Yesterday, voters around the state cast ballots in local elections with one of the most prominent issues in many localities being the question of sales taxes on adult use marijuana purchases in the state.
Sales tax on medical marijuana purchases is set at a flat rate of 4%. For adult use purchases in the state taxes are 6% with localities able to add an additional tax of up to 3% via voter approval.
Missouri voters in municipalities and counties across the state approved the additional taxes in nearly every case. While many election results are still considered unofficial, early results show that nearly every dispensary in the state will be subject to increased sales taxes on adult use purchases.
“Unlike in so many other states, we are thrilled to see communities all across Missouri embrace having cannabis facilities as part of their local economy,” said Andrew Mullins, Executive Director of Missouri Cannabis Trade Association. “Already, the Missouri cannabis industry has created more than 14,000 direct jobs, surpassed $100 million in the first month of adult use sales, and has generated billions in economic activity. Missouri’s adult use marijuana program is already drawing national and international acclaim as one of the most customer-friendly in the nation and today’s votes show that hundreds of communities in every corner of the Show-Me-State want to be part of one of Missouri’s newest and most flourishing industries.”
The next question for operators and consumers is how those taxes will be applied
Originally, Missouri Department of Revenue had stated that the additional 3% sales tax would not be able to be added by both cities or municipalities and the counties they are located in. But in a reversal of that previous position, the Department stated in February, “The distinction between local government and political subdivision is important as voters in the entire county will authorize the additional tax, not just voters in the unincorporated area. And practically, counties do not otherwise limit the applicability of their sales taxes based on geography. So both municipalities and counties can impose up to a 3% sales tax on adult use sales.”
With nearly every ballot measure asking for approval of the maximum tax of 3%, many consumers in the state are likely to see a 12% total sales tax on recreational marijuana purchases, while medical marijuana purchases remain at just 4%.
With new patient application numbers dwindling in recent months, the stacking of sales taxes could encourage many recreational consumers to obtain their medical marijuana card. With adult use legalization in 2022, medical marijuana card expiration changed from 1 to 3 years.
According to Pistil Data, Missouri’s average ounce price for flower was ~$235 dollars in March, if a consumer purchased their full three ounce limit in one transaction adult use taxes would equate to roughly $84, while medical marijuana patients would pay only $28. That +$50 dollar savings per transaction is more than enough to encourage many consumers to obtain a medical marijuana certification.
“With sales tax numbers on the rise, we’re now seeing a potential 3x tax burden for recreational consumers vs medical cannabis patients,” explained Zach Greene of greenpass, an online certification service for medical marijuana patients. “The simple process of obtaining a medical card, along with its now 3-year renewal window, makes it a great option to diminish the cost burden for consumers with qualifying medical conditions.”
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