Missouri Marijuana Tax Dispute Heads to Court

Vertical Enterprise asserts the county tax on municipal locations is unconstitutional.

A legal fight over recreational marijuana taxes is slated for a December court hearing in a rural county north of Kansas City, where a cannabis retailer claims that the county’s 3% levy is illegal under the state constitution.

At issue is whether Buchanan County – and other county governments – are allowed to tack their own marijuana taxes onto those imposed by municipalities in incorporated areas, according to the St. Louis Post-Dispatch.

The question was brought by retailer Vertical Enterprise, which operates in the small town of St. Joseph, in a lawsuit filed in Buchanan County Circuit Court last month. Vertical argues that the county’s 3% tax – which doubles the 3% already in place by the town of St. Joseph – is prohibited by the 2022 ballot measure that legalized recreational marijuana. Vertical asserts that it only gives counties the right to impose cannabis taxes on businesses located in unincorporated areas.

“Buchanan County is not a ‘local government’ in relation to Vertical because Vertical is in an incorporated area and Buchanan County is not a village, town or city,” the lawsuit asserts. “Therefore, Buchanan County’s tax on marijuana sales in the city limits of St. Joseph is not authorized.”

If Vertical loses the lawsuit, cannabis consumers in Missouri will pay a roughly 20% tax at retailers that are located in similarly taxed jurisdictions, when including city, county, and state taxes, according to an estimate from the Municipal League of Metro St. Louis.

Several other counties have taken the same step as Buchanan County, including St. Louis County and St. Charles County, which are home to the city of St. Louis and many of its suburbs, the Post-Dispatch reported.

Vertical noted in the lawsuit that, to date, it has not collected the additional tax because “that would be wrong and impossible to return.”

A trial date has been set by Circuit Judge Daniel Kellogg for Dec. 8.

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