Kansas Citians shopping at their local marijuana dispensary will now pay 3% less in sales taxes after a recent Missouri Supreme Court ruling.
They will still pay nearly 19% in sales taxes, or $19 on an $100 purchase, however.
Takeaways
- The Missouri Supreme Court ruled that, under an amendment passed by voters in 2022, a city and county cannot “stack” taxes on marijuana sales.
- Following the ruling, counties’ taxes can only apply to dispensaries in unincorporated areas.
- That will bring down the amount customers are paying, but it will also strip counties of a source of funding.
- Officials from Jackson County and elsewhere are in talks with state lawmakers about putting a question on the 2026 ballot to clarify this issue, but others believe it won’t get far.
In a 6-1 decision, the state’s highest court ruled that, under an amendment voters passed in 2022 to legalize recreational marijuana, a city or a county can collect a marijuana sales tax of up to 3% — but not both at the same time.
That means dispensaries in a city will charge that city’s tax, if there is one, but not a county’s. On the other hand, dispensaries in unincorporated areas will be subject to a county’s tax.
Impact on counties
The ruling has a significant impact for Jackson County, where all of the local dispensaries are in incorporated cities. That means the county can no longer collect any marijuana sales tax revenue.
“We were disappointed that the Supreme Court came to the decision that they came to, but we are respectful of that decision and we understand that it’s a decision based upon inconsistent and confusing language that was put into the Missouri state constitution,” said Caleb Clifford, chief of staff to Jackson County Executive Frank White Jr.
The amendment that legalized recreational marijuana — and laid the foundation for the regulatory and tax frameworks for the new industry — was drafted by industry leaders rather than lawmakers, and some of the language was unclear or contradictory, Clifford said.
In one part of the amendment, a “local government” is defined as, “in the case of an incorporated area, a village, town or city and, in the case of an unincorporated area, a county.”
Robust Missouri Dispensary 3, a Florissant dispensary that brought the original suit against St. Louis County, argued that this part of the amendment meant that there can only be one local government that can collect the tax in any given place.
The dispensary argued that stacking city and county taxes would cause “irreparable harm.”
St. Louis County — joined later by St. Charles County — countered that the use of “and” between the two definitions meant that a city and county could both be considered local governments of a given area.
Most of the judges, however, were not convinced by the counties’ argument and sided with the dispensary.
Clifford previously told The Beacon that viewing the marijuana sales tax debate through a “tax stacking” lens was missing the point of sales taxes.
“There are different responsibilities and functions at different levels of government, so there are means to provide the resources necessary to provide those services,” he said. “So whether it’s the COMBAT sales tax, whether it’s our general revenue sales tax or the stadium sales tax, for example, they are collected throughout the county, because the entirety of the county receives the benefit of those public services.”
Clifford said the recent ruling on marijuana sales tax makes it an outlier. Other sales taxes in Jackson County are collected in both incorporated and unincorporated areas, including the regular sales tax that still applies to marijuana sales everywhere in the county.
To resolve this discrepancy, Clifford said county officials “have been in communication with a few” state lawmakers about putting a question on the 2026 ballot to clarify the language from the 2022 amendment and allow counties to collect marijuana sales taxes throughout their jurisdictions.
“But until that time, we don’t have a fix, and in fact, it’s one of numerous budget issues that we’re now facing that are creating shortfalls and are going to create some complications for the county,” he said.
Tax dollars’ positive impact
The tax revenue generated by marijuana sales has supported communities across the state, according to David Craig, vice president of marketing at Illicit Gardens, a Missouri-based cannabis brand.
“It’s great to see the tax revenue that’s generated from the industry go to veterans’ affairs and all the stuff that’s outlined in the amendment,” he said. “We feel like the revenue that’s being generated is really positive for these local communities and the state.”
“I don’t think anyone’s necessarily averse to the industry raising money to do good stuff,” he added. “But raising the price even more is not ideal.”
From Jackson County voters’ approval of a marijuana sales tax in April 2023 to the Supreme Court’s ruling in July, the county has been collecting both its regular sales tax and a special, marijuana-specific sales tax on sales of recreational marijuana.
During that time, the county collected more than $10 million that it did not spend as it and other counties awaited the court’s decision.
But Clifford said some of the already-collected money had been included in the county’s recently approved budget. Those appropriations are now being “reassessed,” he said.
“We have felt confident that the funds that are collected pursuant to voter approval of the sales tax are valid and can be used,” he said. “However, we wanted to make sure that we were being conservative about it and were being thoughtful.”
“We’re just reviewing (the appropriations) again, at this point, based upon the specific decision that came down, to ensure we’re moving forward responsibly,” he added, calling the county’s strategy a “belt-and-suspenders approach.”
When Clifford spoke with The Beacon about the issue in May, he said supporting local nonprofits was a top priority for the county as it considered how to use its marijuana sales tax revenue.
The county government later approved $3 million to support nonprofits impacted by federal cuts, something Clifford said “we’re going to be unable to fund at that level for the 2026 budget because of this Supreme Court decision.”
Jackson County is not alone. Ninety of the state’s 114 counties have passed their own marijuana sales tax since Missouri voters legalized recreational marijuana in 2022.
Of those, “dozens of counties” across Missouri have no dispensaries in unincorporated areas, according to Jack Cardetti, a spokesperson for the Missouri Cannabis Trade Association.
For other counties, including neighboring Platte and Clay, the decision doesn’t make much of a difference, because they had yet to pass their own countywide marijuana sales tax.
Missouri marijuana customers to save ‘$3 million each and every month’
While many counties’ budgets have taken a hit, the court ruling was positive for dispensaries’ customers, Cardetti said.
“Their ruling this month will save Missouri marijuana customers about $3 million each and every month,” he said.
Cardetti also hailed the decision as a win for the regulated cannabis industry. Industry leaders have argued that high taxes on regulated cannabis products push customers toward cheaper, black-market alternatives.
However, Cardetti also acknowledged that demand for black-market cannabis in the state has been relatively low because “Missouri actually has done more than about any other state to bring customers from the illicit market to the regulated, licensed, product-tested market.”
Increasing access to regulated marijuana — through both statewide legalization and no local bans on dispensaries — and implementing “sensible regulations and sensible taxes” have helped to keep Missourians shopping in licensed dispensaries, Cardetti said.
Asked whether the drop in taxes could lead dispensaries to raise their prices, Craig said he “wouldn’t hold that past people, but I would think the market would dictate otherwise.”
Between the time needed to grow the marijuana plants and the time needed to build up the supply chain, Craig said, part of the Missouri cannabis industry has only come fully online this year.
“So if anything, there’s way more supply in the market than there was when the market first started, so I see prices going down,” Craig said.
Asked about the potential for a future ballot question allowing counties to collect marijuana sales tax in incorporated areas, Cardetti said he believes “most of the lawmakers here in Missouri, whether it’s at the local or state level, are going to respect the will of the people.”
“The tax policy that we have in place right now is 100% what Missourians were voting on. They knew they were voting on it this way and they went ahead and approved it back in 2022,” he said. “Any effort to overturn the will of the people on this issue would, I think, be a very unsuccessful venture.”
