Municipalities and counties may put the additional tax on the ballot, but Missourians will ultimately decide what they support.”
Locally, two marijuana taxes are on election ballots for April 4. Warrenton and Warren County are both seeking to add an extra 3 percent sales tax to the drug. Pragmatically speaking, those taxes would only affect one existing store: Proper Cannabis in Warrenton.
Without further clarification that might only come from a court ruling, the Department of Revenue’s latest letter indicates that both taxes would apply to sales if the propositions from Warrenton and Warren County are both approved. That could bring sales tax on recreational marijuana to as high as 21.5 percent.
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