The Missouri Supreme Court handed down a landmark decision Tuesday that puts an end to the controversial practice of tax stacking on cannabis products. In a 6-1 ruling, the state’s highest court determined that only one level of local government can impose the 3% cannabis sales tax allowed under Missouri’s 2022 constitutional amendment.
This decision resolves a two-year legal battle that began when Florissant-based dispensary Robust Missouri 3 LLC challenged the practice of collecting taxes from both city and county governments. The ruling affects more than 70 areas across Missouri where both municipal and county governments had been imposing overlapping 3% taxes on cannabis sales.
The Tax Stacking Problem
The legal dispute centered around the interpretation of “local government” in Missouri’s recreational cannabis amendment. Before Tuesday’s ruling, cannabis customers in some locations in Missouri were paying nearly 21% in total sales tax. This rate included the state’s 6% cannabis tax plus separate 3% taxes from both the city of some counties.
The Missouri Supreme Court’s decision clarifies that the constitutional amendment allows only one municipality to impose the local tax. In incorporated areas like cities and towns, only the city can collect the 3% tax. In unincorporated county areas, only the county can impose this tax.
Chief Justice Mary R. Russell wrote in the majority opinion that “the plain language of article XIV, section 2 limits the definition of ‘local government’ to allow only one local government to impose a 3 percent tax—a village, town, or city in an incorporated area, and a county in an unincorporated area.”
We reached out to our friend Tyler Hannegan Owner at Robust Cannabis + Feel State Dispensary in Florissant Missouri who were main drivers in the legal challenge.
“Our team at Feel State Dispensary + Robust remains thrilled to have been the plaintiff representing not only the Missouri Cannabis industry but most importantly the advocates of our Patients + Customers that we serve. Though it did take an incredible amount of time and in all the Supreme Court of Missouri upholding their judgement against the Counties egregious interpretation of Missouri’s Constitutional program; we would respectfully do it again one hundred times out of hundred.” said Hannegan.
“In Missouri, we have nearly tripled the originally expected tax revenues from the program as a whole. These appropriately collected taxes directly benefit our Veterans Commission, the Missouri Public Defender System, and the Department of Health and Senior Services (DHSS) for substance use disorder programs. We are proud to save Missourians a collective $3 million a month on a go-forward basis by alleviating this tax burden and continue to push our State’s program to be the best in the country.”
A Victory for Cannabis Consumers and Industry
The ruling is a big win for Missouri’s cannabis industry and consumers alike. According to Andrew Mullins, executive director of the Missouri Cannabis Trade Association via the Missouri Independent, the decision will save Missouri cannabis customers millions every month.
“Missouri customers already pay their fair share, with sales tax revenue from cannabis in Missouri now tripling original state estimates,” Mullins stated. “The ruling’s clarity preserves Missouri’s standing as one of the nation’s most impactful and accessible cannabis programs, ensuring patients and adult-use consumers continue to benefit from fair pricing, great service and robust product choice.”
The decision also helps level the playing field between legal cannabis businesses and the illicit market. High taxes have long pushed consumers toward unregulated products, undermining the goals of legalization.
By reducing the tax burden, legal dispensaries can offer more competitive pricing while maintaining the safety standards and regulatory compliance that distinguish them from illegal operations.
Fair Cannabis Taxation
This ruling also highlights the ongoing challenges faced by the cannabis industry regarding taxation policies. Unlike other regulated industries, cannabis businesses often face disproportionate tax burdens designed to fill state coffers.
These excessive taxes can hinder legitimate business growth and push consumers toward illegal alternatives.
The Missouri Supreme Court’s decision sets an important precedent for fair cannabis taxation. It recognizes that excessive tax layering can undermine the effectiveness of regulated cannabis markets.
When legal products become prohibitively expensive due to stacked taxes, consumers naturally seek cheaper alternatives in the unregulated market.
Cannabis businesses already operate under significant regulatory burdens and compliance costs. Adding multiple layers of local taxation on top of state taxes creates an unsustainable financial environment that benefits no one.
Patients who rely on cannabis for medical conditions are particularly affected by high prices, potentially limiting their access to needed treatments.
“The Missouri Supreme Court’s ruling to strike down tax stacking is a significant victory for Missouri’s cannabis industry and its consumers. By eliminating the unfair practice of stacking local taxes, which inflated prices for customers, this decision ensures a more accessible and competitive market.” said Adam Diltz CEO of Illicit and From the Earth dispensaries in MO.
“Tax stacking shouldn’t burden consumers, and I’m thrilled to see Missouri take a stand against it, setting a precedent for fair taxation that benefits both the industry and the people it serves.”
“We are currently working with other industry leaders and legal teams to figure out the most efficient way to get the customers their share of the tax refund.”
Economic Impact on Local Governments
While the ruling benefits consumers and businesses, it does create revenue challenges for some local governments. St. Louis County spokesman Doug Moore expressed disappointment, noting the county could lose up to $3 million annually. St. Charles County Executive Steve Ehlmann also voiced concerns about the revenue impact.
However, this financial adjustment may encourage more balanced approaches to cannabis taxation. Rather than viewing cannabis as an unlimited revenue source, local governments can work to create sustainable tax structures that support both public programs and industry growth.
The cannabis industry generates substantial tax revenue for Missouri. The Missouri Cannabis Trade Association estimates that the state’s cannabis industry generates $241 million in sales tax revenue annually for state and local governments.
This demonstrates that even with fair taxation practices, cannabis contributes significantly to public finances, but it shouldn’t be seen as a catch-all solution for fixing budgets.
Missouri Supreme Court Ruling Supports Fair Cannabis Policy
Tuesday’s Supreme Court decision represents more than just a tax ruling—it’s a statement about fairness in cannabis policy. For too long, cannabis businesses and consumers have faced discriminatory taxation practices that wouldn’t be tolerated in other industries.
The ruling helps ensure that Missouri’s cannabis program remains accessible to patients who depend on these products for medical relief. It also supports the growth of legitimate cannabis businesses that create jobs, pay taxes, and contribute to their communities.
Cannabis companies can compete more effectively against illicit operators when they’re not over burdened by excessive taxation. This benefits public safety by encouraging consumers to purchase tested, regulated products instead of potentially dangerous alternatives from the illicit market.
Moving Forward
The Missouri Supreme Court’s decision provides much-needed clarity for the state’s cannabis industry. With the tax stacking issue resolved, businesses can focus on serving customers and expanding access to quality cannabis products.
This ruling should serve as a model for other states grappling with cannabis taxation issues. Fair, transparent tax policies benefit everyone involved—consumers get better prices, businesses can operate more effectively, and governments receive sustainable revenue.
Missouri voters approved recreational cannabis with the expectation of creating a regulated, accessible market. Tuesday’s Supreme Court decision helps fulfill that promise by ensuring that cannabis taxation remains reasonable and fair.
As the industry continues to mature, policies like this help establish cannabis as a legitimate part of Missouri’s economy rather than just a source of quick revenue.
The end of tax stacking marks an important milestone in Missouri’s cannabis journey, demonstrating that fair treatment of this industry benefits patients, consumers, businesses, and communities alike.
